HMOs have lost money on people who are chronically ill, because the government’s allowance for each person on Medicare only varies by geographical region, not by the person’s health condition. That means that HMOs receive the same amount of money for well people, and sometimes it isn’t enough to take care of the sick people. HMOs are now paid based on the person’s health status in addition to geographical region, which makes it more attractive to HMOs to accept Medicare patients. This could change under the Patient Protection and Affordable Care Act of 2010.
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