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Medicare HMO Information Slowdown

by Jane Bryant Quinn, as published in the Chicago Tribune, October 26, 1997

For Medicare, the 21st Century will start ahead of time - in November 1998. that's when a range of new privately managed Medicare plans will be unveiled. This program is to be known as Medicare Choice.

Everyone, young and old, should be paying attention. You're going to see a blueprint for what Medicare may become.

There's one problem. Seniors need to be told, in great detail, what their new choices are. Yet Congress is on the verge of slashing the funds that were promised to help seniors compare these plans so they can choose the one that will serve them best.

Under the balanced-budget law, the public information campaign for Medicare Choice will be run by the Health Care financing Administration (HCFA), which manages Medicare and Medicaid.

The cost is supposed to be borne by all the privately managed Medicare plans (principally HMOs). The law set their first-year contribution at up to $200 million - a small fraction of what the HMOs are paid by Medicare each year.

But the HMOs are telling their allies in Congress that they won't pay anywhere near that price.

The budget does sound high. but the job is huge. One year from now, 38 million Medicare beneficiaries are supposed to receive a booklet comparing all the competing plans in their area. The booklet will cover traditional Medicare, existing HMOs and any new types of plans.

You'll have to decide which one you want, so getting good information will be critical. Here's what the law says the HCFA booklet has to do:

  1. Compare each plan on specified points, such as medical benefits, out-of-pocket costs, emergency care and doctor choice.
  2. Disclose comparative quality data for every plan. This includes surveys of patient satisfaction, the rate at which patients quit the plan and data on the percentage of patients who receive preventive care. In the future, you're also supposed to get data on how patients fare.
  3. Maintain toll-free telephone lines and an Internet site. A lot of specialists are going to have to be trained.

HCFA has been worried that even $200 million won't get the job done in time. Nevertheless, the HMOs allies in Congress seem ready to chop the information budget to around $95 million.

"At that level, will there be enough people to handle the phone lines?" wonders a congressional source close to the legislation. "Will the booklets be printed on something that looks like recycled toilet pater? Will people say 'Yuck' and throw the information away?"

The HMOs aren't stopping with cutting the outreach program's size. They're angling to pay almost none of it themselves.

Under the law, each Medicare Choice plan (most of them HMOs) is supposed to pay a pro rata share. congress deemed this fair, because they're the ones the booklets help. Their plan information will be mailed to every Medicare household.

But speaking for the trade group, the American Association of Health Plans in Washington, D.C., Senior Vice President Rick Smith says the plans should pay around 15 percent of the cost, because they cover 15 percent of the Medicare population. Apparently taxpayers should pay the rest.

Ironically, Medicare HMOs got a windfall from taxpayers this year - thanks to another change in the law. Medicare HMOs have always been paid in advance for the patients on their rolls. Adjustments for overpayments were made the following year.

But Congress is letting the HMOs keep last year's overpayments, which, together with other accounting changes, came to $666 million. And even with all this extra money, they don't want to meet their obligations for Medicare Choice.


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This page posted November 2.

Last revised January 31, 1998