Medicare+Choice option gains ground as alternative to HMOs

Private fee-for-service plans offer Medicare rates without the standard managed care rules.

By Markian Hawryluk, AMNews staff. Dec. 10, 2001.

Washington -- Ask physicians to list their biggest headaches, and both Medicare and managed care are likely to top the list. But a new type of Medicare+Choice option that more closely resembles traditional fee for service is winning converts.

The first private fee-for-service plan hit Medicare in September 2000. Now Sterling Option I operates in 25 states and has more than 20,000 enrollees. A second private fee-for-service plan, Humana Gold Choice, will begin operation on Jan. 1, 2002, in DuPage County, Ill. Humana, which modeled its product after the Sterling plan, expects to enroll more than 4,000 beneficiaries for next year.

But what physicians like about this still-emerging Medicare option is its simplicity. There are no contracts, little preauthorization, no utilization reviews and no discounted payments.

For most physicians, first contact with such a plan will be when a beneficiary enrolled in Sterling or Humana walks through their doors. Many physicians are unaware of the plans and aren't sure how to handle these beneficiaries.

The product differs little from the traditional Medicare fee-for-service program but offers greater administrative simplicity for physicians. Doctors need only collect the co-payment for the beneficiary and bill the Medicare allowable rate to the plan. There's no primary and secondary payer to worry about as there often is with traditional Medicare.

James Jacobsen, MD, an internist and endocrinologist in Arlington, Texas, said Sterling's plan makes life much easier for physicians. [...]