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Medicare program; qualified health maintenance organizations: technical amendments--HCFA. Final rule with comment period.

This rule clarifies and updates portions of the HCFA regulations that pertain to Federal qualification and continued regulation of health maintenance organizations (HMOs), inclusion of qualified HMOs in employee health benefits plans, and the administration of outstanding loans and loan guarantees that were awarded before October 1, 1986, under the Public Health Service Act (PHS Act). This rule is part of a special project to clarify and update all of 42 CFR part 417, which contains the regulations applicable to all entities that provide prepaid health care, that is, HMOs, CMPs (competitive medical plans) and HCPPs (health care prepayment plans). These are technical and editorial changes that do not affect the substance of the regulations. They are intended to make it easier to find particular provisions, to provide overviews of the different program aspects, and to better ensure uniform understanding of the rules.

Centers for Medicare and Medicaid Services, U.S.↗

Medicare program; payments to HMOs and CMPs and appeals: technical amendments--HCFA. Final rule with comment period.

This rule clarifies and updates portions of the HCFA regulations that pertain to payment for services furnished to Medicare enrollees by health maintenance organizations (HMOs) and competitive medical plans (CMPs); appeals by Medicare enrollees concerning payment for those services; and appeals by HMOs and CMPs with regard to their Medicare contracts. This rule completes the special project aimed at the total technical revision of part 417. Part 417 contains the regulations applicable to all prepaid health care organizations, that is, HMOs, CMPs, and health care prepayment plans (HCPPs). These are technical and editorial changes that do not affect the substance of the regulations. They are intended to make it easier to find particular provisions, to eliminate needless repetition and remove obsolete content, and to better ensure uniform understanding of the rules.

Centers for Medicare and Medicaid Services, U.S.↗

Medicare program; HCFA market research for providers and other partners--HCFA. General notice with comment period.

This notice seeks public comments on information needs of Medicare risk contract health maintenance organizations (HMOs) and competitive medical plans (CMPs) and communication strategies that could improve the effectiveness and efficiency of the risk contract program. Under section 4002 of the Balanced Budget Act of 1997, and with the implementation of the Medicare + Choice program, all HMOs and CMPs will contract with HCFA under requirements of the Medicare + Choice program. The information sought in this notice will facilitate future changes in the contracting program, as well as improve information needs and communication strategies under the current risk program. Respondents should prioritize issues raised in the preliminary research and identify and additional areas of information needs and best communication strategies. This initiative is one component of our overall effort to develop a comprehensive communication strategy with Medicare providers and HMOs/CMPs and to develop innovative approaches that will assist all program participants to obtain and use information in the most accessible and effective manner. Preliminary research on the information needs of Medicare risk contract HMOs and CMPs and effective communication strategies has identified a number of areas in which we could provide additional information and potential strategies for communicating that information effectively.

Aged↗

Medicare and Medicaid programs; requirements for physician incentive plans in prepaid health care organizations--HCFA. Final rule.

This final rule amends the regulations established by a March 27, 1996, final rule with comment period. The regulations govern physician incentive plans operated by Federally-qualified health maintenance organizations and competitive medical plans contracting with the Medicare program, and certain health maintenance organizations and health insuring organizations contracting with the Medicaid program. As explained in the March 27 rule, the provisions of this final rule will also have an effect on certain entities subject to the physician referral rules in section 1877 of the Social Security Act.

Capitation Fee↗

Privatization and bidding in the health-care sector.

Public provision of health care, as under Medicare and Medicaid, traditionally "privatized" major production decisions. Providers of care, largely private physicians and hospitals (but also public hospitals), made significant decisions about public beneficiaries' access to care, the quality and quantity of individual services, and the prices to be paid. The result was high access and quality/quantity, but also high program spending, which has prompted a reassertion of public budgetary control. Newly activist program administration is using various mechanisms to promote economizing. Unable and unwilling to specify standards of public access or quality/quantity too overtly, administration instead seeks to squeeze prices--mainly through administrative price setting but also through competitive bidding and voucherlike arrangements. Under such new incentives, major choices that in many non-American systems would be public are here "reprivatized" to be resolved out of the limelight by beneficiaries, traditional providers, or new intermediaries like Competitive Medical Plans.

Competitive Bidding↗

HMOs in the Medicare market. Part 1.

Final governmental regulations permitting all qualified health maintenance organizations and competitive medical plans to enter the Medicare market were published early last year. This action has created a significant need for information on marketing strategies and operational issues pertaining to this new area. Mathematica Policy Research was awarded a grant by HCFA to evaluate the Medicare Competition Demonstration program undertaken by 26 HMOs and CMPs between August 1982 and December 1984, with a focus on the marketing strategies and operational decisions and changes during the initial period of entering the Medicare market. In this first part of a two-part report, information is provided on the marketing approaches developed by the demonstration HMOs as they dealt with, in most cases, a large influx of elderly enrollees.

