[Congressional Record Volume 144, Number 132 (Monday, September 28, 1998)]
[House]
[Pages H9086-H9087]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          MANAGED CARE FLIGHT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 21, 1997, the gentlewoman from California (Mrs. Capps) is 
recognized during morning hour debates for 5 minutes.
  Mrs. CAPPS. Mr. Speaker, I rise today to bring to the attention of 
the House a crisis that is looming throughout the country and is 
happening right now in my district, the central coast of California.
  In the past several weeks, many of the managed care companies, 
primarily in San Luis Obispo County, have announced that they will no 
longer be offering seniors the option of Medicare HMOs. This pullout 
could begin as early as January.
  Mr. Speaker, these actions are causing tremendous turmoil in my 
district. Thousands of senior citizens will face extreme hardship, 
including large increases in out-of-pocket expenses, confusion over 
benefits and other transition complications. It is estimated that over 
50,000 seniors will lose access to Medicare HMOs in San Luis Obispo 
County and perhaps thousands more in Santa Barbara County. By early 
next year, only one HMO option may be available for seniors in San Luis 
Obispo.
  Why is this happening? There seem to be two reasons. First and most 
critically, reimbursement rates for HMOs in my district have 
historically been among the lowest in California and the country. To be 
precise, Santa Barbara and San Luis Obispo Counties are the third and 
fourth lowest in the State. In both counties, HMOs receive less than 
$400 per beneficiary per month. However, just next door in Ventura 
County to the south, managed care companies receive more than $500. And 
in Los Angeles County, a few miles away, the reimbursement rate is 
almost $650.
  While the reimbursement rates are low in my district, the cost of 
living is anything but. Anyone who has visited the central coast of 
California knows that housing prices are high, rents are high, and 
health care costs reflect that reality. We have excellent health care, 
but it is not cheap.
  The second reason for the HMO pullout are the recent rulings by the 
Health Care Financing Administration which may be exacerbating an 
already bad situation in my district and across the country, especially 
in rural and underserved areas. New administrative burdens, higher-
than-expected health care inflation, and smaller annual reimbursement 
increases may be adding to the reasons managed care companies across 
the country are withdrawing Medicare products from the market.
  To address this crisis, I have recently written to the chairman of 
the Subcommittee on Health. I know that this subcommittee is looking 
into the nationwide flight of managed care companies from Medicare 
products. I want the Chair to hear firsthand how this is occurring in 
my district and to urge the adoption of bipartisan legislation to 
address this issue.
  The bipartisan Medicare Health Plan Fair Payment Act, of which I am 
proud to be a cosponsor, will address the chronic underpayment of 
health plans in rural areas.
  Low reimbursement rates discourage companies from offering their 
products in rural areas. That means fewer health care options for 
seniors and sometimes no options at all. We need to make sure we are 
paying these companies enough to get them to offer products our seniors 
clearly want. That is the first step.

[[Page H9087]]

  Next I have written to HCFA to alert them to the seriousness of this 
situation for my constituents. I want HCFA to wake up and see what is 
happening on the central coast of California.
  What I see are seniors frightened that their health plans are being 
taken from them and frustrated that they have to switch plans or go 
back to basic Medicare with all its high costs and confusing rules. I 
join the Senate Finance Committee Chairman, Bill Roth, in urging HCFA 
to look at its recent actions that may be adding to this crisis in 
rural America. HCFA needs to be flexible in how these new rules are 
implemented.
  Finally, I have called on the governor of our great State to advise 
him of the powers of his office in this matter. Many Members may not be 
aware of a little-known provision in the Balanced Budget Act of 1997. 
It allows a governor to request that HCFA redefine the service areas 
that managed care companies must cover within their State. While 
service areas are now county by county, they could encompass several 
counties over the entire State.

                              {time}  1045

  What that means is that the governor could require that managed care 
companies cover low-reimbursement, low-profit areas along with the 
high-reimbursement, high-profit areas. This simple tool, if wielded 
properly, could provide an incentive for managed care companies to 
increase coverage throughout States like California that have some 
high-profit areas and some low-profit areas.
  Mr. Speaker, this Congress has made a lot of noise about increasing 
senior citizens' access to managed care and about controlling Medicare 
costs through increased use of managed care. Seniors in my district 
have expressed a desire to join HMOs, and we should make it easier for 
them to do so. And yet managed care companies are pulling out of my 
district, and others across the country, like rats deserting a sinking 
ship, and they are leaving frightened, frustrated and stranded seniors 
in their wake. This is simply wrong.
  We must take action. The actions I have outlined above would ensure 
that seniors in my district and seniors across the country have access 
to reliable, quality and affordable health care. There is no excuse for 
not acting now, before this Congress goes home to campaign, before this 
Congress renames another post office, before we disintegrate into yet 
another partisan fight about this issue or that. We need to consider 
now this bipartisan issue facing seniors with Medicare and HMOs.

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