[Congressional Record (Bound Edition), Volume 145 (1999), Part 3]
[House]
[Page 3921]
[From the U.S. Government Publishing Office, www.gpo.gov]




           HMO'S PULLING OUT AND NOT RENEWING THEIR CONTRACTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 19, 1999, the gentleman from Florida (Mr. Stearns) is 
recognized during morning hour debates for 5 minutes.
  Mr. STEARNS. Today, Mr. Speaker, there is one issue that I hear an 
awful lot about from constituents in my district. I just finished eight 
town meetings. The question they ask me repeatedly is why are Medicare 
health maintenance organizations no longer available? It is not an easy 
question to answer because the issue is a complex one and there is no 
simple explanation.
  Today I would like to share with Members my understanding of some of 
the major reasons why HMOs have decided not to renew their plans in 
central Florida and elsewhere in this country. Thus far this action has 
affected over 440,000 Medicare beneficiaries across this country.
  Mr. Speaker, the Balanced Budget Act of 1997 restructured the system 
for setting the rates by which Medicare pays HMOs. The Balanced Budget 
Act may have been overly ambitious in setting its deadlines and these 
ambitious deadlines may be having the opposite effect. HCFA, the Health 
Care Financing Administration, created numerous problems by issuing 
interim final regulations that contain overly expansive interpretations 
of the BBA and are frankly contrary to congressional intent. HCFA also 
has been rigid in its implementation of the 1997 Balanced Budget Act, 
even though the act called for flexibility in implementing the new 
Medicare choice. Nevertheless, HCFA has chosen to be heavy-handed and 
these regulations have led to less rather than more options and choices 
for Medicare beneficiaries.
  Health plans must also be more flexible to the new Medicare program. 
The new payments, the requirement for implementation of a risk 
adjuster, new patient protections with their emphasis on quality and 
the user fee for providing information to beneficiaries all must be 
taken into consideration. However, Mr. Speaker, the primary question we 
are talking about this morning is the disparity in the payments to the 
various counties. I believe the payment methodology is the main reason 
why payments are falling behind the rate of medical care inflation and 
that is why the HMO plans are leaving the Medicare program.
  In addition, HCFA has decided to implement a new methodology for 
calculating the adjusted community rate (ACR). This is how health plans 
determine the minimum amount of Medicare noncovered benefits that they 
must provide and the premiums that they can charge for such benefits. 
The deadline may have been unworkable under the existing time frame.
  So, in conclusion, Mr. Speaker, I believe that one of the most 
compelling reasons for HMOs leaving was that they were asked to file 
their adjusted community rate, by May 1. It was just not feasible. 
There should have been more flexibility by HCFA. I wrote a letter to 
the HCFA administrator to express my concern about the fact that the 
plans were required to submit proposals by May 1 instead of the 
traditional November 15 deadline based upon the regulations that were 
not issued until mid-June of that year.
  In central Florida, I have found that many of my constituents no 
longer have HMOs. They are concerned, I am concerned, and others of us 
on the Committee on Commerce have expressed deep concern to the 
administrator of HCFA and we are hoping that the flexibility that is 
required in the program will be implemented by the new administrator.
  The plans that withdrew their Medicare HMO coverage indicated they 
did so because of the new filing date for ACR's coupled with the 
knowledge that the risk adjuster proposal being designed by HCFA could 
result in less payments to plans.
  So, Mr. Speaker, for these reasons and others we now must act.
  We need to act in a bipartisan manner to help create real choice in 
Medicare which includes HMO's for all of our senior citizens.

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