M+C plan county exit decisions 1999-2001: implications for payment policy

The primary legislative response to diminishing private plan participation in the Medicare+Choice (M+C) program since 1999 has been substantial payment increases. Analysis of M+C decisions to continue serving or drop counties from 1999-2000 and 2000-2001 reveals that payment amounts, although important, did not have a consistent impact on these decisions. Plan decisions varied depending on the year and the intention to continue participating in M+C at all. Simulations show that M+C plans were better off, on average, with the payment methodology imposed by the Balanced Budget Act (BBA) of 1997 than under the previous payment system and that large payment increases would increase plan retention.