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Protecting payment levels under Medicare risk-based contracting.
1Proskauer Rose LLP, Washington, DC, USA.
Summary
Medicare beneficiaries in risk-based Health Maintenance Organizations (HMOs) are increasing. To avoid underpayment, HMOs must monitor Medicare payments and challenge inadequate rates due to potential calculation errors by HCFA.
Area of Science:
- Healthcare Policy
- Health Economics
Background:
- Over 3.4 million Medicare beneficiaries are enrolled in risk-based Health Maintenance Organizations (HMOs).
- Enrollment in these plans is projected to double within seven years.
- The Balanced Budget Act of 1997 expanded Medicare contracting to include various plan types.
Purpose of the Study:
- To highlight potential underpayment issues faced by HMOs contracting with Medicare.
- To inform risk-based HMOs about monitoring and challenging Medicare payment determinations.
Main Methods:
- Analysis of Medicare payment calculation requirements under risk-based contracts.
- Identification of common errors in Health Care Financing Administration (HCFA) payment determinations.
Main Results:
- HCFA payment calculations may not accurately reflect the adjusted average per capita cost.
- Errors often arise from using enrollee mailing addresses instead of service area data.
- This discrepancy can lead to underpayment for services provided by HMOs.
Conclusions:
- Risk-based HMOs are susceptible to underpayment from inaccurate Medicare payment calculations.
- Proactive monitoring and challenging of inadequate payment rates by HMOs are crucial.
- Ensuring accurate geographic data in payment calculations is essential for fair reimbursement.