Medicare payments to managed-care plans in rural areas will rise by up to two-thirds next fiscal year, but provider and payer groups say the hike might not be enough to spur plans to expand rural coverage.
HCFA released its Medicare HMO payment rates last week. They implement provisions of the recently passed federal balanced-budget law and take effect Oct. 1.
The new rates establish a nationwide minimum Medicare payment to HMOs of $367 per enrollee per month. That floor represents a major increase in payment rates to HMOs serving 1,102 rural counties but still is much lower than the rates paid to HMOs serving many urban areas (See chart). HMOs serving the country's remaining 2,047 counties will see their payment rates increase by 2%.
Although the $367 floor will increase payments substantially in many rural counties, providers and payers said the rise will be insufficient to attract Medicare managed-care plans into rural areas and offer rural beneficiaries the choices lawmakers envisioned under managed-care payment reforms.
"We will learn whether the market will bear choice at $367," said Susan Foote, Washington coordinator for the Fairness in Medicare Coalition, which represents hospital associations, physician groups, Blue Cross and Blue Shield plans, and HMOs.
Some experts, however, added that factors such as population density and private-sector managed-care activity also determine whether HMOs begin enrolling Medicare beneficiaries in rural areas.
The Congressional Budget Office estimates Medicare managed-care enrollment in counties initially subject to the new payment floor will be 100,000 in 1998 and grow to 1 million by 2002. Overall, it estimates 11 million Medicare beneficiaries will be enrolled in managed-care plans by 2002.