Inquiry on Medicare Finds Improper Limits

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http://www.nytimes.com/2004/09/28/politics/28medicare.html

 

September 28, 2004

 

 

Inquiry on Medicare Finds Improper Limits

By ROBERT PEAR

 

WASHINGTON, Sept. 27 - Federal investigators said Monday that the Bush

administration had improperly allowed some private health plans to

limit Medicare patients' choice of health care providers, including

doctors, nursing homes and home care agencies.

 

The investigators, from the Government Accountability Office, also

said that the private plans had increased out-of-pocket costs for the

elderly and had not saved money for the government, contrary to

predictions by Medicare officials.

 

The study, the most comprehensive assessment of a demonstration

project that the administration has described as the best hope for

Medicare's future, focused on the program's experience with a form of

managed care known as preferred provider organizations, the type of

health insurance most popular among people under 65.

 

Medicare is spending $650 to $750 a year more for each beneficiary in

such private plans than it would have spent if the same people stayed

in traditional Medicare, the investigators said.

 

In negotiations over the Medicare bill last year, the administration

pressed for more money and authority to foster the growth of preferred

provider plans, saying they would be more efficient and would save

money over time. Administration officials reiterated that view on Monday.

 

After reviewing the report, Dr. Mark B. McClellan, administrator of

the federal Centers for Medicare and Medicaid Services, insisted that

private plans were " an attractive option'' that would save money and

improve coverage for beneficiaries.

 

The accountability office, a nonpartisan investigative arm of

Congress, said the administration " exceeded its authority'' by

allowing P.P.O.'s to limit patients' choices of providers offering

skilled nursing and home health care, dental care and routine physical

examinations.

 

In many cases, it said, the private plans covered such services only

when beneficiaries used health care providers designated by the plans

themselves. Beneficiaries who went outside the network of preferred

providers were often " liable for the full cost of their care,'' the

report said.

 

" By law,'' it said, " these plans should have been required to cover

all services in their benefit packages even if those services were

obtained from providers outside the plans' provider networks.'' But,

it said, the administration waived this requirement for 29 of the 33

preferred provider plans, allowing them to deny coverage for some

services obtained outside their networks.

 

The administration " did not have the authority to allow plans to

restrict enrollees' choice of providers'' as it did, the report said.

 

Normally, preferred provider plans encourage patients to use certain

doctors and hospitals, but allow them to use other health care

providers for an additional cost.

 

The accountability office, formerly the General Accounting Office,

found that the administration had " improperly waived the requirement''

for P.P.O.'s to let Medicare patients choose their health care providers.

 

The findings are a significant setback for the administration, which

wants to triple enrollment in private plans in five years. About 4.7

million of the 41 million Medicare beneficiaries, or 11.5 percent, are

now in private plans, most of them H.M.O.'s.

 

In January 2003, the Bush administration began the demonstration

project encouraging beneficiaries to join P.P.O.'s, which in theory

offer more choice than H.M.O.'s.

 

Ten million beneficiaries were eligible for the preferred provider

plans, but only 105,000 had enrolled as of last month, the report said.

 

To comply with the law, the accountability office said, Medicare

officials should immediately instruct these private plans to provide

coverage for " all plan services furnished by any provider'' willing to

accept their payments.

 

Dr. McClellan said, " We will comply with the recommendations made in

the report.'' Moreover, he said, the government will work with private

plans to ensure they follow the law.

 

Senator Max Baucus of Montana, the senior Democrat on the Senate

Finance Committee, who requested the report, said the administration's

claims about private plans were " not based on reality.''

 

Mr. Baucus, who voted for the new Medicare law, said, " While I believe

in choice, I also believe that private plan options, including

P.P.O.'s, should be added to Medicare only if they bring value to

beneficiaries and taxpayers.'' Contrary to assertions by Medicare

officials, Mr. Baucus said, auditors found that P.P.O.'s " are more

expensive, to both taxpayers and enrollees.''

 

To draw P.P.O.'s into Medicare, the report said, the Bush

administration offered to pay them more, waived stringent standards

for the quality of care and removed limits on the costs that

beneficiaries might be required to pay. As a result, it said, these

plans were " subject to no statutory or regulatory limits on

cost-sharing'' for beneficiaries.

 

The report was the fourth in two years to find that the administration

had skirted federal law in pursuing health policy objectives. In July

2002 and last January, the accountability office said the

administration had improperly allowed states to divert money from the

Children's Health Insurance Program to provide coverage for childless

adults.

 

Earlier this month the auditing agency said that the Bush

administration had illegally withheld data from Congress on the

projected cost of the new Medicare law.

 

The demonstration project, offering P.P.O. plans in 214 counties, runs

through 2005. Medicare officials hope to offer such plans in all parts

of the country in 2006.

 

In the future, Dr. McClellan said, " P.P.O.'s will be a familiar and

popular choice.''

 

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