Many hospital, physician and managed-care groups warned in comments filed with HCFA late last month that the HCFA regulation implementing the new Medicare+Choice structure is so stringent it could reduce the choices available to seniors.
"These expansive requirements, instead of encouraging increased health plan participation in the Medicare+Choice program . . . may chill the development of additional health plans and in fact could endanger the continued participation by current risk contractors," according to the Chicago-based Blue Cross and Blue Shield Association's comments.
The new Medicare+Choice structure was enacted as part of the federal Balanced Budget Act of 1997. It is designed to give seniors a menu of options including fee-for-service, medical savings accounts, HMOs, PPOs, provider-sponsored organizations and other managed-care options.
HCFA released the regulation as an interim final rule on June 26. The regulation took effect July 27. However, HCFA will consider changes to the regulation if the comments warrant it.
Although the Blues put the finest point on its concerns, other groups echoed its message.
"Offering a Medicare+Choice plan may simply not be doable, especially for start-up organizations," the American Hospital Association wrote in a letter to HCFA Administrator Nancy-Ann Min DeParle.
Although "interest in sponsoring Medicare+Choice plans is high among our members," the AHA wrote, "we are rapidly coming to the conclusion that without better balance between the Medicare program's demands and payment, far too few of our members and others will offer plans."
Specific concerns common to a number of groups include:
Implementation of the Quality Improvement System for Managed Care. The system is designed to give plans specific performance benchmarks. The AHA, along with the American Association of Health Plans and the Blues, said QISMC is untested and should be phased in over a period of years.
"The approach . . . should be revised to significantly improve flexibility and avoid a potential meltdown at both the plans and provider level," according to the AHA.
Medicare reimbursement rates. The AHA, AAHP and Blues all questioned whether the current Medicare reimbursement rates for contracting health plans are sufficient to make the plans attractive to seniors. Reimbursement rates for plans vary widely across the country. Most rural counties receive less than $400 per enrollee per month whereas high-cost areas like New York receive nearly $800.
"AAHP has strong concerns that the payment methodology included in the (balanced-budget law) is resulting in payments that are falling seriously behind the rate of medical inflation and could lead to limiting, rather than expanding, the health plan choices available to Medicare beneficiaries."
A requirement that all Medicare health plans have a compliance program. Several groups complained that HCFA was making an unprecedented move to mandatory programs, which would increase plan costs.
A requirement that plans certify the accuracy of all data. Nearly all the groups said this was creating a new avenue for federal investigators to use the Federal False Claims Act against providers. For example, the American Medical Association said in its letter that "we are concerned about requirements for certification of the accuracy of data by plans and subcontractors in a `no errors tolerated' environment." The AHA suggested HCFA delay implementation of the requirement until plans have a chance to "work the bugs out of the information systems."
Mandatory "notice of noncoverage." The rule requires plans to give enrollees a notice of Medicare noncoverage for a given procedure. The notice must be given to the beneficiary before discharge from a hospital inpatient stay. Hospital groups argued in their letters that plans are passing this requirement on to hospitals, costing hospitals money and manpower.
The groups' views diverge on a number of provisions in the regulation, especially the ongoing fight over "patient protections."
For example, the regulation tells plans they must handle appeals from beneficiaries about covered services within 72 hours when the situation in question is life threatening. The new requirements are similar to those included in several of the patient-protection bills introduced in Congress.
The AMA, which supports the leading Democratic managed-care regulation bills, also supports the HCFA regulation. Not surprisingly, the Blues, which oppose the managed-care measures, also oppose the measures in the June 26 HCFA regulation.
The groups agree on one thing, however. The new regulations will be costly.
"To the best of our knowledge, no comprehensive analysis has been conducted of the administrative costs of the requirements associated with the regulation," said AAHP President Karen Ignagni.