Medicare Managed Care: Growing Enrollment Adds Urgency to Fixing HMO Payment Problem

United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Health, Education, and Human Services Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1995-11-08 monographic deposited born digital 32 p. GA 1.13:HEHS-96-21 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-96-21 P0b002ee18039fb63 f:he96021 DGPO 2010-08-12 2011-03-23 GAOREPORTS-HEHS-96-21 machine generated eng fdlp REPORT GAOREPORTS-HEHS-96-21 HEHS-96-21 Medicare programs Medical services rates Health maintenance organizations Health insurance cost control Elderly persons Overpayments Medical economic analysis Competition Risk management Medicare Risk Contract Program Arizona Arizona Medicaid Managed Care Program California CalPERS Health Benefits Program (CA) Letter Report HEHS Medicare Managed Care: Growing Enrollment Adds Urgency to Fixing HMO Payment Problem Pursuant to a congressional request, GAO reviewed Medicare payments to health maintenance organizations (HMO), focusing on: (1) current trends in Medicare beneficiary enrollment in HMO; (2) flaws in Medicare's rate-setting method that prevent it from realizing potential savings from HMO; and (3) the Health Care Financing Administration's (HCFA) efforts to test HMO payment reforms.<p/>GAO found that: (1) since 1993, the annual increase in Medicare beneficiary HMO enrollment has exceeded 20 percent; (2) HMO enrollment increases have been concentrated in 15 states with little enrollment growth occurring in the other 35 states; (3) Medicare links HMO payment rates to the average cost of fee-for-service care and fails to adjust HMO payment rates to reflect beneficiaries' health status or local differences in utilization rates; (4) strategies to improve Medicare HMO payments include giving HCFA new authority to use competitive bidding or to negotiate with HMO, modifying the HMO rate-setting formula to include a health status risk adjuster, and requiring larger discounts from HMO in areas where HMO payment rates are too high; (5) HCFA could generate the most savings if it combines all three cost-reduction strategies and tailors the strategy to local conditions; and (6) although HCFA is planning demonstration projects using competitive bidding and improved risk adjustments, HCFA needs to gather and use available data to adjust HMO payments. https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-96-21/html/GAOREPORTS-HEHS-96-21.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-96-21/pdf/GAOREPORTS-HEHS-96-21.pdf GAO/HEHS-96-21 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-96-21 Letter Report GAO/HEHS-96-21; Medicare Managed Care: Growing Enrollment Adds Urgency to Fixing HMO Payment Problem; Medicare programs Medical services rates Health maintenance organizations Health insurance cost control Elderly persons Overpayments Medical economic analysis Competition Risk management Medicare Risk Contract Program Arizona Arizona Medicaid Managed Care Program California CalPERS Health Benefits Program (CA)