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ARCHIVED  July 1, 1997

Medicare, Medicaid pose costly dilemma

As the national trend toward managed health care continues, efforts are being made to make sure that two of the largest populations are included: Medicaid and Medicare patients.

And Colorado has emerged as a leader in that effort, with a growing number of health-maintenance organizations, a growing HMO enrollment and a growing number of Medicaid and Medicare HMO recipients.

The reasons for including both Medicaid and Medicare patients in managed health plans is compelling, if for no other reason than to control and contain costs.

Medicaid, the state-federal program for low-income people, has long been regarded as one of the most costly and fastest-growing components of state health-care budgets, while Medicare, the federal health-insurance program for retired citizens who often require the most-expensive care, is one of the key pieces in the federal budget-balancing effort.

Managed care is increasingly viewed as important to helping improve efficiencies and reducing, controlling or containing costs for participants in both programs.

In a Medicaid or Medicare managed-care plan, the HMO is paid a fixed monthly fee per enrollee for delivery of a wide variety of health-care services. The HMO assumes the full financial risk for providing for an individual patient’s necessary medical services but controls costs by an overall emphasis on prevention and primary care.

Ten of Colorado’s 18 HMOs serve either Medicaid or Medicare recipients, and the number overall is growing, according to statistics compiled by Allan Baumgarten in the Colorado Managed Care Review for 1996.

Medicaid HMO enrollment in Colorado more than doubled to 40,000 in 1995 and more than doubled again last year, while the number of Medicare patients enrolled in HMOs also is growing rapidly.

In 1992, almost 35,000 Medicare recipients were enrolled in HMOs under Medicare risk contracts, in which the HMO accepts full risk for the enrollee in exchange for a capitated payment. By the end of 1995, that number had doubled to almost 75,000 and was nearing 90,000 by midyear last year.

“Competition is vigorous, with most HMOs offering zero-premium policies in the Denver area,” Baumgarten said. “The prospects of future growth are strong.”

More than one million Coloradans are now enrolled in a managed-care plan, and all but two reported growth during the first half of 1996, according to the Colorado Managed Care Review.

One of Colorado’s most unusual HMOs — and one of its fastest-growing — is Colorado Access, a Denver-based HMO that was launched by a group of “safety-net” providers as an innovative managed-care organization to serve Medicaid recipients in 12 counties along the Colorado Front Range.

Since its inception in December 1995, Colorado Access has emerged as the state’s largest Medicaid managed health plan, serving more than 40,000 Medicaid recipients, approximately 54 percent of Colorado’s Medicaid HMO enrollees. Its mission is to offer wider access to quality, cost-effective health care for Medicaid recipients in all Medicaid-covered federal programs.

“What distinguishes Colorado Access from other health plans in Colorado is its partnership of providers who have a traditional commitment to care for low-income and indigent patients,´ said its executive director, David West. “This is a network of providers who have always been there for the medically underserved.

“We’re built a large community-based network of ‘safety-net’ providers who have traditionally served the Medicaid population, such as pregnant women, the elderly and disabled,” he said. “Thanks to the combined knowledge and expertise of our partner organizations, we can provide high-quality, cost-effective health care in a managed-care environment for those with Medicaid coverage.”

The not-for-profit partnership involves 10 free-standing community health centers outside the Denver area; Denver Health, which operates Denver General Hospital and 11 community health centers in Denver; The Children’s Hospital; and University Hospital, in conjunction with University Physicians.

It has a contract with the State of Colorado to provide managed health-care services to Medicaid recipients in 12 designated counties along the Front Range, operating as far north as Weld County. Under the contract, the State of Colorado pays 95 percent of what it would pay for Medicaid recipients on a fee-for-service; thus, it saves approximately $4 million a year, while the HMO provides what it believes is superior service.

Colorado also is scheduled to be the site for an experimental — and highly controversial — federal Health Care Financing Administration Medicare HMO demonstration project, but it has been stalled. The program would require HMOs to bid competitively for Medicare patients, but it has been delayed by a lawsuit filed by the American Association of Health Plans, the Colorado HMO Association and five Denver-area HMOs.

The government hoped to use the pilot project to test a new Medicare reimbursement structure it hopes will make the Medicare program more solvent, but the proposal encountered strenuous opposition from HMOs that object to a federal requirement that they bid for Medicare patients or be frozen out of Medicare’s risk-contract program for three years.

The opposing HMOs persuaded a federal judge in May to block the project temporarily because the federal government had not provided them adequate notice of rule changes or adequate opportunity to comment on them.

Whether the pilot project goes forward in Denver, Colorado HMO officials predict continued growth in managed-care plans locally for both Medicare and Medicaid enrollees.

As the national trend toward managed health care continues, efforts are being made to make sure that two of the largest populations are included: Medicaid and Medicare patients.

And Colorado has emerged as a leader in that effort, with a growing number of health-maintenance organizations, a growing HMO enrollment and a growing number of Medicaid and Medicare HMO recipients.

The reasons for including both Medicaid and Medicare patients in managed health plans is compelling, if for no other reason than to control and contain costs.

Medicaid, the state-federal program for low-income people, has long been regarded as one of the most costly and…

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