Nobody Wants M+C To Die, So Why Can’t We Make It Work?

John A. Marcille

Remember the op-ed pieces back in 1997 when the Balanced Budget Act was passed? Many of them warned that such a worthy goal could not be achieved without pain. Then the economic boom really took hold, and we thought that the surplus could help us avoid making many of the tough choices.

“Congress didn't realize how all the components of the technical formula were going to interact,” says Karen Ignagni, president of the American Association of Health Plans, who is featured in Senior Editor Frank Diamond's cover story.

Two examples: The blended-rate formula that BBA uses for M+C is calculated by combining the national-average Medicare+Choice capitation rate and the local area specific rate. The problem is that the national-average rate is weighted based on total Medicare enrollment across all counties, even though not all counties have Medicare+Choice enrollees. The AAHP wants the blend to be based on M+C enrollment, not Medicare fee-for-service enrollment.

The BBA also requires that M+C payments for patients treated at academic medical centers be paid, not to the health plans, but directly to the centers. How would the plans recover the money? The theory was that they'd do so by negotiating lower payment rates to the centers for such services rendered. What was not foreseen was the huge increase in hospital mergers and the greater bargaining power vis-à-vis health plans that resulted.

There's an effort to save M+C by increasing payments to the program, so that they at least equal the increases seen in fee-for-service Medicare. This is much needed for the sake of the poor elderly who have come to rely on M+C as their best shot at quality health care. Still, money alone can't solve all of Medicare+Choice's woes, and structural problems will need to be addressed.