Advertising↗

The entry of HMOs into the Medicare market: implications for TEFRA's mandate.

The Tax Equity and Fiscal Responsibility Act of 1982, under rules implemented in April 1985, creates incentives for HMOs and other competitive medical plans to significantly expand their participation in Medicare on an at-risk basis. In an attempt to gauge the likely response of HMOs to the new incentives, we examined data on a census of HMOs operating in 1982 to look for differences between HMOs that entered the Medicare program at risk under the earlier National Medicare Competition demonstration and those that did not. The most consistent difference we found was that HMOs in areas with a high adjusted average per capita cost were more likely to enter the Medicare market. HMOs with prior experience serving Medicare beneficiaries were also more likely to join the demonstration, as were HMOs that were federally qualified. No other HMO characteristics appeared to significantly affect the likelihood of entry.

Catchment Area, Health↗

Medicare risk contracting: determinants of market entry.

The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 made it more attractive for health maintenance organizations (HMOs) and other competitive medical plans to enter into risk contracts with Medicare. Since the start of the TEFRA program in April 1985, more than 160 HMOs have had risk contracts with Medicare under the program. An investigation of factors associated with TEFRA risk-market entry at the end of 1986 revealed that high adjusted average per capita cost payment levels, prior Medicare cost-contract experience, and prior Federal qualification were the most important factors distinguishing market entrants from nonentrants.

Capitation Fee↗

Medicare risk contracting. Lessons from an unsuccessful demonstration.

The Tax Equity and Fiscal Responsibility Act of 1982 provided a full-risk Medicare capitation financing option for health maintenance organizations and competitive medical plans. Two rounds of demonstrations were conducted, followed by the publication of final regulations in January 1985. The first-round demonstration at Marshfield, Wis, was operational for 28 months. Thirty-seven percent of all resident beneficiaries enrolled. Aggregate losses exceeded $3 million (11.6% of revenue). Management implemented increasingly more stringent utilization review. Overall hospital utilization declined 261.7 days per 1000 from fiscal year 1981 to 1982; nonetheless, federal reimbursement was insufficient to meet program costs and the demonstration was terminated. The central reimbursement method used in Medicare risk contracting (adjusted average per capita cost) does not adequately control for enrollment selection, unmet medical need, or recent regional cost variations. Reimbursement set at 95% of estimated fee-for-service costs does not recognize, and in the long run will not support, an efficiently operating delivery system.

Centers for Medicare and Medicaid Services, U.S.↗

Why there will be little or no physician surplus between now and the year 2000.

Most observers think that by the year 2000 there will be a considerable surplus of physicians in the United States. In this paper we present a new framework for estimating the future balance between supply and demand with respect to physicians' services. Our analysis suggests that even if competitive medical plans serve approximately half the population by the year 2000, there will probably be little or no physician surplus. Moreover, if a slight surplus should occur, it is likely to be largely erased by increased involvement of physicians in administrative activities and a variety of nontraditional clinical activities that currently occupy little of a physician's time. Our prediction of little or no surplus could be altered appreciably, however, by two forces that would have opposite effects: an acceleration of technological change would increase demand beyond our projections, whereas widespread rationing of beneficial services would constrain the demand for physicians' services.

Forecasting↗

Service use and costs for Medicare beneficiaries in risk-based HMOs and CMPs: some interim results from the National Medicare Competition Evaluation.

The Health Care Financing Administration (HCFA) initiated the Medicare Competition Demonstration in 1982 in anticipation of congressional intent to establish a national program. Interim results on the 1984 service use and cost experience of the health maintenance organizations (HMOs) and competitive medical plans (CMPs) participating in the demonstrations indicate that Medicare enrollees in the demonstration experienced a median of 1,951 hospital days per 1,000 person years, 57 per cent of the median of 3,432 days per 1,000 in the local markets from which the plans drew enrollment. Independent practice association (IPA) HMOs experienced higher hospital use rates than staff and group model HMOs. These comparisons are not adjusted for various risk factors, the absence of which were likely to favor the demonstration plans. Plans with lower hospital service use were federally qualified and had been operating for more than five years. The median total annual revenue per enrollee across all plans was $2,312, compared to median annual expenses per enrollee of $2,250. The distribution of median annual expenses per enrollee by major category of expense was: institutional expenses ($1,038/enrollee), medical expenses ($720/enrollee), supplemental services expenses ($154/enrollee), and administrative and other expenses ($295/enrollee). Future analysis, using beneficiary-level data, will examine the impact of the demonstration and the nature and extent of evident biased selection and will compare the quality of care in the demonstrations to that in the fee-for-service sector.

