A federal commission charged with choosing sites for a Medicare managed-care competitive-bidding demonstration project has narrowed its choices to nine sites (See map). It is scheduled to pick the two finalists next month.
The commissioners admit, however, that they have not figured out how to overcome the opposition of health plans and local lawmakers to the pilot project. (See story below).
The 15-member Competitive Pricing Advisory Committee was created as part of the federal Balanced Budget Act of 1997. It grew out of Congress' desire to avoid some of the problems that befell past competitive-bidding programs.
HCFA attempts to implement the first programs, in Baltimore and Denver, were halted before they began because of opposition from local lawmakers and managed-care plans.
So far, commission members have agreed on a structure for the new demonstration program that is similar to that of the Baltimore and Denver programs. Health plans will submit bids, and HCFA will choose a middle point for the Medicare reimbursement rate.
Plans that bid higher than the reimbursement rate will be forced to absorb the difference or charge enrollees a premium. Plans that submit bids below the chosen rate will be able to offer additional benefits as a marketing inducement.
The committee hopes the two sites can begin operations Jan. 1, 2000. That is one year later than projected for the first two sites; two more were to begin operations a year after that, another deadline that won't be met, panel members said. The law also calls for the first four sites to include three urban areas and one rural area. The nine sites under consideration are all urban.
Some commissioners have expressed worry that little has been done to overcome the opposition that sank the Baltimore and Denver projects.
"I have reviewed what HCFA did (in Baltimore and Denver), and I have been trying to figure out a way that we can overcome the political flak, and I can't find any," said committee member Samuel Havens, a healthcare consultant in Chatham, N.J.
Havens added that the committee was making contact with local lawmakers, "but I'm not sure if that will be enough."
Committee member Jay Wolfson, director of the Florida Health Information Center at the University of South Florida, Tampa, said it was "all a matter of packaging and marketing. If we go to the key opponents and explain, we may be able to overcome some of the communications problems that hurt HCFA last time."
Wolfson says he doubts the opposition can be overcome, though, and he wonders if plans will choose not to participate.
"The possibility that we would give a party and no one would come has always been a concern," he said.
Committee members at their October meeting discussed postponing or canceling the demonstration project given the recent turmoil in the Medicare+Choice program. Nearly 50 plans have notified HCFA that they will not offer Medicare managed care next year.
"Some members have qualms about continuing the program given the environment," said Charles "Chip" Kahn, president-designate of the Health Insurance Association of America. Kahn said he would likely offer a proposal at the December meeting to forestall the program until Jan. 1, 2001, to allow the Medicare+Choice program to settle.
Although he, too, questions the timing of the plan, said Havens, he said he doubts there is support on the committee to pass a resolution to delay the program.
Such a change would likely require congressional action.