Medi- Minutes

Medicare HMOs to Get 2% Payment Increase in 2001

Most Medicare HMOs will see an average increase of 2% in Medicare payments next year, according to the Clinton administration. But that payment increase will drop to about 1.4% after the administration factors in a reduction for plans treating mostly healthy Medicare beneficiaries. Some counties will see a rise in payments of as much as 3.3%, but HMOs serving beneficiaries in major cities will receive the minimum increase.

Even the maximum of 3.3% is far less than the increase of between 5% and 12% last year. Industry representatives are calling for more Medicare money for HMOs, claiming that their payments have been slashed so deeply they cannot even cover their costs, even after some cuts were restored last year.

But some government reports claim that HMOs receive not only enough compensation from Medicare, but still too much. According to a recent report released by the Inspector General, for the five years prior to the 1997 cuts, Medicare payments to HMOs rose by an average of 8%, while national healthcare spending increased by only 1.5% per person.