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A little study in HMO's utilized in Medicare

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These suggestions for change clearly require a much more thorough examination of the possible consequences and operational concerns. The recommendations are put forth simply to illustrate the potential to improve the risk program, from the perspective of both HMOs and taxpayers. At present, HMOs in the risk program provide care that is approximately equal in quality to that rendered in the FFS sector, with more extensive benefit coverage and at a much lower price to beneficiaries than alternative supplemental coverage. HMOs successfully reduce utilization by sizable margins by practicing cost-effective care. They are also capable of generating savings that can be shared among beneficiaries, HCFA, and HMOs. Furthermore, although a number of HMOs have left the risk program and others complain of financial difficulties, the non-renewal rate has declined and a high proportion of plans that have left the program would be interested in reentering if the payment mechanism were reformed. With a carefully planned package of changes by HCFA and continued efforts on the part of HMOs, HMOs' ability to deliver Medicare services more efficiently could bring savings to HCFA, beneficiaries, and HMOs.

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