Medicare Compliance & Reimbursement

In 2004, managed care plans serving the majority of Medicare+Choice beneficiaries will again see only the minimum two percent increase guaranteed by federal law, the Centers for Medicare & Medicaid Services announced in preliminary estimates March 28.

M+C plans in most counties will see bigger increases: In counties where reimbursement is determined by the statutory "floor" amount, for elderly beneficiaries plans will see increases from $547.54 to $592.29 for any area in a metropolitan statistical area with a population of at least 250,000, and from $495.39 to $535.88 for other areas. However, M+C enrollees are concentrated in nonfloor counties that get only the two percent increase.

CMS also announced that, in 2004, M+C reimbursements will for the first time be risk-adjusted to reflect diagnosis data from inpatient, outpatient, and physician settings. Payments have previously been adjusted based only on inpatient data, and CMS said the new methodology "is expected to increase payments to plans that care for the sickest beneficiaries - those patients who stand to gain the most from managed care's focus on coordinating care."

From 2000 to 2003, risk-adjustment was applied to 10 percent of plan reimbursements. In 2004, 30 percent of payments will be risk-adjusted, with the amount rising to 100 percent between 2004 and 2007.

The notice also included provisions "to ensure that the agency pays accurately for treating frail elderly enrolled in specialty plans," including the Program for All-inclusive Care for the Elderly. In 2004, 10 percent of PACE payments will be adjusted by a "frailty adjuster" based on activities of daily living, such as dressing, eating, and walking; the adjusted portion will rise to 100 percent in 2008.