With Medicare HMOs in retreat, the Bush administration is starting up experimental hybrid health plans that could become part of the president's new plan to reform Medicare.
The new hybrids, started at the beginning of the year, generally match the drug coverage available in many Medicare HMOs but go beyond HMOs by providing access to out-of-network providers.
The Bush administration is sweetening the deal by providing better payments for insurers than those given to HMOs, which have been leaving the Medicare+Choice HMO program in droves due to low payments.
This year, CMS reports that 24 Medicare HMOs reduced their service areas and nine left the program altogether. Now the hybrids are gearing up enrollment.
In January, 33 health plans in 23 states launched "Medicare PPO" demonstration projects, CMS reports. CMS is paying the Medicare PPOs 99% of fee-for-service rates and will share cost savings, while Medicare HMOs get a strict payment well under 95%, according to the plans.
While 200,000 beneficiaries were dropped by HMOs this year, the new PPOs enrolled 58,000 people in their first one and a half months, CMS reports. The American Association of Health Plans says that rate is similar to the sign-up rate of Medicare HMOs when they started up.
Meanwhile, the CMS Private Fee-For-Service demonstration project, similar to the PPO project, opened in February with two insurers: Louisville, Ky.-based Humana, serving six states, and Bellingham, Wash.-based Sterling Life Insurance Co., serving 25 states. The two kinds of hybrids mirror the "Enhanced Medicare" option in Bush's Medicare reform plan, which includes options for Medicare HMOs and traditional fee-for-service Medicare, which would not provide drug coverage for most beneficiaries.
Ron Bangasser, M.D., the new president of the California Medical Association, says he likes the idea of physicians being paid for coverage of out-of-network services, but he is concerned that rising drug costs could eat into physician reimbursements.
The American Association of PPOs expressed support for the PPO project but added that the offerings are "certainly not the full set of PPO benefits enjoyed by beneficiaries in the private sector."