Medicare Compliance & Reimbursement

Medicare+Choice plans that have wanted to get in on Medicare's social HMO demonstration may never get that chance - and plans participating in other demonstrations are wondering if their days are numbered.

The Medicare Payment Advisory Commission voted April 24 to recommend that Congress begin rolling the SHMO demo programs into the greater M+C program at the end of the year. SHMOs were launched in 1985 as a way to provide enhanced care to frail, chronically ill, functionally impaired seniors and help them remain independent and avoid institutionalization. Participating plans receive additional Medicare payments and "frailty adjustments" for these services. But that would come to an end if Congress follows MedPAC's advice.

According to the plan, the add-on payments would be phased out over the next four years, researcher Tim Greene explained at the meeting. MedPAC is making the decision because Medicare is supposed to be a national program with a uniform benefit, and giving special payments to four plans - and giving special benefits to the members of those four plans - creates inequities, Greene said. SHMOs were only intended to be a demonstration, Greene noted, and they demonstrated that the participating plans "did not effectively integrate acute and long-term care."

But that's an unfair criticism based on data from an old study, charges Dr. Timothy Schwab, Chief Medical Officer at Long Beach, CA-based SCAN Health Plan, one of the SHMOs. Policy-makers have been overly influenced by a study from 1989, Schwab says, and "we are a drastically different plan now."

Despite MedPAC's recommendations, the SHMO Commission is working with Congress to make the program permanent, as a specialty M+C plan, according to Valerie Wilbur, principal of the Wilbur Group in Washington. Wilbur tells MCR that "it would be very difficult for us to move into the standard M+C program for two reasons." First of all, the special benefit structure of SHMOs allows them to offer, in addition to Part A and Part B services, extended-care benefits such as home- and community-based care, adult day care, personal care and medical transportation. "To just roll us into the regular M+C program would take away all our uniqueness," Wilbur says.

Secondly, SHMOs treat a particularly infirm - and therefore costly - population, and it could be impossible for them to care for these benes under the traditional Medicare program, Wilbur says. "Even if we dropped all our extra enhanced benefits, we wouldn't be able to afford to provide even part A and part B services to the people in our plans because we have so many people who are nursing home certifiable." Most SHMOs treat patient populations that are approximately 25-percent nursing-home certifiable - people whom the state Medicaid agency has determined are eligible to go into nursing homes due to poor health status. That percentage is far higher than most traditional M+C plans, Wilbur notes.

"It's obviously a strong competitive disadvantage for us in the marketplace," Schwab observes. "We would have to change things drastically to survive."

Not only would the roll-in be bad news for the four plans currently participating in the SHMO program, it could portend future moves to kill Medicare demo programs, says John Gorman, president of Gorman Health Group in Washington. Plans that participate in the Program for All-inclusive Care for the Elderly, a program that benefits dual-eligibles, have reason to fear that the PACE program may be similarly rolled into M+C, Gorman warns.

"We were definitely disappointed" by Med-PAC's recommendation, Wilbur says. She notes that SHMOs have been contacted in the past by other M+COs that have been interested in participating, but weren't allowed to join because the program has only four allotted slots. Now, even those slots could be gone by the end of the year.