Providers and payers alike were enthusiastic last week that Medicare HMOs, which were recently awarded a significant federal pay increase, plan to use their newfound funds to cut premiums, soup up benefits and even boost payments to hospitals and doctors.
At least 34 managed-care companies representing 3.1 million enrollees will target new federal funds handed to them by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 to pay healthcare providers more and thereby "stabilize or enhance beneficiary access," according to a survey conducted by the AAHP-HIAA, an insurance industry lobbying group.
Plans representing some 75% of beneficiaries enrolled in Medicare HMOs surveyed by the AAHP-HIAA plan to boost provider payments, according to the association.
On March 1, Medicare HMO rates will climb an average of 10.6%, carrying out provisions of the Medicare legislation that earmarked $500 million in 2004 and $800 million in 2005 to stabilize managed-care payments to insurers. In 2006, Medicare beneficiaries will be able to select a private managed-care plan to administer their benefits.
"I hope that some money will flow to providers because they have enormous losses, but I imagine most will go to beneficiaries, which is a good thing as well," said Lori Burgiel, senior director of managed-care policy for the Massachusetts Hospital Association.
Health plans representing more than 93% of Medicare HMO beneficiaries will use the extra money from recent rate increases to lower monthly premiums, in some cases significantly, according to the survey, which also found that plans representing 60% of Medicare HMO beneficiaries will use the funding to offer new or enhanced benefits, including prescription drug coverage and disease-management programs.
"Congressional action in December is getting results," AAHP-HIAA President Karen Ignagni told reporters last week, citing the growing number of companies announcing that they are reducing premiums and adding benefits.
Before President Bush signed the Medicare bill, Medicare HMOs were scheduled to receive payment increases of 3.2% through 2004. Advocates for those plans, including Ignagni, have long argued that insurers dropped coverage because the Medicare+Choice payment rates were inadequate. Medicare HMOs had until Jan. 30 to submit to the CMS their new coverage plans. Under the law, the payment increases must be used to lower cost-sharing, enhance benefits or increase provider payments.
Last week several major managed-care organizations trumpeted their plans to expand service and lower beneficiaries' out-of-pocket costs. Among them were Aetna, Blue Cross and Blue Shield of Rhode Island, Oxford Health Plans and PacifiCare Health Systems.