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PLAN WOULD PUT PRIVATE SECTOR IN HEATED RACE

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The Republican transformation of Medicare would trigger a marketing free-for-all among private insurers, HMOs, hospitals and physicians to snare a larger share of the business of caring for America's elderly.

The proposal, which the House may approve before the end of this week, would compel President Clinton's health secretary to stage a national health fair next October to help sell the elderly on these new "MedicarePlus" plans.Until the end of 1997, Medicare's 37 million aged or disabled beneficiaries could jump back and forth between regular Medicare and the new private plans as often as they wished.

The offerings would include health maintenance organizations, preferred-provider organizations and managed-care plans run directly by doctors and hospitals that bypass insurers.

About 3 million of the elderly already are in Medicare HMOs.

The GOP plan to squeeze $270 billion from Medicare over seven years would give private plans a vastly bigger role while putting the entire program under stringent budget limits.

Here is a look at what lies ahead if the Medicare Preservation Act of 1995 becomes law:

- Higher premiums, lower fee increases - Medicare's monthly Part B premium of $46.10 would climb to $54 a month in January 1996 and $87 a month by 2002.

Hospitals, doctors, laboratories, home health agencies, medical equipment vendors - all would get billions of dollars less in future fees.

Traditional Medicare - the fee-for-service program that allows the elderly to go to any doctor they choose - would remain the fall-back choice for everyone leery of "MedicarePlus." But it could be hit by deep, automatic spending cuts.

If Medicare overshoots spending targets, the Republicans' "fail-safe" mechanism would automatically reduce fee-for-service payments to doctors and hospitals the following year.

With that ax hanging over traditional Medicare, "beneficiaries may find it hard to get a doctor who will serve them unless they move into managed care," said Tricia Smith of the American Association of Retired Persons.

- Medical savings accounts - Medicare beneficiaries would be asked next fall if they wanted to jump from Medicare into a medical savings account combined with a high-deductible, catastrophic-only insurance policy, effective January 1997.

Medicare would put some money in these accounts that could be spent on any medical bills or for long-term care insurance.

Beneficiaries would be obligated to pay at least $3,000 in medical bills before insurance kicked in.

Someone who chose a medical savings account would have to stick with it for a full year.

Any bills that would have been covered by regular Medicare would count toward the deductible, which could not exceed $10,000.

- Medicareplus - Medicare beneficiaries choosing a Med-icare-Plus plan for the first time could change their minds in 90 days and revert to regular Medicare.

During the first two years, they could jump back and forth between plans at any time; after that, they could only switch during annual open enrollment periods each fall.

All MedicarePlus plans - but not the medical savings accounts - would have to at least match the basic Medicare benefit package.

They would be paid amounts per patient that would vary by age, gender, location and whether they were in a nursing home. Different payments would be set for the disabled and Medicare patients with kidney failure.

- Balance billing - The biggest risk the elderly may run is losing Medicare's ironclad protection against being charged exorbitant fees by physicians.

No physician now can charge the elderly more than 115 percent of Medicare's approved amounts.

That protection would remain in the fee-for-service side of Medicare, and Republicans say a Medi-care-Plus plan could not charge the elderly extra so long as they stayed within the plan's network of providers.

But those who went outside the network could be charged whatever the physician wants. The MedicarePlus plan would pay just 70 percent of Medicare's rate.

There would be no limit on what doctors could charge people with medical savings accounts.

- First come, first served - MedicarePlus new plans could not discriminate against sick people, but they could choose where to operate, and limit enrollment on a first-come, first-served basis.

New "provider service networks" - formed by doctors and hospitals, bypassing insurers and HMOs - could be federally licensed, bypassing state regulators and solvency requirements.

MedicarePlus would allow HMOs to rebate to beneficiaries the $46.10 monthly premium for coverage of doctor bills.

The elderly in such places as New York, Miami and southern California are accustomed to being wooed by Medicare HMOs with extra benefits.

But the AARP's Smith predicted, "in a few years they will no longer have the financial latitude to offer the richer benefit package."

Medicare HMOs would no longer be paid 95 percent of the fee-for-service costs in each county - a method that produces rates as low as $313 per beneficiary each month in the Salem, Ore., area and as high as $760 on New York's Staten Island.

The Republicans plan to let the payments grow 5 percent a year and to flatten out the differences, allowing faster growth in areas that deliver fewer medical services.

Proponents say MedicarePlus will spare the elderly the expense of buying supplemental Medigap insurance costing $1,200 a year or more.