Voiding of Medicare Price Hike Delayed
More than 100,000 Medicare beneficiaries in San Bernardino, Riverside and Kern counties will pay an extra $20 a month for Medicare coverage starting next month because the federal government will not allow their health maintenance organization--Secure Horizons--to cancel a scheduled price increase.
The federal government says Secure Horizons’ petition to cancel planned price hikes must be reviewed because it came long after a July deadline for setting next year’s rates.
Medicare beneficiaries are caught in a bureaucratic trap: Under federal rules, the government--seeking to prevent unexpected price hikes--must approve all rate changes for HMOs that, like Secure Horizons, cover people under Medicare. But ironically, the rules are preventing the very consumer protection they were designed to ensure.
Secure Horizons began reviewing its pricing policy this fall after its customers expressed concern about the price increase at a series of public meetings and as Congress began moving to boost future payments for Medicare HMOs.
“Our hope is that it will be rescinded,” Tyler Mason, a spokesman for PacifiCare, the parent of Secure Horizons, said Thursday. The government “has allowed us to make phone calls to our members that we are working on this issue,” he said.
“They indicated to us that at this point we will not hear before Jan. 3,” he said. That means the 100,000 affected Secure Horizons members will face at least one month where they have to pay $20 that the company does not want to collect from them.
PacifiCare originally planned to impose a premium increase of $20 a month on residents of the three counties, where the payment from the federal government for taking care of Medicare beneficiaries is much lower than in Los Angeles and Orange counties.
Payments are based on the average spending for Medicare beneficiaries outside HMOs, and the high reimbursement rates in Los Angeles and Orange counties reflect higher charges by doctors and hospitals. The federal government pays Medicare HMOs $628 monthly in Los Angeles County, $593 in Orange, $519 in Riverside, $522 in San Bernardino and $502 in Kern.
Early last month, according to Mason, PacifiCare contacted the federal regulator that runs Medicare--the Health Care Financing Administration--and proposed dropping the scheduled price increase. Later in the month, Congress gave final approval to a bill to boost Medicare outlays by $16 billion over five years, including nearly $5 billion for HMOs, including Secure Horizons.
Mason said Secure Horizons will “scramble to make things easiest on the membership.” This might include delaying sending out the bills for January, or refunding the money if federal regulators give approval later.
The July deadline for HMOs to submit benefit packages and prices for the coming year helps people enrolled in Medicare because it “establishes a level playing field among HMOs,” said Chris Peacock, a spokesman for the health care financing agency. Setting the rules and rates in July means that beneficiaries will get accurate and timely information when HMOs and the government mail them information in the fall, he said.
Plans are allowed to seek government approval for improving their benefits 30 days after a plan year starts. Presumably, Secure Horizons would be allowed to eliminate the $20 price hike in February, calling the step an improved benefit.
However, Peacock declined to predict whether the price relief would be granted in the case of Secure Horizons. Federal regulators must review all such proposals to be sure they are financially safe. If plans are fiscally sound, “Medicare is happy to improve enhancements of the benefits package,” he said.
HMOs such as Secure Horizons cover about 15% of the 40 million Medicare beneficiaries--those over 65 and the disabled of all ages--nationally. The percentage is much higher in California, about 40%.
The traditional Medicare program allows an enrollee to use the services of any doctor or hospital, paying 20% of covered doctor bills.
HMO Medicare patients, however, must stay within the health plan’s network. In return, the patient gets extra benefits that are not covered by Medicare, such as prescription drugs and 100% payment of a doctor’s bill.
