Medicare Compliance & Reimbursement

The final region determinations will be key factors in health plans' Medicare success.

Health plans interested in taking part in the revamped Medicare program have some good news: The mammoth regulations explaining how the program will work are now out.
 
The Centers for Medicare & Medicaid Services released 1,956 pages of proposed regulations on Medicare Part D - prescription drug coverage, which will begin on Jan. 1, 2006 - and on the new Medicare Advantage program featuring managed care plans and PPOs.
 
CMS wants to hear from health plans on what changes should be made. And although the regs leave some key questions unanswered, industry leaders were glad to see that the often slow machinery of government has worked relatively quickly to churn out the regs.
 
"We commend CMS for working on a fast track to issue proposed rules for the new programs," said Karen Ignagni, president of America's Health Insurance Plans. Region Sizes Yet To Be Determined The regs do not address the issue of Medicare region sizes. According to the Medicare Modernization Act, participating private plans must offer their product to an entire Medicare region, so the exact sizes and shapes of the regions are key factors.
 
CMS unveiled five different formats for the Medicare regions at a July 21 open meeting in Chicago, and it has yet to decide which format will win out. CMS discussed five possible region formats: one format would have 50 regions, with each state its own region; one would have 41 regions; one would have 24 regions; one would have 11; and one would have only 10.
 
"At this point we're still firm in our preference for 50 state-based regions," says Jane Galvin, the Blue Cross Blue Shield Association's senior consultant for regulatory affairs.
 
The main reason: timing. "This is a very fast timeline for this program," Galvin notes. The final regulations specifying the regions are due in the late fall - which probably means December, Galvin says - and plans would need to submit an application for participation in the first quarter of 2005, even though the bidding isn't until June.
 
If a health plan wanted to participate in a region that combined states, it would need to create various joint ventures and partnerships and would need to recontract with providers - all in a few months.
 
"If you make it complex, it's going to be harder to bring a product into the program under the timeline that the agency wants," Galvin says.
 
But there are other important considerations, such as what size regions will best sustain private plans; what will give plans the best chance to develop a strong provider network in both urban and rural areas; and what will cost Medicare and beneficiaries the least money, says Jack Ebeler, [...]