SPRING 2005
IN THIS ISSUE
    CAPITATION
    UP CLOSE
    MANAGED CARE
    PHARMACY CASE STUDY
 
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Dave Kalb, Vice President, Evergreen Re


Health Plans File for Medicare Advantage; MCOs May Have Advantage in Part D Coverage

The Centers for Medicare and Medicare Services (CMS) said it received 141 applications for new local Medicare Advantage (MA) plans by the February 15 deadline. Industry analysts say the health plans are being attracted by the extra funds the Bush Administration has included for the new expanded MA program. According to a recent Modern Healthcare report, under the new program, MA plans will receive between $14 billion and $46 billion in additional payments over the next 10 years.

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Capitation Gets Renewed Interest from Providers  
by Charles Crispin, President & CEO, Evergreen Re

Capitation is alive and well and is getting renewed interest from many of our nation’s medical groups and physician organizations. Evergreen Re has clients in 45 states and we have seen new capitation contracting in almost all regions. It is expanding in many geographic areas, particularly in existing Medicare risk markets. We are also seeing new activity in markets where health plans had abandoned Medicare risk contracting but are now considering re-entering.

We believe there are several drivers behind this trend. First, there has been a huge correction in the funding side of health care. With higher premiums for private plans and new federal funding available, there is more revenue in the system so payers are now in a position to offer reasonable cap rates. Payers want to control cost and when implemented correctly, capitation meets that objective better than any other reimbursement scheme. When providers are capitated they are more likely to avoid unnecessary utilization because they have some skin in the game.
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