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Date:  September 8, 1995
For Release:  Immediately
Contact:  HCFA Press Office (202) 690-6145

HCFA Releases 1996 Payment Rates
for Medicare Managed Care Plans

The Health Care Financing Administration today released 1996 payment rates for Medicare health-maintenance organizations. For the 100 counties with the highest enrollment in risk-based managed care plans, these rates will range from $313.55 to $760.66 a month.

"The formula for determining payments needs to be improved," said HCFA Administrator Bruce C. Vladeck. "However, the 1996 rates demonstrate that Medicare payment rates for managed care plans are moving in parallel with private sector payments. In areas of the country where growth in private payment rates for managed care is low, Medicare payment rates are also rising slowly."

Payment rates are determined for each county in the United States based on Medicare costs in the county's fee-for-service sector -- that is, medical care outside of managed care plans. The adjusted average per capita cost (AAPCC) rates are used to determine Medicare payments to risk-based managed care plans for 1996.

In order to determine appropriate payments, each enrollee is assigned to a demographic class based on age, sex, Medicare entitlement status, whether they live in an institution and whether they are also eligible for Medicaid. The annual rate of payment for each enrollee is set at 95 percent of the AAPCC for the demographic class to which that enrollee is assigned.

As of July 1, about 2.8 million Medicare beneficiaries were enrolled in 167 risk-based managed care plans across the country.

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