You can't have your savings and get your drugs, too.
That's the message Medicare HMOs are sending to the Clinton administration as they lobby for higher payments. They list the plans that have dropped out of Medicare or slashed drug coverage to prove their point.
But administration officials don't see the cutbacks as evidence of poor payment. Instead, they're trumpeting a report they compiled on the state of Medicare HMOs to support not only the administration's drive for a Medicare prescription drug benefit but also the presidential aspirations of Vice President Al Gore.
Late last month Gore served as the point man for the drug benefit. At an American Medical Association meeting in Washington, Gore released a HCFA report describing how Medicare HMOs have changed or slashed their drug coverage in the face of financial pressure from the Balanced Budget Act of 1997 and the Clinton administration.
According to the report, by 2000:
* About one-third of all plans will cap their drug spending at $500 per year per beneficiary.
* Beneficiaries will have access to a drug benefit only if they make copayments.
* The number of beneficiaries who have access to plans that don't charge a premium for enrollment will drop by 3 million.
"This report underscores that because HMOs are not required to offer a prescription drug benefit and are not compensated for it, beneficiaries cannot be certain that the benefit they depend on will always be there for them," according to a written statement by the White House.
Just a few years ago Medicare managed care was going to save the program, according to the administration. Even when HMOs began dropping out of the program or trimming their benefits last year, HCFA quickly pointed out how many applications it had received from plans that wanted to join Medicare+Choice. HMOs were still the future.
But the administration started changing its tune after President Clinton called for a programwide prescription drug benefit in his State of the Union address in January.
For example, at a National Press Club luncheon in Washington four months ago, HHS Secretary Donna Shalala said Medicare HMOs had promised the administration they could do more with less. By trimming benefits and complaining about poor payments, plans were reneging on their promise, she said.
Health plans, on the other hand, feel somewhat betrayed by this political gamesmanship.
"It's a classic Catch-22," says Karen Ignagni, president of the American Association of Health Plans. "For months, the (Clinton) administration kept saying, 'No problem.' In July, we said virtually every plan was having to cut back on drug benefits, and the administration still said, 'No problem.' And then suddenly we're the problem."
The American Association of Retired Persons, arguably one of the most powerful lobbies in Washington, has selected Medicare drug coverage as its top priority.
And the AARP, like the administration, believes that HMOs are an unreliable vehicle for bringing drug coverage to all Medicare beneficiaries.
"HMOs have done a really good job of shooting themselves in the foot," says John Rother, the group's legislative director. "They're sending us a big flashing message to the public, saying, 'We can't be trusted.' "
The National Council on the Aging, another advocacy group for seniors, is more sympathetic to the financial struggles of the Medicare HMOs, but believes the administration is barking up the right tree.
"Looking at the bigger picture, not only are the HMOs increasing their premiums and lowering their caps, but retiree coverage is declining, and Medigap premiums are rising," says Howard Bedlin, vice president of public policy and advocacy at the council. "The administration makes a good point: Even though two-thirds of beneficiaries have some coverage, it's not reliable, and it's getting worse."
Not to mention that drugs are getting ever more expensive, Bedlin said.
That's where the drugmakers join the debate. A coalition of pharmaceutical companies, insurers and providers that wants to kill Clinton's drug benefit proposal has been lining the pockets of politicians to win their loyalty.
The coalition, dubbed Citizens for Better Medicare, has contributed more than $1 million to the campaigns of federal candidates, according to the Center for Responsive Politics, a Washington-based watchdog group. Two-thirds of that money went to Republicans.
To complicate matters, Medicare HMOs and providers are competing for limited federal funds intended to ease some of the scheduled payment reductions required by the 1997 budget law.
And if Congress puts a drug benefit on the table, that means even less money for providers. "(Providers') concern is that if we spend all this money on a drug benefit, there won't be any left for them," Bedlin says, referring to providers' push to roll back scheduled Medicare payment reductions.
Despite the administration's vilifying HMOs over drug coverage, health plans that offer drug coverage stand to gain if a drug benefit is passed. Medicare would reimburse all beneficiaries, so Medicare HMOs would also benefit, Rother points out.
Health plans and providers alike are anxiously waiting for the House Ways and Means health subcommittee meeting this week, where members are expected to mark up final legislation to relieve some providers.