A number of Medicare HMOs pulled out of markets this year because providers refused to deal with them, not because HCFA was paying them poorly.
That's what an expert panel told members of the Medicare Payment Advisory Commission at its meeting last week in Washington.
After years of consolidation in many markets, hospitals and large medical groups can confidently walk away from Medicare HMOs' offers if the money isn't right.
"Plans are in a weaker negotiating position," said Marsha Gold, a senior fellow at Plainsboro, N.J.-based Mathmatica Policy Research, who interviewed health plan officers for the report to MedPAC.
Historically, Medicare fee-for-service payments are richer than Medicare managed-care payments, just as traditional insurance pays providers better than commercial managed care.
"Providers have the option of reverting to fee-for-service Medicare, and some are saying to plans, 'We want out,' " said Robert Hurley, an associate professor at the Medical College of Virginia at Virginia Commonwealth University in Richmond. "In some markets where there used to be more contracting entities, there's now only one. The providers are locking arms and saying no (to Medicare HMOs)."
George Strumpf, senior vice president for legislative affairs at the Alliance of Community Health Plans, a group of not-for-profit HMOs, said such incidents are anecdotal.
"It's not a widespread phenomenon," Strumpf said. "It is happening in some markets, and the rationale is easy to understand: There's just not enough money on the table to meet the demands of health plans and the providers they contract with."
At a time when providers are facing Medicare payment reductions, Medicare managed care is generally not welcome. Providers in the Northeast have gone as far as to publicly campaign in favor of traditional Medicare fee-for-service coverage (May 31, p. 8).