If you are the lone Medicare beneficiary in Arthur, Neb., enrolled in a managed-care plan, you are probably going to love the budget plans passed last month by the House and Senate.
That's because both plans substantially raise the rates paid to the plan by Medicare. In the case of the Senate measure, the one operating Medicare managed-care plan in Arthur would enjoy a boost of more than 80% in its rates (See chart). The legislation should mean a slew of new benefits for the plan's beneficiaries.
But what if you are one of the nearly 350,000 Medicare beneficiaries enrolled in a health plan in Los Angeles County?
It turns out that under the Senate plan, capitated payments in the county would actually be 0.27% less in 2002 than they are today. Under the House plan, payments would increase nearly 3% over the five years from fiscal 1998 to 2002.
Both the House and Senate plans take from the many to give to the few. Under pressure from rural lawmakers, who say low reimbursement rates have kept managed-care plans from entering rural markets, the budgets seek to increase payments to those areas.
There were no estimates of the total amount of money that would be shifted among plans under the House and Senate measures.
To pay for the change, the plans reduce reimbursements to high-payment areas, most of which are urban with high managed-care penetration.
House and Senate negotiators are scheduled to begin meeting this week to hash out the differences between their respective plans. One of the key issues they must decide is which plan will be included in the final budget bill.
Representatives of managed-care plans say if the choice is the Senate plan, beneficiaries in areas that currently receive relatively generous payments will almost certainly get fewer benefits as plans try to cope with flat, or in some cases, falling reimbursement rates.
"People will see a cut in benefits," said Karen Ignagni, president of the American Association of Health Plans. "Beneficiaries say they moved into (managed-care plans) to receive broader benefits, predictability of copayments and coordinated care. This would jeopardize that."
Nearly everyone seems to agree the current system of reimbursing managed-care plans under Medicare, called the adjusted average per-capita cost, is cockeyed.
Because it's keyed to the average cost for a fee-for-service patient in a given county, the rates vary widely across the nation. For example, plans in Dade County, Fla., receive nearly $750 per month per beneficiary, while plans in several rural counties receive less than $250 a month.
But how you seek to close that gap makes a big difference from county to county.
The House plan puts a $350-per-month floor on payments and guarantees that every plan will receive at least a 2% annual increase in payments.
The Senate plan, however, assures every county will receive at least 85% of the national average (about $417 a month) with no guaranteed update. That means some high-payment areas would be frozen for five years or even see a real reduction in payments.
Many legislators and interest groups say the Senate plan goes too far in equalizing payments.
Ignagni said that while there "certainly has to be balance between rural and urban areas, we think the (House) plan is the better choice," because it takes a more gradual approach to the changes.
Others question whether raising the payments in rural areas will really lure managed-care plans.
"At some point you are going to shift this so much that you are going to lose beneficiaries in areas where managed care has been successful, and you are not going to make up those losses in rural areas," said one congressional aide, who asked not to be identified. "Overall it will be a net loss at a time when we want to encourage enrollment (in managed care)."
However, Ignagni thinks the changes will make a difference.
"Managed care is already going in there in the private market," she said. "There is no reason it won't happen in Medicare."
