WASHINGTON-The rapid movement of retirees from traditional Medicare programs to health maintenance organizations is likely to continue even if Congress passes legislation reducing the growth of federal payments to HMOs, consultants say.

More than 4.3 million retirees now receive health care coverage through so-called Medicare risk HMOs, with roughly 80,000 to 100,000 new retirees moving into HMOs each month.

Many of these retirees also receive additional benefits from the HMOs, such as prescription drug coverage, reducing costs for employers that had been providing the supplemental benefits from their post-employment health care plans.

Benefit managers, while not endorsing the Clinton administration package, say the formula the federal government uses to pay HMOs is fundamentally flawed and needs to be overhauled.

Under the current system, HMOs receive from Medicare 95% of what Medicare believes it would cost the federal government to provide traditional Medicare benefits to retirees in counties where the retirees live.

Benefit managers say that results in a huge skewing effect.

They say payment rates in counties where Medicare costs are high allow the HMOs to offer benefits Medicare does not provide, charge retirees little or no premium and still make a healthy profit.

On the other hand, payment rates to HMOs in counties where Medicare costs are low often are insufficient for HMOs to offer coverage to retirees eligible for Medicare and operate profitably.

"It is a very peculiar public policy. In some markets, you can get everything under the sun" from HMOs providing coverage to retirees, said Helen Darling, manager of health care strategy and programs at Xerox Corp.

But in other markets where Medicare payment rates to HMOs are low, the benefits are poor, she said.

Indeed, in South Florida, Medicare payments to HMOs are so high that HMOs have been able to offer a rich array of supplemental benefits, including free transportation to health care providers, said Jack Romeo, director of health care systems for Bethlehem Steel Corp. in Bethlehem, Pa., which now has 10,000 retirees receiving coverage through Medicare risk HMOs.

"It seems to us that we need more equity," Mr. Romeo said.

These reactions come after a new study released last week by the American Assn. of Health Plans, a Washington-based managed care trade group, that analyzes the impact of proposed changes to payment methodology for HMOs that provide coverage to retirees.

Changes the Clinton administration is proposing include:

Reducing the basic payment to HMOs to 90% from 95% of the cost the federal government believes it would cost provide Medicare benefits to retirees.

Basing rates not just on Medicare costs in a county but also Medicare costs nationally. Specifically, rates for a county would be a blend of national and local costs. The weight of national costs gradually would increase. National costs are not considered now in the payment formula but they would be 10% of the formula in 1998 and rise to 30% in 2002.

This change would lower payment increases in counties with high Medicare costs and accelerate payment increases in counties where Medicare costs are below the national average.

Establishing a minimum basic payment rate of $350 a month per retiree.

The AAHP study, prepared by the Barents Group, a research arm of KPMG Peat Marwick L.L.P., found that under the administration proposals, basic payment rates to Medicare risk HMOs would rise to an average of $592.43 per retiree by the year 2002 from the current basic rate of $526.09. By contrast, under current law, basic rates are expected to rise to an average of $733.19.

In some counties, though, the cut in payment increases would be especially high. For example, in Dade County, Fla., the basic payment rate, which is now $748.23-the highest of any county in the United States-only would nudge ahead 1.3% to $757.95 by the year 2002, the study found. That compares with a 56.9% projected rise to $1,173.76 if the current payment methodology is unchanged.

On the other hand, rates would rise faster in some areas of the country where payment rates are low. In San Luis Obispo County, Calif., the basic payment rate would rise 30.6% to $504.76 under the administration's plan, compared with the projected rate of $462.99, a 19.8% rise, according to the study.

AAHP President and Chief Executive Officer Karen Ignagni said that, overall, most retirees would be in parts of the country where projected payment increases would be lower than compared with current law. As a result, additional, supplemental benefits provided by HMOs to retirees could be jeopardized, she said.

But benefit consultants say that providing coverage to retirees is so profitable that HMOs likely would only have to trim benefits to maintain profit levels.

"HMOs still will be able to offer attractive benefits. All that we are likely to see is a trimming of supplemental benefits," said Will Applegate, a consultant with The Kwasha Lipton Group in Fort Lee, N.J.

The administration proposal, from an employer perspective, "is not bad news. HMOs will still be attractive enough for retirees to join," he added.