HCFA tests Medicare managed care competition

In what could be a precursor for helping to establish the Prospective Payment System (PPS), the Health Care Financing Administration (HCFA) selected Denver as a test site for a competitive bidding site.

The project is called the Medicare Managed Care Competitive Pricing Demonstration project. The goal of the study is to set payment rates based on competitive bidding. Denver was chosen because it has six managed care plans participating in the Medicare program. More than a third of Medicare beneficiaries in the Denver area are enrolled in managed care plans, according to HCFA data. HCFA officials also note that managed care payers in Denver are paid slightly higher than the national average for Medicare services provided.

Participants can enroll beginning in the fall for the three-year project. Managed care plans must present bids later this year, and the new rates will go into effect in 1998. As a result, Medicare beneficiaries will benefit from increased information about health care options, says Bruce Vladeck, HCFA administrator.

Beneficiaries will be provided with handbooks containing comparative information on managed care and fee-for-service plans, notes Vladeck. "The expanded information will help Medicare beneficiaries to be smart consumers. It should improve their ability to choose the best options to meet their individual needs — whether it is a managed care plan or fee-for-service," notes Vladeck.