Medicare managed-care plans in 63% of U.S. counties will see capitation payments rise by more than the minimum 2% in 2000, HCFA announced last week.
It will be the first time since 1997 HCFA will be able to calculate rates based on a "blend" of national and local fee-for-service costs as provided for under the 1997 balanced-budget law. Nationally, Medicare rates will increase by a little more than 5% per enrollee.
Because of the blended payment rates, based on 1997 costs, some counties will receive more than the 5% average and some will receive less. Plan payments per beneficiary also will vary because HCFA will begin applying a controversial "risk adjuster" that pays plans less for enrolling healthier beneficiaries.
The blend was not implemented in 1998 or 1999 because it would have increased Medicare spending more than the law projected. The law provided for three methods of calculating Medicare managed-care payments: The blend, a minimum 2% update and a payment floor of $401.61 per enrollee in 2000.
Applying the minimum update and the payment floor absorbed all the money allotted for managed-care spending growth in 1998 and 1999, so no money was available to fund the payment blend.
The blend is aimed at equalizing capitation payments between high-and low-cost counties and encouraging HMOs to expand into the lower-cost counties.
Last year, managed-care plans stopped offering coverage in dozens of counties, affecting 400,000, or 6.5%, of Medicare managed-care enrollees. The plans cited inadequate payments and increased regulatory burdens under the 1997 law.
"We are very pleased about the blend counties," said Janet Newport, vice president of regulatory affairs for PacifiCare Health Systems, Santa Ana, Calif., which has 1 million Medicare enrollees.
But despite the 5% payment increase nationally, the American Association of Health Plans said it isn't enough. Only 18% of Medicare beneficiaries live in the counties receiving the blend, according to the group's calculations.