A U.S. Appeals Court holds that the Medicare program's formula for reimbursing managed care providers, although it results in wide discrepancies in costs and benefits among geographic regions, does not violate beneficiaries' right to travel or to equal protection. Minn. Senior Federation v. United States (U.S. Ct. App., 8th Cir., No. 00-3139, Dec. 13, 2001).
Mary Sarno is a resident of Broward County, Florida, and is enrolled in a Medicare managed care plan (Medicare+Choice) there. Mrs. Sarno would like to move to Minnesota to be with her daughter, but claims she is prevented from doing so because of the difference in cost and benefits between a Medicare managed care plan in Florida and one in Minnesota.
This difference is the result of varying reimbursement payments that Medicare pays providers in different parts of the country based on local costs. "Excess" payments may be passed on to Medicare beneficiaries, which means that Medicare benefits are more generous in some communities than in others. For example, in 1999, the managed care reimbursement rate for Broward County was $676.64, whereas the reimbursement rate for Dakota County, Minnesota, was $394.92. The generous reimbursement rate in Broward County enabled Mrs. Sarno's plan to offer unlimited prescription drugs, no co-payments for physician visits and various services, and no annual premium. By contrast, Medicare Part C enrollees in Dakota County paid an annual premium of $1,137, were charged higher co-payments, and received virtually no prescription drug coverage.
Mrs. Sarno and the Minnesota Senior Federation sought a declaratory judgment that the Medicare+Choice reimbursement formula violates their constitutional rights to travel and to equal protection of the law. Among other arguments, they claimed that the Medicare+Choice formula is irrational because it discriminates against Medicare beneficiaries enrolled with efficient providers, like those in Minnesota (presumably because if providers in a given locale operate efficiently and have lower costs, they wind up receiving lower Medicare reimbursement). The U.S. District Court granted the government's motion to dismiss.
The U.S. Court of Appeals for the Eighth Circuit agrees with the district court. The court determines that the Medicare+Choice payment method survives the equal protection challenge because it is "rational" in a constitutional sense. The court goes on to review U.S. Supreme Court right-to-travel decisions and concludes that the right to travel is not implicated by the Medicare+Choice formula and therefore is subject only to rational basis review. "However unfairly the current Medicare Part C funding mechanism may seem to impact some classes of Medicare beneficiaries," the court writes, "the fact the line might have been drawn differently at some points is a matter for legislative, rather than judicial, consideration." (citing United States R.R. Ret. Bd. v. Fritz, 449 U.S. 166, 179 (1980)).
To download this decision in PDF format, go to: https://www.ca8.uscourts.gov/opndir/01/12/003139P.pdf
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