FOR IMMEDIATE RELEASE
February 12, 1997
No. HL-2
Congressman Bill Thomas (R-CA), Chairman, Subcommittee on Health of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing to examine Medicare Health Maintenance Organization (HMO) enrollment growth and payment policies. The hearing will take place on Tuesday, February 25, 1997, in the main committee hearing room, 1100 Longworth House Office Building, beginning at 9:00 a.m.
In view of the limited time available to hear witnesses, oral testimony at this hearing will be heard from invited witnesses only. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.
BACKGROUND
In recent years, there has been a rapid increase in the number of Medicare beneficiaries choosing to enroll in Medicare risk HMOs. While only 4 percent of eligible beneficiaries were enrolled in 1991, by 1996 this number had climbed to 11 percent. The Congressional Budget Office estimates that over the next decade, this trend will continue. By the year 2007, more than one third of the Medicare beneficiaries are expected to be enrolled in HMOs.
Under its risk contracting program, Medicare pays risk plans based on a county-level per capita monthly rate equal to 95 percent of the adjusted average per capita costs in the Medicare fee-for-service sector. Calculating the rates at the county level based on historical fee-for-service program spending results in wide variation in rates across counties. For example, the 1997 monthly per capita rates range from $221 in one county to $767 in another -- an annual difference of $6,552.
Medicare's county-level payment rates are based on the costs of treating the average beneficiary. The Health Care Financing Administration currently uses a limited set of demographic characteristics to adjust the rates, including gender, age, Medicaid eligibility, institutional status, and employment status (working or non-working aged). Unfortunately, these adjustments do not accurately account for much of the variation in costs. Better risk adjustment methods could reduce Medicare costs and increase the choices available to Medicare beneficiaries.
The President's fiscal year (FY) 1998 budget proposal fundamentally restructures the manner in which HMOs are paid by Medicare and reduces projected payments to HMOs by $34 billion from FY 1998 to FY 2002. The most significant policy change would be to sever the direct link between HMO payment rates and individual county-level fee-for-service spending. The proposal also would blend national and regional rates and institute a payment floor of $350 per month for payments in low-cost counties. Under the President's plan, the calculation of the HMO payment rates would exclude Medicare's special payments for direct and indirect medical education and to disproportionate share hospitals. Beginning in the year 2000, the President's plan would further reduce HMO payment rates by approximately 5 percent across-the-board to account for an "overpayment" which is alleged to occur due to risk selection.
In announcing the hearing, Chairman Thomas stated: "We are encouraged by the growing number of beneficiaries choosing to enroll in private health plans. Clearly, giving Medicare beneficiaries the choice of enrolling in HMOs and other health plans will be a fundamental element of any plan to save Medicare. I am happy to see that the Administration has come to the table with a plan that recognizes that fundamental changes must be made in Medicare's payment system. I look forward to reviewing the details of the Administration's plan."
FOCUS OF THE HEARING
This hearing will focus on the implications of the President's budget proposals on Medicare HMO enrollment and spending. These proposals will be assessed in light of the Medicare recommendations developed for the Congress by the Prospective Payment Assessment Commission and the Physician Payment Review Commission, as well as the policies contained in the Medicare Preservation Act of 1995 and the Balanced Budget Act of 1995.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
Any person or organization wishing to submit a written statement for the printed record of the hearing should submit at least six (6) copies of their statement and a 3.5-inch diskette in WordPerfect or ASCII format, with their address and date of hearing noted, by the close of business, Tuesday, March 11, 1997, to A.L. Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of Representatives, 1102 Longworth House Office Building, Washington, D.C. 20515. If those filing written statements wish to have their statements distributed to the press and interested public at the hearing, they may deliver 200 additional copies for this purpose to the Subcommittee on Health office, room 1136 Longworth House Office Building, at least one hour before the hearing begins.
FORMATTING REQUIREMENTS
Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.
1. All statements and any accompanying exhibits for printing must be typed in single space on legal-size paper and may not exceed a total of 10 pages including attachments. At the same time written statements are submitted to the Committee, witnesses are now requested to submit their statements on a 3.5-inch diskette in WordPerfect or ASCII format.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.
4. A supplemental sheet must accompany each statement listing the name, full address, a telephone number where the witness or the designated representative may be reached and a topical outline or summary of the comments and recommendations in the full statement. This supplemental sheet will not be included in the printed record.
The above restrictions and limitations apply only to material being submitted for printing. Statements and exhibits or supplementary material submitted solely for distribution to the Members, the press and the public during the course of a public hearing may be submitted in other forms.