Pact on PPOs Aimed at Rural Elderly

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Pact on PPOs Aimed at Rural Elderly

By Amy Goldstein, The Washington Post
October 31, 2003

Congressional negotiators struggling to reconcile House and Senate bills to redesign Medicare have tentatively agreed to create a $12 billion fund, not envisioned in either measure, that would allow the government to pay private health plans extra money to enroll elderly patients in regions where managed care is scarce.

The agreement, confirmed yesterday by several sources familiar with the closed-door Medicare negotiations, represents a success for the White House and conservative GOP senators. They have been urging a small group of negotiators to take stronger steps to ensure that preferred provider organizations (PPOs) -- the type of health plans that many Republicans want to become the main form of care for older Americans -- take part in the program.

The proposed $12 billion pool is a comparatively small part of the $400 billion that both chambers have set aside for the next decade to add drug coverage and make other changes to Medicare, the health insurance program for the elderly and disabled. Yet it reflects the GOP's determination to tilt Medicare toward the private sector. The negotiators -- all but two of them Republican, to the consternation of Democrats -- are in their final days of work but are still trying to determine whether other aspects of the legislation would be affordable.

Under the Medicare bills the House and Senate passed in June, the government would invite private health plans to compete to care for patients in different regions of the country. Negotiators have wrestled with how large those regions would be. The Bush administration and many lawmakers favor broad regions so that companies could not bypass patients in rural or other relatively unprofitable places. Health care companies want to operate in smaller geographic areas that more closely match their existing businesses, focused largely on younger patients.

Congress and the administration want a system that proves more successful than an earlier effort to expand the role of private health plans in Medicare through a program called Medicare+Choice. Since that program started in 1997, thousands of patients have been stranded as HMOs have dropped out of Medicare, pared services or charged more. The HMOs said the government did not pay them enough. The pending Medicare bills rely instead on PPOs, but a partisan disagreement lingers over how much they -- as opposed to a government formula -- would determine rates.

Under the tentative agreement, the sources said, the secretary of Health and Human Services would decide when and where the extra payments were needed. The agreement borrows from a White House proposal last month to give HHS permission to increase payments for PPOs already in Medicare but threatening to leave. The proposal also has elements of plans by GOP Sens. Jon Kyl ( Ariz. ) and Don Nickles ( Okla. ), two of the negotiators. They say the program should have more freedom to pay health plans as much as they say they need in any area where health plans have balked at taking part.

In a concession to House Republicans, who had been wary of this idea, the agreement also calls for limits on when and by how much HHS could increase payments.

The move on PPO payments is a small piece of a broader question over how much the traditional, fee-for-service Medicare program should be required to compete for patients against the private health plans.

Yesterday, House Democrats theatrically vented their frustration that the negotiators' chairman, Ways and Means Committee Chairman Bill Thomas (R-Calif.), has not allowed them to attend daily bargaining sessions in his office -- even though three of them are technically members of the Medicare "conference committee" assigned to reconcile the House and Senate versions.

Ways and Means' ranking Democrat, Rep. Charles Rangel (N.Y.), led a delegation of 13 fellow Democrats to Thomas's office, rapped on the door without success and ultimately entered behind one of the two participating Democratic senators.

Less than an hour later, the House Democrats emerged, saying they still are banned from future sessions.

"I came to say, 'Listen, we don't know what you are doing,' " Rangel told reporters. "We couldn't screw up anything more than what we read [is being done] in the paper."