Medicare Reform and Industry Shifts: A New Era for Coverage Decisions

The Health Care Financing Administration is poised to introduce the first-ever criteria for coverage of new technologies and services under Medicare, with the aim of clarifying the "reasonable and necessary" standard for reimbursement. This move has raised hopes among technology industry executives for standardization and consistency in coverage decisions, particularly among the 55 fiscal intermediaries that handle the majority of Medicare coverage decisions. Meanwhile, the insurance industry is experiencing a significant shift, with Ceres Group Inc. acquiring Pyramid Life Insurance Co. and several major HMOs exiting the Medicare market, leaving thousands of seniors without affordable health benefit choices.

Key Takeaways:

• The Health Care Financing Administration will introduce the first-ever criteria for coverage of new technologies and services under Medicare, based on medical benefit and added value.
• The proposed criteria will apply to the 55 fiscal intermediaries that handle 90% of all coverage decisions, aiming to provide consistency and standardization.
• Ceres Group Inc. has acquired Pyramid Life Insurance Co., a move that expands its senior market insurance coverage.
• The acquisition includes assets of about $140 million and projected revenues of $75 million in 2000.
• Ceres paid $42.5 million for Pyramid Life Insurance Co.
• At least seven leading HMOs have announced plans to exit several major markets, uprooting over 700,000 Medicare beneficiaries.
• Aetna U.S. Healthcare is leading the withdrawals, reporting plans to stop offering Medicare HMO coverage in 14 states, including Ohio, leaving 355,000 seniors without HMO coverage.
• The withdrawals are expected to leave thousands of seniors without affordable health benefit choices, exacerbating the dwindling number of lower-cost options.

Statistics:

• 55 fiscal intermediaries handle roughly 90% of all Medicare coverage decisions (HCFA).
• Aetna U.S. Healthcare will cancel Medicare HMO coverage in 14 states, impacting 355,000 seniors (Aetna).
• The withdrawals are expected to uproot over 700,000 Medicare beneficiaries (HCFA).
• Ceres Group Inc. paid $42.5 million for Pyramid Life Insurance Co.
• Pyramid Life Insurance Co. projects revenues of $75 million in 2000.
• The acquisition includes assets of about $140 million.

Sources:

• HCFA (no date provided)
• Aetna U.S. Healthcare (no date provided)
• Healthcare Finance News (Volume: 21 Publication number: 33)