Medicare Compliance & Reimbursement

The so-called social health maintenance organizations - with which Medicare has experimented for nearly two decades - should be folded into the Medicare+Choice program when the S/HMO demonstration officially ends this December. That's the word from the Medicare Payment Advisory Commission, based on repeated findings that S/HMOs haven't had much more success with integrating care, cutting institutionalization rates, and improving outcomes for frail elderly people than have other Medicare health plans. The S/HMO demonstration was established in 1985 and revised in 1996 to test a service-delivery and financing model that would provide acute, chronic, and long-term care, especially community-based LTC, and smooth beneficiaries' transitions among the three. Under the demonstration - which currently exists in four sites and serves around 115,000 beneficiaries - enrollees are entitled to basic Medicare benefits, supplemental benefits such as prescription drugs and eyeglasses, and expanded "social" benefits including personal-care and homemaker services. Eligibility for some benefits, such as personal care, depend on the enrollee's health status. S/HMOs are paid on a capitated basis and receive 5.3 percent more than county M+C rates. The higher payment is intended to pay for additional services and "is a holdover from the years when managed-care payments were set to 95 percent of fee-for-service payments for a county," MedPAC explains in an August report. But a series of studies over the years has demonstrated that S/HMOs generally haven't done better than the rest of Medicare at integrating care or reducing institutionalizations, MedPAC says. In recent years, one of the four S/HMOs, operated by the group-model HMO Kaiser Northwest in Portland, OR, "has successfully integrated care," adopting both an interdisciplinary-team organization and other care-management approaches recommended by geriatricians, says the Commission. But Kaiser has adopted those approaches in both its S/HMO and its regular M+C plan, while the other three S/HMOs haven't adopted similar proven geriatric-care techniques. With competition between S/HMOs and M+C plans basically a wash, MedPAC concludes that the existing S/HMOs should be offered the opportunity to become regular M+C plans come January, and that mandates for S/HMOs to provide additional benefits should end. If the plans choose to enter M+C, their extra payment should be phased out between 2004 and 2007, and the same comprehensive risk adjustment that's in the offing for M+C should be phased in over the same period. The recommendation follows from two of MedPAC's chief principles, says the Commission. Eliminating S/HMO plans that were mandated to offer extra benefits - unlike some M+C plans that are able to offer non-mandated benefits because they deliver care more efficiently - preserves equity among beneficiaries. Eliminating extra payments to S/HMOs accords with the principle that plans serving basically the same beneficiaries should be paid the same to [...]