Medicare+Choice Payments

Publication Date: January 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Health

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Abstract:

In 1997, Congress passed the Balanced Budget Act of 1997 (BBA, P.L. 105-33), which included provisions to create the Medicare+Choice (M+C) program. This legislation redesigned the system for setting Medicare payment rates for health maintenance organizations and other private plans that contract with Medicare. The new payment structure is designed to reduce variation in payments across the country by increasing payments in areas where they are traditionally low and slowing the rate of growth in areas with higher payments.

The M+C program also established new rules for beneficiary and plan participation. These new rules were devised to expand health plans to markets where access to managed care plans was limited or non-existent, and to offer new types of health plans in all areas. The M+C program has had limited success at expanding coverage, and the initial moderate growth which increased M+C enrollment has been on a downward turn since 2001.

In 1999, Congress enacted the Balanced Budget Refinement Act of 1999 (BBRA, P.L. 106-113) to address some of the issues arising from the passage of the BBA. The BBRA included changes to the M+C program in an effort to make it easier for Medicare beneficiaries and plans to participate in the program. Further refinements to the M+C program were included in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, (BIPA, P.L. 106-554).

The 107th Congress considered, but was not able to reach agreement on major legislative changes to the Medicare+Choice program. The House passed H.R. 4954 on June 28, 2002, a bill that would have increased M+C payments in 2003 and 2004 and then in 2005 would have created a new Medicare+Choice competition program and a demonstration program. Two bills were introduced in the Senate that would have also made major changes to the M+C program. S. 3018 (introduced by the Senators Baucus and Grassley et al.,) contained similar provisions to H.R. 4954 to increase M+C payments 2003 and 2004. S. 2729 (introduced by Senator Grassley et al. - the tripartisan bill) would have based payments in M+C on competitive bids by plans. Neither bill was passed by the Senate.

This report focuses on M+C payments. For a discussion on the recent trends in Medicare managed care, along with an overview of the M+C program, see CRS Report RL30702, Medicare+Choice.