Payment Rates for 2002 Announced

Federal payment rates for Medicare+Choice managed care plans will increase by about 5.3 percent in most counties across the country, the Health Care Financing Administration (HCFA) announced. Payment rates in other counties will rise by the guaranteed minimum increase of 2 percent. 

The expected payment rates reflect the law's requirements, including recent changes included in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) enacted last December. The new payment rates for 2001 and 2002 can be viewed on the HCFA Web site at http://www.hcfa.gov/stats/hmorates/aapccpg.htm  

For 2002 the floor amounts will be $553.04 for urban areas with populations of 250,000 or more. In other counties the floor amount will be $500.37. For the months of March through December 2001, the rates are $525 and $475 respectively. All of these rates reflect the increases made by the BIPA. 

The information released today includes county worksheet data that reflect the increase in capitation, or per-person rates, and the factors used to compute the risk-adjusted portion of payment for managed care plans. The increase in the national per capita Medicare+Choice growth percentage for aged beneficiaries is 7.99 percent. This applies to area-specific rates that were announced on March 1, 2000, prior to the enactment of the BIPA. 

In 2002 Medicare+Choice organizations will be able to receive extra payments for providing out-patient care for people with congestive heart failure.  As one of the most frequently billed inpatient diagnoses, congestive heart failure is unique in that it often can be successfully managed on an out-patient basis. To qualify for these payments organizations must meet recognized standards for high quality of care and comply with two quality indicators to ensure that proper diagnostic and treatment procedures have been followed.  HCFA will select a sample of organizations in 2002 and audit data they submit for this extra payment. The audits are to confirm that the inpatient discharge diagnosis is supported by medical records and that the quality indicator thresholds are met. 

The BIPA also directed HCFA to continue to apply the 10 percent risk-adjusted payment that had been used in 2000 and 2001. Risk adjustment is the payment process that pays plans more for treating sicker patients. In 2002, the Medicare+Choice payment will be based on a formula in which 10 percent of the payment is risk-adjusted and 90 percent is based on demographic method. 

As of February 2001, about 5.6 million people have chosen to be in a Medicare+Choice plan. In total, 39 million people have Medicare.