By Chris Gearon

WASHINGTON (Reuters Health) - A month before scores of health plans will announce whether or not they will exit the Medicare program next year, the Clinton administration said last week that it would ease several administrative rules for managed care organizations participating in the federal health insurance program.

The changes will help HMOs reduce many provider-contracting requirements, loosen marketing restrictions, delay or cancel new costly administrative requirements and help Medicare HMOs better meet the needs of employers who look to such health plans to provide retiree medical coverage. The Health Care Financing Administration (HCFA), which administers Medicare, will also reorganize to better meet health plans' needs.

However, HMO industry sources said that the changes aren't likely to prevent an expected large-scale withdrawal of health plans next year from the Medicare+Choice program. ``The die is cast at this point,'' Bruce Fried, a partner in the Washington, DC, law firm of Shaw Pittman and a former director of Medicare's managed care program, told Reuters Health.

As many as 1 million of the 6.2 million Medicare beneficiaries enrolled in Medicare managed care plans could be displaced next year as a result of private health plans withdrawing or reducing their presence in the program, some industry sources estimate. Medicare health plans have until July 3 to inform HCFA of their intention to exit or remain in the program.

Medicare HMOs complain that payment changes limiting federal payments to % a year for most plans is the primary reason health plans have left Medicare and the reason why more will exit next year. Health care costs have been rising at more than twice that rate. Health plans also contend that burdensome administrative rules have played a role in HMOs leaving the program. In the last 2 years, nearly 200 Medicare HMOs have exited or reduced their presence, impacting nearly 750,000 members.

Cigna HealthCare has already announced that it will leave the program beginning January 1, 2001, in all markets except Phoenix and possibly New Mexico. The move will force 104,000 beneficiaries enrolled in Cigna HMOs to seek another health plan or return to traditional Medicare.

While the administration's action is not likely to deter the number of plans intending to leave Medicare next year, Fried said, ``(easing) the regulatory burden is a very important signal...I think it is very important for the plans that stay in.'' Currently, 261 Medicare+Choice organizations enroll 6.2 million beneficiaries.In a June 8 letter to Medicare HMOs, HCFA Administrator Nancy-Ann Min DeParle said, ``Although we cannot change (HMO) payments, we have heard, and we are addressing, the concerns regarding administrative burden.''

``Based on your comments, we have modified many requirements in our contracts and operations to be more consistent with the approaches used by private and other public purchasers,'' she added.

Susan Pisano, spokesperson for the American Association of Health Plans, told Reuters Health that these are ``important administrative initiatives, but they won't be enough to solve the problem of the Medicare + Choice program.''

(From Yahoo)