Medicare+Choice Benefits Are Permitted To Vary By Region


In 1997 Congress created a new range of managed care choices for Medicare beneficiaries. The new options, dubbed “Medicare+Choice,” were intended to give seniors (and the disabled) a range of options for delivery of health care services. The success of the program has been limited, and the availability of different choices varies widely across the country.

In addition to Medicare Health Maintenance Organizations (HMOs), Medicare+Choice was expected to provide “Private Fee for Service,” “Preferred Provider Organization,” “Point of Service” and other variations on managed care plans for Medicare beneficiaries. As it turns out, however, the result in most areas has been a reduction in choices—in Tucson, for example, while a single “Private Fee for Service” program has become available, the number of Medicare HMOs has shrunk from four (with several different plan options) to two.

In addition to fewer choices in most areas, there is tremendous variation from one locality to another. Part of that difference (and much of the difference in benefits actually offered to participants in different plans) stems from Medicare’s complicated system of determining the amount it pays managed care plans for each Medicare enrollee in a given jurisdiction.

In Broward County, Florida, for example, the 1999 reimbursement rate for a Medicare HMO was $676.64 per month; in Dakota County, Minnesota, the rate was $394.92. Not surprisingly, the benefits offered by HMOs in Broward County were substantially better than those in Dakota County. As one stark example, while HMO participants in Broward County paid no annual premium for membership, it cost a Dakota County participant $1,137 in premiums just to belong to a Medicare HMO.

That was why Mary Sarno, a Florida resident, sued the Medicare program administrator. She argued that her constitutional right to travel was infringed by the program’s structure; while she wanted to visit (and possibly live near) her children in Minnesota, she could not afford to do so if the Medicare benefits in Dakota County were so much more expensive than those she enjoyed in Florida.

Ms. Sarno’s complaint was dismissed by the federal judge in Minnesota, and she appealed. The Eight Circuit of the Federal Court of Appeals agreed with the District Court judge and threw her case out of court. Even if she was right about the disparity in benefits in different regions, said the Court of Appeals, she had no claim against a federal program. The section of the U.S. Constitution which prohibits laws that interfere with a citizen’s right to travel is directed toward actions by State governments, not the federal government and its programs. Minnesota Senior Federation v. United States, December 13, 2001.

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