HMOs fight HCFA over Medicare project

The Colorado HMO Association filed a federal lawsuit in May to keep the Health Care Financing Administration (HCFA) in Baltimore from conducting its controversial Denver Medicare demonstration project.

The proposed demonstration project is designed to reduce Medicare costs. Opponents of the project, however, claim that HCFA unlawfully plans to change the benefit structure affecting seniors who receive Medicare benefits by forcing health maintenance organizations (HMOs) to justify their costs through a complex competitive bidding process. They say that the project may cut seniors’ benefits and cause higher rates and premiums.

HCFA has indicated that it will press on with the demonstration regardless of concerns raised by health plans and consumer groups, and it further proposes to exclude Colorado HMOs that do not participate in the demonstration project from participating in Medicare coverage for three years.

The Colorado HMO Association was joined in the suit by the American Association of Health Plans, the Colorado Medical Society, the Colorado Hospital Association, and the Colorado Association of Commerce and Industry, as well as by five HMOs and Medicare beneficiary Irving A. Barber II. The plaintiffs are asking the federal court to issue an immediate temporary restraining order so HCFA cannot compel the health plans to complete the bidding process.

At press time, no decision had been made. However, if the court issues the order, the next step will be a hearing for a preliminary injunction against HCFA.