Medicare Compliance & Reimbursement

Medicare legislation to add a prescription-drug benefit and inject more private health-plan competition into the program has passed both houses of Congress. But uncertainties still abound, starting with whether a conference committee can bridge differences between the two bills to keep more liberal senators and more conservative House members from bolting when a final vote arrives. If and when a law is enacted, there still are future cliffhangers aplenty. Stakeholders will continue to struggle over rules setting up the new programs. And since many of the mechanisms the legislation proposes are new and untried, advocates on all sides will stay vigilant for the inevitable unintended consequences. Here's a sample of issues still in question: WILL PRIVATE PLANS SAVE MONEY?

Gospel among Republicans is the proposition that a new private-plan portion of Medicare will significantly hold down costs. Indeed, for many this proposition constitutes the primary stated rationale for retooling Medicare to depend on private insurers. But health plans don't necessarily tout that selling point the way lawmakers do. At a June 26 briefing on Capitol Hill, American Association of Health Plans Executive Vice President Diana Dennett stressed the importance to insurers of having their reimbursements tied to local Medicare fee-for-service spending.

An audience member at the forum spon-soredbytheAlliance for Health Reform and the Kaiser Family Foundation wondered why, given that private plans work at holding down prices and motivating providers to offer the most effective and cost-effective care. Health plans can do a bit to bring care closer to sensible norms in areas where there's underuse or overuse, Dennett said. But she went on to emphasize that "the underlying driver of health care costs is provider expectations" about how much money they'll make, not health plans. First priority for a health plan must be assembling a provider network. And the major barrier to accomplishing this is "inability to meet the expectation of providers" about how much money they'll make from participating in the plan, Dennett said. WHAT WILL MOTIVATE PRIVATE PLANS TO BE EFFICIENT MANAGERS OF MEDICARE BENEFITS?

For many Republican policymakers, the answer is "bearing insurance risk." But on the matter of risk, too, private plans seem to be singing from a different hymnbook than many of their congressional advocates. According to documents from the American Association of Preferred Provider Organizations, PPOs - the new private health plan of choice for Medicare - aren't accustomed to bearing insurance risk, prefer not to bear insurance risk, and also want Medicare to continue processing claims and setting provider fees administratively, another Centers for Medicare & Medicaid Services function that many lawmakers hope they can kiss goodbye with a new influx of Medicare private plans. Describing its preferred "traditional," "non-risk" PPO model as [...]