HMOs to Cut Medicare Drug Benefit, U.S. Report Says (Correct)
Bloomberg News
September 22, 1999, 6:05 p.m. ET
HMOs to Cut Medicare Drug Benefit, U.S. Report Says (Correct)
(Changes second paragraph to indicate that people in certain
areas of the country have access to free coverage.)
Washington, Sept. 22 (Bloomberg) -- The Clinton
administration, trying to build support for its Medicare
prescription-drug plan, said HMOs will raise co-payments for
Medicare patients next year and eliminate free coverage.
HMOs, which serve more than 6 million of the nation's 40
million Medicare beneficiaries, will raise co-payments an average
21 percent for brand-name drugs and 8 percent for generic drugs,
an administration report said. Co-payments will be charged for
all prescription drugs, it said. More than 1 million Medicare
patients in HMOs live in areas where free coverage is available.
Industry representatives say Medicare payments, cut under
the 1997 balanced-budget law, haven't kept pace with costs.
Administration officials counter that even if payments to HMOs
rise, there will still be a need for President Bill Clinton's
comprehensive prescription-drug benefit plan for Medicare, the
government health-insurance program for the elderly.
''Too many of America's working families depending on
Medicare cannot depend on their HMOs to deliver the affordable,
critical benefits that convinced them to choose an HMO in the
first place,'' Vice President Al Gore said in a statement.
Gore argued that the Republican-controlled Congress should
pass the President's prescription-drug coverage plan, expected to
cost $118 billion over 10 years. The proposal faces stiff
opposition from the industry and in Congress.
Capitol Hill Rally
The American Association of Health Plans, gathered 100
senior citizens to rally on Capitol Hill today for higher
Medicare reimbursements. The industry said the administration
didn't heed industry warnings that the payment cuts would lead to
reduced benefits.
PacifiCare Health Systems Inc., the HMO with the largest
number of Medicare enrollees, and other health plans said this
summer they were considering raising co-payments for the elderly
to help offset cuts in the growth of their Medicare payments.
The companies are paid a fixed fee to care for Medicare
patients, which is adjusted regionally for differences in health
costs. The 1997 law reduced the annual growth of those payments
by $22 billion over five years.
''Beneficiaries' access to affordable coverage is eroding
altogether,'' because of the Medicare cuts, said Karen Ignagni,
chief executive of the American Association of Health Plans, the
industry trade group.
The 1997 Medicare cuts were enacted after reports that HMOs
were largely treating healthy senior citizens who, on average,
cost far less to treat than what Medicare was paying in
reimbursements.
Medicare Payments
Medicare payment increases to HMOs have been held to 2
percent this year in many parts of the country, compared with
raises of 6 percent to 10 percent before the passage of the 1997
law.
Payments to HMOs will rise 2 percent to 12.9 percent next
year, in the 100 U.S. counties that have the largest numbers of
Medicare HMO patients. Still, 99 HMOs have said they will drop
coverage of 327,000 senior citizens next year.
The Clinton administration attributes the withdrawal of
coverage to competition among HMOs.
''Decisions about pulling out of the program have much more
to do with market forces -- competition'' than Medicare cuts,
said Chris Jennings, a White House health aide.
HMOs, which control costs by restricting patient access to
services and limiting patients to a roster of affiliated doctors,
have attracted Medicare beneficiaries by offering them
prescription drugs and other benefits not available in the
traditional fee-for-service program.
The administration report said statistics show a decline in
HMO drug benefits. The report says that next year:
-- All health plans will charge beneficiaries a co-payment
for medicines for the first time.
-- The percentage of HMOs that limit a patient's annual
prescription-drug coverage to $500 or less will rise to 32
percent, from 21 percent in 1999.
-- HMO monthly premiums will rise sharply in some states. In
New Hampshire, for example, average premiums will rise to $40
from $11.
-- Only 4 percent of Medicare beneficiaries in rural areas
will be able to get drug coverage through an HMO.
The only way to ensure affordable access to drug benefits,
Jennings said, ''is to ensure a drug option is offered (to all
Medicare beneficiaries) and make sure it is subsidized.''
''We are not saying HMOs are bad,'' he said. ''We're saying
under the current system they can't ensure a meaningful drug
benefit for all beneficiaries.
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