Despite concerns from managed-care plans and their industry lobbyists, HCFA is forging ahead with its competitive-bid Medicare HMO demonstration project in Denver.
In a letter to the American Association of Health Plans released last week by the agency, HCFA Administrator Bruce Vladeck said the agency will require plans to submit bids by May 15 as scheduled.
Vladeck said the concerns of plans were not "sufficient reason to suspend development of a project that promises significant information about how Medicare's managed-care program can be improved."
There are seven Denver-area managed-care plans with Medicare risk contracts. Last week, all seven received instructions on how the bid process in the demonstration proj-ect works, said a HCFA spokesman. The plans must submit a bid in order to continue contracting with Medicare.
After the plans bid, HCFA will choose a payment rate. That rate will apply to all plans in the Denver market. HCFA will use a third-party broker to enroll and disenroll Medicare beneficiaries.
Plans with premium bids higher than the rate will have two choices: accept a lower payment rate or charge beneficiaries a higher premium. Plans with bids lower than the HCFA premium will be able to add benefits or keep the surplus. HCFA has not released details of how it will choose the winning bid amount but has said it will not base its decision strictly on price.
Denver-area health plans complained that HCFA did not consult with them in designing the program. They also said the demonstration will have a negative impact on beneficiaries as Medicare reimbursements to plans are squeezed.
The plans want the project delayed until changes are made, a request denied by Vladeck.
A similar project in Baltimore was scrapped amid complaints from plans and lawmakers, principally Rep. Ben Cardin (D-Md.), who represents the Baltimore area. After several delays, the project was eventually killed in favor of the Denver site.
To Denver-area health plans' dismay, local lawmakers so far have not complained.