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Medicare HMOs Get Rate Increases

Wed, 01/10/2001 - 12:00am — Karen Stevenson
Description: 

In response to concerns about the large number of insurance companies exiting the Medicare HMO market, Congress has enacted new increases in the payments that HMOs can receive. The HMOs received an increase of about 2% this month, but will receive another increase to raise their payments again in March.

Medicare HMOs receive county-specific rates, with the lowest rates in rural counties and the highest rates in urban areas. Rural areas, in particular, have been left without any Medicare HMO plans, since the insurance companies have insisted that the payments in rural areas were particularly inadequate. Based on this, the largest increases will go to some rural counties. Counties which were at the floor under the old rate schedule will see rates increase from $415 to $475 per member per month. The floor for urban areas has been increased to $525.

Managed care organizations will see an increase of $9 billion in reimbursement and risk adjustment rates over the next five years. According to the legislation signed on December 21, 2000, managed care organizations that currently contract with HCFA may use the funds only to reduce beneficiary premiums or co-pays, enhance benefits, stabilize or widen the network of health care providers available to beneficiaries, or reserve funds to help offset premium increases or reduced benefits in the future.

To qualify for the increased rates, which are effective beginning March 1, 2001, managed care organizations that renewed their contracts with HCFA for 2001 are required by law to revise their Adjusted Community Rate Proposal (ACRP) and submit this to HCFA by January 18, 2001.

Managed care organizations that notified HCFA that they are ending their contract or reducing their service areas for 2001 may rescind those decisions and receive the increased capitation payments if they submit a new ACRP for HCFA review by January 18, 2001.

In response to concerns about the large number of insurance companies exiting the Medicare HMO market, Congress has enacted new increases in the payments that HMOs can receive. The HMOs received an increase of about 2% this month, but will receive another increase to raise their payments again in March.

Medicare HMOs receive county-specific rates, with the lowest rates in rural counties and the highest rates in urban areas. Rural areas, in particular, have been left without any Medicare HMO plans, since the insurance companies have insisted that the payments in rural areas were particularly inadequate. Based on this, the largest increases will go to some rural counties. Counties which were at the floor under the old rate schedule will see rates increase from $415 to $475 per member per month. The floor for urban areas has been increased to $525.

Managed care organizations will see an increase of $9 billion in reimbursement and risk adjustment rates over the next five years. According to the legislation signed on December 21, 2000, managed care organizations that currently contract with HCFA may use the funds only to reduce beneficiary premiums or co-pays, enhance benefits, stabilize or widen the network of health care providers available to beneficiaries, or reserve funds to help offset premium increases or reduced benefits in the future.

To qualify for the increased rates, which are effective beginning March 1, 2001, managed care organizations that renewed their contracts with HCFA for 2001 are required by law to revise their Adjusted Community Rate Proposal (ACRP) and submit this to HCFA by January 18, 2001.

Managed care organizations that notified HCFA that they are ending their contract or reducing their service areas for 2001 may rescind those decisions and receive the increased capitation payments if they submit a new ACRP for HCFA review by January 18, 2001.