Medicare Risk Contract

Medicare beneficiaries can choose to enroll in the traditional Medicare program, a fee-for-service (FFS) program, or a managed care program under Medicare. The most common type of Medicare managed care health plan is risk-contracted HMOs. In the Medicare managed care risk contract program, each HMO has a defined geographic area for serving Medicare beneficiaries. They provide a full range of Medicare services and may offer benefits not covered by traditional Medicare, such as prescription drugs. After joining a risk contract HMO, a beneficiary selects a primary care physician affiliated with that HMO. All medical care is managed by the primary care physician, and referrals are made to specialists or other providers associated with the HMO, with the exception of emergency cases. The HMO is paid a flat fee per month for each enrolled Medicare patient, regardless of the medical services provided to that patient. Thus, the fewer or less expensive procedures authorized by the primary care provider, the more profitable the HMO risk contract becomes.