Aged↗

Neurology referral patterns.

To examine the indications for referral of patients to neurologists, a survey was conducted of 88 such referrals by general internists in an HMO. In approximately one third of all referrals, the neurologist's advice regarding diagnosis and treatment was of minor or no importance. Instead, such referrals were often responsive to patient and family demands or focused upon the necessity for neuroimaging, even when the likely diagnosis and required treatment were already evident. Referral rates in HMO practice are strongly influenced by the practice styles of primary care providers. The authors conclude that a case manager ("gatekeeper") mechanism in competitive medical plans that excludes patient self-referrals may have a greater effect upon total (and surgical) specialty care, compared with the volume of services provided by medical specialists such as neurologists.

Data Collection↗

Medicare program; offset of Medicare payments to individuals to collect past-due obligations arising from breach of scholarship and loan contracts--HCFA. Final rule.

This final rule sets forth the procedures to be followed for collection of past-due amounts owed by individuals who breached contracts under certain scholarship and loan programs. The programs that would be affected are the National Health Service Corps Scholarship, the Physician Shortage Area Scholarship, and the Health Education Assistance Loan. These procedures would apply to those individuals who breached contracts under the scholarship and loan programs and who-- Accept Medicare assignment for services; Are employed by or affiliated with a provider, Health Maintenance Organization, or Competitive Medical Plan that receives Medicare payment for services; or Are members of a group practice that receives Medicare payment for services. This regulation implements section 1892 of the Social Security Act, as added by section 4052 of the Omnibus Budget Reconciliation Act of 1987.

Centers for Medicare and Medicaid Services, U.S.↗

Medicare and Medicaid programs; OMB control numbers for collection of information requirements contained in HCFA regulations--HCFA. Final rule and correction notice.

In accordance with Office of Management and Budget (OMB) regulations at 5 CFR Part 1320, implementing the provisions of the Paperwork Reduction Act of 1980, this final rule adds additional OMB control numbers to the display in 42 CFR Chapter IV of currently valid OMB control numbers for approved "collection of information" requirements contained in HCFA regulations. In addition, we are announcing a correction to a statement made concerning information collection requirements in final rules published on January 10, 1985 at 50 FR 1313, titled, Payment to Health Maintenance Organizations and Competitive Medical Plans.

Centers for Medicare and Medicaid Services, U.S.↗

Are CMPs right for your medical group?

The competitive medical plan (CMP) is a newly created alternative delivery system. Qualified organizations that are found to be "eligible" CMPs can negotiate contracts with HCFA to serve Medicare recipients under a cost contract or risk contract.

Centers for Medicare and Medicaid Services, U.S.↗

Pricing strategies for capitated delivery systems.

This article discusses alternative methods for establishing a fairer pricing mechanism for Medicare recipients who enroll in health maintenance organizations and other competitive medical plans. The current method, based upon the adjusted average per capita cost, is inadequate because it fails to adjust premium levels for differences in health status; it establishes undesirable incentives that may lead to underservice, and it is tied to costs in the fee-for-service system. Alternative methods would incorporate health status, have Medicare share the risk with HMO's, and base payment on HMO experience.

Aged↗

Medicare program; interest calculation. Final Rule.

This final rule changes the way we calculate interest on Medicare overpayments and underpayments to providers, suppliers, health maintenance organizations, competitive medical plans, and health care prepayment plans to be more reflective of current business practices. This change reduces the amount of interest assessed on overpayments and underpayments and simplifies the way the interest is calculated. This change in the way we calculate interest also applies to Medicare Secondary Payer debt.

Centers for Medicare and Medicaid Services, U.S.↗

Patient satisfaction among elderly enrollees and disenrollees in Medicare health maintenance organizations. Results from the National Medicare Competition Evaluation.

More than 1 million Medicare beneficiaries have enrolled in health maintenance organizations (HMOs) and competitive medical plans under a new program in which beneficiaries can freely enroll in a risk-based HMO in their area or remain in the fee-for-service sector under Medicare. Based on a randomly selected nationwide sample of beneficiaries, we analyzed differences in patient satisfaction between 2091 beneficiaries who were continuously enrolled in an HMO plan for 1 year and 1000 beneficiaries in the fee-for-service sector. We also studied the reasons for disenrollment. No significant difference in overall satisfaction was found between HMO enrollees and fee-for-service beneficiaries. However, HMO enrollees expressed less satisfaction compared with fee-for-service beneficiaries regarding the professional competence of their health care providers and the willingness of the HMO staff to discuss problems. On the other hand, HMO enrollees were more satisfied than fee-for-service beneficiaries with waiting times and claims processing. Approximately half of the disenrollment from an HMO within 1 year was attributed to misunderstanding the terms of enrollment.

Consumer Behavior↗