Archive for Friday, March 2, 2001

Payment increases for HMOs serving Medicare patients

March 2, 2001


— The government began paying more money Thursday to private health plans that serve Medicare patients, with the prospect of a further increase in 2002.

The higher reimbursement for doctors and hospitals that are part of health maintenance organizations is intended to help keep HMOs in the federal insurance program for the elderly and disabled, and attract new participants.

"This is a positive step but more needs to be done," said Phil Blando, spokesman for the American Association of Health Plans, which represents HMOs.

About 250 HMOs supplement Medicare's traditional health coverage, and nearly 6 million of the overall 39 million Medicare participants pay for expanded benefits that include assistance in buying prescription drugs.

But in the past few years, nearly 1 million Medicare patients have lost such coverage when HMOs left Medicare, citing low government payments for their services and cumbersome regulations that base reimbursement rates on a complex county-based formula. HMO industry estimates for this year say 700,000 more Medicare participants will lose their HMO benefits.

To retain or attract private health plans, lawmakers have raised government payments to HMO doctors and hospitals. Health advocates and some government officials have criticized this approach, saying that HMOs are leaving Medicare for reasons other than money.

The raise comes as Congress considers changes to Medicare, including granting all participants in the 36-year-old program help with medicines needed after a hospital stay.

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