Medicare PPO proposal pits plans against doctors in move to boost rural managed care

Health plans call for a guarantee of physician participation while doctors charge that insurers already have too much clout.

By Markian Hawryluk, AMNews staff. Nov. 10, 2003.

Washington -- The success of a plan to give Medicare beneficiaries new health coverage options may depend on whether lawmakers can find a balance of power between physicians and health plans.

House and Senate negotiators working to finalize a Medicare reform bill are looking at ways to stabilize the Medicare+Choice program and provide managed care options in rural areas that plans have shunned to date.

To encourage plans to establish preferred provider organizations to serve rural beneficiaries, lawmakers proposed dividing the country into large regions, possibly as few as 10. Medicare then would solicit bids from plans to serve both urban and rural areas of the regions starting in 2006.

"People are not going to want to go out and take rural Pennsylvania if they can get the opportunity to just pick in Philadelphia and Pittsburgh," said Tom Scully, administrator of the Centers for Medicare & Medicaid Services.

To qualify, plans would be required to ensure that they have an adequate network of physician and other health services in all areas of the region. But health plans say rural areas often have so few physicians and hospitals that insurers have trouble negotiating discounts. Many rural physicians already have more patients than they can handle.

A lack of negotiating leverage where physician or hospital competition is limited could shut them out of the entire region, health plan officials warned. Plans complain that local physician and hospital monopolies have demanded two or three times the Medicare fee-for-service rate.