Congress and the Bush administration have tried to welcome private preferred provider organization plans into the Medicare managed care market, but significant barriers remain.[@@]
A team of researchers led by Steven Pizer, a Boston University health economist, comes to that conclusion in a study published in the latest issue of Health Affairs, a health care finance journal.
The Medicare managed care program regional bidding process gives health maintenance organizations an advantage over most PPOs, Pizer and his colleagues write in the study.
The Medicare Prescription Drug Improvement and Modernization Act of 2002, the law that set the bidding rules now in effect, requires new plans to participate in Medicare on a regional basis, but it permits existing HMOs to continue to operate in individual markets.
"Established HMOs will have a competitive advantage over new regional PPOs," the researchers write.
The new PPOs probably will avoid competing with established HMOs, and the new PPOs will show a profit only because of overpayments that could support enrollment of 4 million Medicare beneficiaries and may cut Medicare Trust Fund assets by about $60 billion over 10 years, the researchers predict.
