How to obtain a Medicare risk contract.

About 3.6 million Medicare beneficiaries--10 percent of the Medicare population--receive Part A and Part B benefits through health maintenance organizations (HMOs). Beneficiaries are spread unevenly among one-third of the nation's 575 HMOs, with four California HMOs accounting for almost 30 percent of all Medicare enrollees. HMO involvement in Medicare has increased steadily since 1993 and may continue to do so over the next few years for two main reasons. First, the HMO industry is committed to increasing its penetration of the Medicare market. Second, enactment of legislation now before Congress would modify payment formulas and regulatory requirements that prevent many HMOs from applying for Medicare contracts. Enactment also would permit a wider array of health plans to contract with Medicare. HMOs must meet Federal requirements and undergo a contracting process to obtain Medicare risk contracts. Proposed Federal legislation suggests tht most of the existing requirements will apply to the revised and expanded Medicare contracting opportunities. The accompanying recommendations should help HMOs expedite the application and approval process.