Healthcare lobbyists are pushing the White House to scrap a rule limiting the number of Medicare beneficiaries a health plan can enroll, arguing it will hinder the development of provider-sponsored organizations.
The regulation, known informally as the "50-50 rule," requires that at least half a health plan's enrollment come from the private, non-Medicare population.
The rule was designed as a quality measure to prevent "Medicare mills," or health plans that enroll beneficiaries and offer substandard care, a problem encountered with the Medicaid program. By requiring 50% enrollment in the private sector, HCFA reasoned the plans would be more market-driven and patient-sensitive.
But provider groups say PSOs, which they envision as integrated networks of providers contracting directly with Medicare to serve beneficiaries, would not be able to satisfy the 50-50 rule.
The White House agrees, to a point. "The 50-50 rule is just a proxy for quality," said Bruce Fried, head of HCFA's Office of Managed Care. "We want (PSOs) to work, but we don't think it makes sense to go straight to the elimination of (the) 50-50 (rule)."
In the long term, Fried said, the administration hopes to implement new quality standards that would make the 50-50 rule unnecessary. However, in the short term, officials will seek to relax the rule to make it easier for PSOs to contract with Medicare, he said.
To that end, proposed PSO legislation recently released by the White House would make two major changes to the 50-50 rule.
The first is to allow HHS to waive the rule in certain cases. Under the White House plan, providers who have a good track record with the Medicare program could apply for a waiver. However, there is no guarantee such a waiver would be granted or that the process will be streamlined to make it easy for providers.
The second change to the 50-50 rule would allow providers who already treat non-Medicare patients on a capitated basis to count those against the 50% limit.