Medicare Managed Care: Enrollment Growth Underscores Need to Revamp HMO Payment Methods

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 1995-07-12 monographic deposited born digital GA 1.13:T-HEHS-95-207 https://www.govinfo.gov/app/details/GAOREPORTS-T-HEHS-95-207 P0b002ee1803a3a4d f:the95207 DGPO 2010-08-12 2011-03-24 GAOREPORTS-T-HEHS-95-207 machine generated eng fdlp REPORT GAOREPORTS-T-HEHS-95-207 T-HEHS-95-207 Health maintenance organizations Payments Beneficiaries Health care programs Medical services rates Risk management Health insurance cost control Health services administration Health care cost control Medicare Risk Contract Program Medicare Health Care Prepayment Plan Medicare Program Arizona CalPERS Health Benefits Program (CA) Testimony HEHS Medicare Managed Care: Enrollment Growth Underscores Need to Revamp HMO Payment Methods Rapid growth in the number of Medicare beneficiaries in health maintenance organizations (HMO) increases the urgency of correcting rate-setting flaws that result in unnecessary Medicare spending. By not tailoring its HMO capitation payment to how health or sick HMO enrollees are, the Health Care Financing Administration (HCFA) cannot realize the savings that private-sector payers capture from HMOs. Two lessons can be learned from GAO's review of ways to fix Medicare's HMO capitation payments. First, a multipronged approach to rate setting makes sense. The large disparities in market conditions between states call for solutions keyed to market conditions. Second, with respect to achieving the promise of such initiatives, details matter. How these strategies are designed and implemented could mean the difference between success and failure. GAO believes that in the short term, HCFA can overcome its capitation problem by introducing a better health status risk adjustor. HCFA should also promptly test competitive bidding and other promising approaches to setting HMO rates that reduce Medicare costs. https://www.govinfo.gov/content/pkg/GAOREPORTS-T-HEHS-95-207/html/GAOREPORTS-T-HEHS-95-207.htm GAO/T-HEHS-95-207 https://www.govinfo.gov/app/details/GAOREPORTS-T-HEHS-95-207 Testimony GAO/T-HEHS-95-207; Medicare Managed Care: Enrollment Growth Underscores Need to Revamp HMO Payment Methods; Health maintenance organizations Payments Beneficiaries Health care programs Medical services rates Risk management Health insurance cost control Health services administration Health care cost control Medicare Risk Contract Program Medicare Health Care Prepayment Plan Medicare Program Arizona CalPERS Health Benefits Program (CA)