June 04,1999


Medicare+Choice, Oversight of Risk Adjustment Methodology and other Implementation Issues

WASHINGTON -- Senate Finance Committee Chairman William V. Roth Jr., (R-DE) today announced the Committee will meet on Wednesday, June 9 at 10:00 a.m. in 215 Dirksen Senate Office Building to hear testimony focusing on ongoing implementation issues surrounding the Medicare+Choice program.

The following witnesses are expected to appear before the Committee:

I. A panel consisting of:

Michael Hash, Deputy Administrator, Health Care Financing Administration; Washington, D.C.

Steven Lieberman, Executive Associate Director, Congressional Budget Office; Washington, D.C.

William J. Scanlon, Ph.D., Director, Health Financing and Public Health Issues, Health, Education, and Human Services Division, General Accounting Office; Washington, D.C.

II. A panel consisting of:

Peter Smith, Chief Executive Officer, Ralin Medical; Buffalo Grove, IL

Robert Cumming, Principal, Milliman & Robertson, Inc., on behalf of the American Academy of Actuaries; Minneapolis, MN

Steven DeMontmollin, Vice President and General Counsel, AvMed, Inc.; Gainesville, FL


The hearing will focus on the soon to be implemented health-based risk adjustment methodology for Medicare+Choice payments as well as other current implementation issues surrounding the Medicare+Choice program which was authorized in the Balanced Budget Act of 1997.

The BBA required the Health Care Financing Administration to develop a methodology to adjust payments to Medicare risk plans according to the health status of the Medicare beneficiaries enrolled in those plans. HCFA introduced this new risk adjustment system in January of this year. The risk adjuster will be implemented beginning in January of 2000. Since the introduction, several policy, federal budget scoring and health plan impact questions have been raised concerning HCFA's proposal.

Testifying at Wednesday's hearing will be a representative of the Congressional Budget Office who will discuss the budget implications of the new payment methodology and its impact on Medicare risk plan enrollment projections. In addition, a witness from the Health Care Financing Administration will discuss not only the risk adjustment methodology, but also the first nation-wide beneficiary information campaign and recent enrollment and plan application trends in the Medicare+Choice program. A representative of the General Accounting Office will be present to discuss the results of a recent study that examined reasons for a number of Medicare HMO withdrawals last year.

In addition, the Committee will hear testimony from a representative for the American Academy of Actuaries which published a report saying that the group had "serious concerns about the implementation, operation and impact of HCFA's risk adjustment methodology".

The Committee will also hear from the largest non-profit HMO in Florida which has recently frozen its Medicare+Choice enrollment citing Medicare's payment amount as the primary reason. And finally, the Committee will hear testimony from a company engaged in disease management for several Medicare+Choice organizations.