Overview of Medicare for Managed Care Professionals

OBJECTIVE: To provide an overview of Medicare and current options under discussion for reforming the program with an emphasis on managed care. DATA SOURCES: Recent literature and the authors' experiences. STUDY SELECTION: Not applicable. DATA EXTRACTION: Not applicable. DATA SYNTHESIS: Authorized under amendments to the Social Security Act of 1965, the Medicare program has made two forays into the managed care world (through the Health Maintenance Organization Act of 1973 and the Tax Equity and Fiscal Responsibility Act in 1987). Medicare Part A provides hospital insurance to the elderly and is funded by payroll taxes. Part 8 helps pay for physicians' services, outpatient hospital care, diagnostic tests, durable medical equipment, ambulance services, and supplies not covered under Part A. The Medicare managed care program currently recognizes three types of contracts: Risk HMOs or competitive medical plans (CMPs), cost HMOs, and health care prepayment plans. Between 1994 and 1995, the number of managed ca...