WASHINGTON — The Obama administration said Monday that it was cutting payments to doctors and hospitals after finding that cost overruns are threatening to use up the money available in a health insurance program for people with cancer, heart disease and other serious illnesses.
The administration had predicted that up to 400,000 people would enroll in the program, created by the 2010 health care law. In fact, about 135,000 have enrolled, but the cost of their claims has far exceeded White House estimates, exhausting most of the $5 billion provided by Congress.
Under a new policy issued by Kathleen Sebelius, the secretary of health and human services, “health care facilities and providers will get paid less” for providing the same services to patients in the federal program, known as the Pre-Existing Condition Insurance Plan.
In most cases, payments to health care providers will be capped at Medicare rates, which are substantially less than the commercial insurance rates they have been receiving. The new policy generally prohibits doctors and hospitals from increasing charges to consumers to make up the difference.
Michael T. Keough, the executive director of the North Carolina Health Insurance Risk Pool, said the new policy was one of several steps taken recently by federal officials to control spending.
“They are trying to stanch the hemorrhaging,” Mr. Keough said.
The federal government notified some states last month that it was setting a ceiling on costs that would be reimbursed from June through December of this year. In effect, state officials said, the new limits shift the financial risk of the program from the federal government to those states.
Congress established the program to provide coverage to people with pre-existing conditions who had been uninsured for at least six months, and Ms. Sebelius has said, “It literally saves lives.”
The program provides a transition to 2014, when most consumers will be able to obtain insurance regardless of their pre-existing conditions.
Federal officials froze enrollment in the program in February, but costs continued to grow rapidly.
Overruns Forcing Lower Payments to Some Providers in Stopgap Health Program - NYTimes.com
It is worth remembering, that these patients had run out of options for access to treatment before the program.
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