Medicare News
| For Immediate Release: | Contact: |
| Thursday, January 30, 1997 | CMS Office of Public Affairs 202-690-6145 |
For questions about Medicare please call 1-800-MEDICARE or visit www.medicare.gov. |
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HCFA CHOOSES DENVER FOR TEST OF MANAGED CARE COMPETITON
The Health Care Financing Administration announced today that it will test the effects of greater market competition among Medicare managed care plans in the metropolitan Denver area. The Medicare Managed Care Competitive Pricing Demonstration project will use competitive bidding to set payment rates. The project also will help Medicare beneficiaries to be more informed consumers, which will foster competition among managed care plans.
Denver has six managed care plans participating in the Medicare program, and they have enrolled more than one-third of the area's Medicare beneficiaries. Denver's managed care plans are paid slightly higher than the national average under Medicare's current payment system.
The demonstration will test how Medicare can take advantage of competitive market forces in setting the rates it pays managed care plans. Plans will submit bids for providing Medicare benefits, and these bids will be used to set the rate Medicare pays. The bidding process will begin later this year, and the new rates will take effect by 1998. Currently, Medicare sets these rates through a statutory formula based on costs in the fee-for-service Medicare program. This method has long been criticized for ignoring the potential of competition among managed care plans to hold down Medicare costs.
The demonstration will strengthen competitive forces by improving and increasing the amount of information available to Medicare beneficiaries when choosing among managed care and fee-for-service options. Beneficiaries will receive special information handbooks and detailed comparisons of all options available to them. Beneficiaries also will be able to call, toll-free, a special counseling center or attend a HCFA-sponsored educational seminar.
"This expanded information will help Medicare beneficiaries to be smart consumers," said HCFA Administrator Bruce C. Vladeck. "It should greatly improve their ability to choose the best health care option to meet their individual needs -- whether it is a managed care plan or fee-for-service."
Under the demonstration, which is expected to last three years, Medicare beneficiaries will have a guaranteed open enrollment period, slated for the Fall of 1997, during which they will be able to enroll in any of the local Medicare managed care plans. A special contractor, not affiliated with any of the plans, will be available to assist beneficiaries in choosing among and enrolling in managed care plans. Beneficiaries who want to remain in Medicare's fee-for-service program or who are already enrolled in a Medicare managed care plan and want to remain in that plan will not need to take any action to retain their existing arrangement.
