Medicare Compliance & Reimbursement

Many won't be able to comply until 2007.

Health plan providers see great possibilities in the recent Medicare Advantage regional preferred provider organization initiative, but they also see significant hurdles to overcome.

The initial compliance hurdles will force many plans to wait awhile to realize their goals.

The regional PPOs are, "if not unique, at least a distinctive opportunity" for insurers, according to Robert Hurley, associate professor in the Department of Health Administration at Virginia Commonwealth University. 

In a new study published in the journal Health Affairs, Hurley and co-authors from the Center for Studying Health System Change take a close look at the mixed reviews health plan executives are giving to Medicare's PPO project. CMS Projects Positivity On MAs Most health plans will respond to the program by marketing several different packages to attract a wider range of potential members within regions, Hurley tells MLR.

As for Medicare's policy goal of increasing the options available to beneficiaries, "I think the government is very pleased with the number of organizations who will be coming to market," avers Jane Galvin, senior consultant for regulatory affairs with the Blue Cross Blue Shield Association.

These expanded options, though, will not likely come solely or even primarily from the regional PPO market. Although plans have embraced the PDP initiative enthusiastically, they're wary of the PPOs. "I think the overall response is probably greater from the local market perspective than from the regional, at least in 2006," Galvin acknowledges. Trio Of Obstacles Holding Providers Back What's holding health care managers back from trying to take full advantage of the regional PPOs? There are three crucial issues.  For most companies, the regional PPOs require a comprehensive change to network infrastructure. Plans have to look at exactly how much needs to change to accommodate the larger regions, argues Galvin.

They need to determine how strong their networks are, how they can meet CMS's network adequacy standards, and how much effort they have "to put into enrolling an entire region of people as opposed to selected counties or even the state," she explains.
  Related to network capability is the question of physician participation across a large geographic area. Cultivating a broader network will demand negotiation of provider contracts, and that puts some bumps in the road.

For one thing, because the health plans urgently need their networks filled out, physicians can leverage better terms for their own participation, explains Gorman.

"They can say, 'Sure, we'll be in your network for 200 percent of the Medicare fee schedule,' and that's unsustainable from a cost standpoint," he says.
  Reconciling the funding and the costs is the third challenge confronting plans entering the regional PPO market.  

The disparity of bene populations across regions makes it difficult [...]