Medicare Compliance & Reimbursement

But the real test will come when CMS releases payment information next month. Health plans in California, Florida and New Jersey are thrilled, but those in Massachusetts, Illinois and Oregon are grumbling.

The Centers for Medicare & Medicaid Services made its long-awaited announcement on the region sizes for Medicare Advantage PPOs, and for health plans, the news was either good or bad depending on what state they're in. Both America's Health Insurance Plans andthe Blue Cross Blue Shield Association of America had asked that CMS designate 50 regions - one for each state - but CMS instead has designated only 26. Eleven states were fortunate enough to be named as their own region, but other states are part of larger regions.

"Any way you look at this thing, it was a shocker," says John Gorman, president of Gorman Health Group in Washington. "It didn't end up looking anything like anybody had anticipated." Gorman describes CMS's decision as being typical of its approach throughout Medicare Advantage implementation: "firing a shot down the middle and satisfying pretty much nobody completely."

What it means: Health plans in single-state regions will be able to market a regional PPO product without having to do much tinkering with their current Medicare products. But health plans in states that are part of multi-state regions would need to find a way to create a product that would work in states in which they may never have done business before.

"The obvious winners are the 11 states that were designated stand-alone regions," Gorman says. "Everyone else is scratching their heads wondering if they can make this thing work."

There are only two ways a plan in a multi-state region could participate: if the plan was a large national or regional plan that was already doing business in the relevant states; or if a plan in one state formed a joint venture with plans across the border.

As a result of the new regs, "the big boys are much better positioned to be regional PPOs than the little boys," says Gary Donner, principal with MMC 20/20.

But even larger plans will have trouble dealing with some of the bigger multi-state regions. One region, for example, consists of Connecticut, Massachusetts, Rhode Island and Vermont. Those states have very different providers, Gorman notes. And it can be challenging to get decent contracts signed in a predominantly rural state like Vermont.
 
Will Joint Ventures Succeed? Forming joint ventures will be "a major challenge" for health plans, says Alissa Fox, executive director of policy for BCBSA.

Plans in multi-state regions will need to get together and mutually decide if they want to form a new venture, hammer out product details and benefits, and decide how to share risk, Fox says. Plans have their [...]