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Puerto Rico To Lose Out In Medicare Reshuffling

HHS likely to include island in Florida region; local health industry officials fear devastating effects, lobby to make island its own region, blast local government officials for last-minute effort


August 26, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Local Medicare beneficiaries could be hurt if Puerto Rico is integrated into the Florida region, as outside consultants have recommended as part of a plan calling for the creation of multistate regions to comply with changes required by the Medicare Prescription Drug, Improvement & Modernization Act of 2003.

The Centers for Medicare & Medicaid Services (CMS), which administers the Medicare program, intends to undertake the move in response to a recommendation by consultant Research Triangle International (RTI) to establish 10 to 50 regions.

Local health industry officials have expressed opposition to the move. Many suggest the best alternative is to make Puerto Rico its own region, which the CMS and U.S. Department of Health & Human Services (HHS) have the authority to do. They also are pointing fingers at local government officials for sitting on the issue.

"They’ve known about this for months and have done nothing," a health industry executive told CARIBBEAN BUSINESS on condition of anonymity. "Now, at the last minute, they send a letter for the record. But I’m afraid at this point it will require major political influence at the White House level to reverse the likely outcome."

Health Secretary Johnny Rullan and Resident Commissioner Anibal Acevedo Vila sent letters to the CMS and the HHS, respectively, expressing their opposition to the proposed move. The letters were sent Aug. 5, the deadline for submitting comments on the proposal.

"We have serious concerns about the implications of a number of the RTI proposals for Medicare beneficiaries living in Puerto Rico," said Rullan in his letter. Puerto Rico has 601,773 Medicare beneficiaries, more than in 24 mainland states.

"We don’t believe any of the multistate regional options presented…accounts for the unique circumstances that exist in Puerto Rico, including differences in drug spending and average per capita income," said Rullan.

He also cited linguistic considerations because only 15.6% of Puerto Rico’s elderly population (those 65 and older) can speak English. "Medicare beneficiaries in Puerto Rico need to be served by plans that are culturally and linguistically competent, which isn’t likely to be the case with plans accustomed to operating in the 50 states and Washington, D.C.," said Rullan.

In his letter to HHS Secretary Tommy Thompson, Acevedo Vila said, "Florida may be the state that is geographically closest to Puerto Rico, but significant differences exist between the two jurisdictions in terms of their economies, healthcare systems & infrastructure, and patient demographics, among other factors."

According to Acevedo Vila, the regional integration would make the cost of Medicare plans prohibitively expensive for the majority of local beneficiaries. "Redistribution of higher average drug-spending costs to a population with a much lower per capita income will be a significant problem inherent in any premium-bidding scenario that requires Puerto Rico to be part of a multistate region," he said. Puerto Rico’s average per capita income in 2000 was $8,185, compared with Florida’s $21,557.

Another problem with the RTI plan, say opponents, is that it expects private health insurers already participating in the markets composing the new region to continue bidding to offer regional Medicare plans. But officials believe local insurers such as Triple-S and Cosvi won’t want to cover markets outside of Puerto Rico where healthcare costs are higher. Therefore, they say, beneficiaries living in Puerto Rico are unlikely to have the option of choosing a familiar local plan.

What’s more, sources say that if local companies are replaced by stateside insurers, they will be forced to eliminate an estimated 150 jobs or to contract with unknown companies in Florida to provide service in the region.

One local consultant expressed concern over the time and money beneficiaries must spend in traveling to Florida for medical care, given that many sick and disabled beneficiaries in Puerto Rico live alone and 44% of this population lives below the poverty level. "The costs associated with traveling to the continental U.S. to look for services are too high for most of our beneficiaries," the consultant said.

Considering all these factors, Pavia Health Executive Vice President Alfredo Volckers believes moving Puerto Rico to the Florida region won’t help achieve the cost-efficiency sought by the HHS and the CMS. "On the contrary," he said, "we will have to start from scratch, dealing with intermediaries we don’t know and who don’t know us."

As Volckers noted, Puerto Rico currently is part of the New York region but has its own intermediaries. "For instance," he said, "we now send our claims to Cosvi, which has done a very good job of paying hospitals on time. With the proposed change, however, we would have to start sending our claims to Florida, and that would just complicate everything."

According to the CMS schedule, the multistate regions should be created by January 2005 and the regional Medicare program should be implemented in 2006.

This Caribbean Business article appears courtesy of Casiano Communications.
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