SMI benefit outlays grew at 6.2 percent. Physician services, the largest component of SMI spending, grew 3.3 percent and accounted for more than 35 percent of the increase in FY 1996 SMI benefits. Though only constituting 24 percent of SMI benefits, payments for outpatient services accounted for nearly 35 percent of FY 1996 SMI growth. The number of Medicare contracts with managed care organizations has increased from 165 in FY 1990 to 325 contracts in FY 1996. Risk plans assume full financial risk for all care provided to Medicare beneficiaries, and must provide all Medicare-covered services.
Most plans offer additional services such as prescription drugs and eyeglasses.
Cost plans are paid a pre-determined monthly amount per beneficiary based on a total estimated budget. Adjustments to that payment are made at the end of the year for any variations from the budget. Cost plans must provide all Medicare-covered services but do not provide the additional services that some risk plans offer. HCPPs are paid in a manner similar to cost plans but generally cover only Part B Medicare services. Any Medicare beneficiary, except those with ESRD, may join a managed care organization.