HCFA Administrator Nancy-Ann Min DeParle said last week that HCFA is considering ways to reduce the effects of a planned risk-adjustment formula on Medicare reimbursements to HMOs. But she denied assertions by White House sources that risk adjustment would be delayed until 2001.
"This is going to take effect in 2000," DeParle said.
Early versions of the risk-adjustment formula would have reduced Medicare reimbursements to health plans by as much as 30%.
Among the options HCFA is considering is phasing in the risk-adjustment formula. HCFA officials are concerned that a drop in Medicare payments might prompt more health plans to pull out of the Medicare risk-management business.
By October, more than 40 plans had announced they were leaving certain Medicare markets. Many cited uncertainty about the risk adjustment as a factor.
The risk-adjustment formula would vary reimbursements for Medicare HMOs so that plans would be paid more for enrolling sicker seniors. It is scheduled to take effect Jan. 1, 2000.
Earlier this year, HCFA released a draft of the risk-adjustment plan, which is based on hospital inpatient data. However, health plans say the hospital data used are unreliable and don't give the complete picture of patients' health status because they reflect only inpatient hospitals stays. Nursing home data, for instance, were not considered.
HMO groups also disagree with HCFA on whether the risk-adjustment formula was meant to save money for the Medicare program. The groups argue that the adjustments were intended to be made among the plans, with some getting more reimbursement and some getting less, and that overall Medicare spending should remain the same.
HCFA officials argue that lawmakers always considered risk adjustment as a way to reduce overall Medicare reimbursements to HMOs.