May 22, 2000
In response to concerns that managed care organizations will cease providing Medicare+Choice services to Washington seniors, Ninth District Congressman Adam Smith is urging five health care organizations to remain in the Washington state market while working with Congress and the Administration to solve the financial crisis facing the program.
Medicare patients have two enrollment choices: the traditional fee-for-service Medicare program, or a Medicare + Choice managed care organization. Proponents of Medicare+Choice argue that it lowers costs through more efficient service delivery and gives seniors more choices because plans compete for patients by offering greater benefits, such as prescription drugs. In Washington, PacifiCare, Group Health, Regence Blue Shield, Premera Blue Cross, and First Choice all offer Medicare+Choice, although only 16 of our 39 counties have the Medicare+Choice option.
“The Medicare reimbursement rate system is unfair to Washington state,” Smith explained. “Medicare+Choice rates have always been based on the fee-for-service costs in each county, and since Washington was one of the most efficient states in Medicare service delivery we had low costs. We tried to fix this problem several years ago, but unfortunately, more needs to be done because we are still being punished for that efficiency and Medicare providers are discovering they may no longer be able to provide services in our state.”
This problem can be illustrated by comparing Pierce County Medicare+Choice reimbursement rates with Dade County (Miami), Florida reimbursement rates. A managed care organization receives a base reimbursement rate of $465.97 for a Medicare patient in Pierce County but $809.90 for a Medicare patient in Dade County. “Obviously, this disparity in payments allows seniors in Miami to receive better benefits than seniors in Pierce County, something that the seniors in the Ninth District are very aware of,” Smith noted. “It’s an unfair system that, ironically, is based primarily on how much each county had previously spent on Medicare, so states that are relatively inefficient have little incentive to cut waste and abuse while efficient states are seeing Medicare+Choice plans disappear.”
Giving seniors choices should be a fundamental part of Medicare, argues Smith. “I think it’s important that we give seniors the option of enrolling in Medicare+Choice,” said Smith. “Competing for patients can help lead to better benefits and a more efficient Medicare system.”
However, the inequality problem was exacerbated when Medicare reforms treated already-efficient states the same as inefficient states when reimbursement rates were recalculated. “Washington state was already very efficient, and there was simply very little fat to trim from Medicare in our state,” he said. “Instead, critical health care services have been scaled back and providers have stopped serving the rural regions of our state altogether.”
To combat this problem, Smith is drafting legislation to ensure Medicare+Choice can survive in efficient states like Washington and in rural areas. He is working with other Members of Congress whose districts are similarly impacted to urge House Leadership to address this issue before Congress adjourns for the year.
In the meantime, Smith is making a personal plea to the five Medicare+Choice providers in Washington state. Private health care organizations must renew their Medicare contracts by July 3, 2000 for 2001, and Smith is working to ensure that they do not abandon Washington state altogether. Smith is also asking the Health Care Financing Administration (HCFA), the agency that oversees Medicare, to implement several regulatory changes that would encourage Medicare+Choice providers to continue offering services to Washington state seniors.
“I have asked HCFA to make a few simple changes that would hopefully encourage Medicare+Choice providers to stick around in Washington state,” said Smith. “I’m also working with the health care providers on a long-term solution to this problem and asking them to renew their contracts for 2001 while we find a solution that allows them to continue offering health care options to Washington state seniors. I don’t want to see a situation where our seniors don’t have the choice of enrolling in a managed care organization while Medicare patients around the rest of the country have that option.”