Congress nixes competitive bid pilot
Congress nixes competitive bid pilot
HCFA looks for new sites
Admitting "we got rolled over politically," Health Care Financing Administration chief Bruce Vladeck says HCFA and an HMO-led coalition of health care groups have agreed not to proceed with a federal pilot to test competitive bidding among Denver-area Medicare HMOs.
Congress, however, has kept the overall project alive by authorizing similar pilots in at least four markets that HCFA hopes to announce next year. Even so, most Capitol Hill insiders expect another round of lawsuits and political maneuvering when HCFA attempts to activate these authorized pilots.
"I’m afraid most members of Congress only support competitive Medicare pricing until it’s about to be instituted in their district," Vladeck observes.
Karen Ignagni, president of the American Association of Health Plans (AAHP), agrees. "No one is stepping up and asking that this demonstration come to their state," she notes.
Under the cancelled pilot, HMOs serving Medicare patients in the Denver area had to submit bids to HCFA specifying the services they planed to provide to beneficiaries at a set monthly fee. HCFA would have then blended and averaged the proposals to devise the the reimbursement rate it would have paid all participating HMOs.
HCFA estimates the pilot would have shaved HMO Medicare costs in Denver by 10% to 12%, while providing beneficiaries additional benefits with no increase in premiums.
The proposal had the Denver medical community up in arms, prompting charges that it would cut payment rates for providers, destroy most existing contract arrangements between insurers and physicians, and create a logistical nightmare for actuarial accountants and medical business offices (see Physician’s Payment Update, April 1997, pp. 62-64).
AAHP, in concert with the Colorado HMO Association, Kaiser Foundation Health Plan, the Colorado Medical Society, and other groups, challenged the HCFA pilot in court last spring, seeking a temporary injunction blocking its implementation.
After the U.S. District Court agreed to the injunction, Republican Colorado Senator Ben Nighthorse Campbell convinced Congress to to pass legislation stopping HCFA from spending any monies on the competitive bidding pilot until Oct. 1.
Opponents called the pilot "arbitrary and capricious" because of the way it organized and designed the bidding process without what they claim was an appropriate notice and comment period.
The pilot flouted "all procedures that we have been accustomed to following in the Medicare program," said Ignagni. In turn, she argues that it would have been useful to experiment with such radically different procedures.
Ignagni says the HMO industry would like to continue to compete for Medicare enrollees in the same basic way it currently does. However, critics contend this unnecessarily increases related costs.
Another alternative pilot project concept being floated, however, could focus on ways to give potential enrollees a way to objectively review and evaluate the programs offered by their local HMOs, similar to the open enrollment season federal workers have to review the different health care plans available to them.
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