HMO's and medicare, interesting article
<<More health maintenance organizations will soon pull out of Medicare or curtail their participation, disrupting insurance coverage for hundreds of thousands of elderly people, according to federal officials, independent experts and managed-care executives.
Despite pledges by the Clinton administration to slow the withdrawal of H.M.O.'s from Medicare, the insurance program for the elderly, the exodus may actually accelerate this year, a White House official and several experts said.
In a striking example of a national trend, the Cigna Corporation said today that it would end coverage for 104,000 Medicare beneficiaries in 11 states: New York, New Jersey, Connecticut, California, Delaware, Florida, Georgia, Maryland, Tennessee, Texas and Virginia.
Cigna will drop 8,000 people in New York City and Nassau and Suffolk Counties in New York; 10,700 in Connecticut, 4,800 in northern New Jersey, 17,400 in the Los Angeles area, and 23,300 in Maryland, Virginia and Washington, D.C.
Aetna Inc., with 676,000 Medicare beneficiaries enrolled in its H.M.O., said it would pull out of some markets, without specifying which ones.
Medicare will increase payments to H.M.O.'s next year, but costs are rising much faster. Many health plans say they have concluded that Medicare's managed-care program, in its current form, is not viable in the long run.
Beneficiaries, who are elderly or disabled, must arrange other insurance by Jan. 1. People dropped by private health plans can try to enroll in another H.M.O. or can return to Medicare's original fee-for-service program. Insurance coverage for prescription drugs -- one of the chief attractions that drew them to managed care -- is not available under the original program. And many people in managed care have established relations with individual doctors that may not be easy to duplicate in a new plan.
In the last two years, H.M.O.'s have pulled out of more than 400 counties in at least 33 states, directly affecting 734,000 Medicare beneficiaries -- 407,000 in 1999 and 327,000 this year. The turmoil touched 1 of every 9 beneficiaries enrolled in managed care.
About 6.2 million of the 39 million Medicare beneficiaries, or 16 percent, are now in H.M.O.'s.
July 3 is the deadline for H.M.O.'s to announce their intentions for next year. Clinton administration officials and industry experts say the number of people forced out of H.M.O.'s may exceed this year's figure.
"The number may be greater than we've seen in the past," said Chris Jennings, the health policy coordinator at the White House. "We don't have a stable marketplace for managed care."
Gary M. Frazier, a senior health care analyst at Deutsche Banc Alex. Brown, said, "It wouldn't surprise me if we have another round of pretty significant exits from the Medicare managed-care program." Charles A. Boorady, a vice president of Goldman Sachs, said the number of people affected could be "very significant, in the range of 400,000 to 1 million." And Alan J. Mittermaier, president of Health Metrix Research Inc., an independent research organization based in Columbus, Ohio, said he expected "widespread Medicare H.M.O. withdrawals effective January 2001, resulting in displacement of 500,000 to 1 million beneficiaries."
Representative Nancy L. Johnson, Republican of Connecticut, said she was distressed that H.M.O.'s were pulling out of more markets.
"It's a crime that the federal government has been so oblivious to this problem," Mrs. Johnson said in an interview. "Medicare has smothered H.M.O.'s with regulation and starved them with low payments."
Administration officials said they wanted to preserve H.M.O.'s as an option for the elderly and the disabled, but had opposed the industry's effort to get more money because they believed that H.M.O.'s were overpaid by Medicare.
Company executives emphasize what they say are inadequate reimbursement rates. Aetna said it was "reviewing future options for its Medicare business on a market-by-market basis and expects to exit a number of markets next year."
Joyce A. Oberdorf, a spokeswoman for Aetna, said: "Our financial performance in the Medicare business has deteriorated and is disappointing to us. It's become increasingly difficult to offer an affordable quality product with the existing reimbursement and premium structure."
Health Central of Harrisburg, Pa., a not-for-profit managed care company owned by six hospitals, said it had already decided to pull out of Medicare next year, leaving 6,500 beneficiaries to seek other insurance.
Robert J. Dondes, president of Health Central, said his company had decided to pull out because of the losses it would sustain on its Medicare business.
"We made the decision with a great deal of hesitation and a great deal of regret," Mr. Dondes said in an interview.
"We have a mission to serve seniors, but it was impossible to reconcile our costs with the reimbursement we were receiving from Medicare."
The withdrawals of the last two years appear to have undermined beneficiaries' confidence in H.M.O.'s, slowing the growth in enrollment.
Tricia Smith, chief federal health lobbyist at AARP, the nation's largest organization of older Americans, said: "Our members have become much more cautious about the decision to join H.M.O.'s. They realize that managed care doesn't necessarily deliver from one year to the next in the way they anticipated."
Under Medicare, an H.M.O. gets a fixed amount of federal money for each beneficiary. Payments, set according to a complex statutory formula, vary by county, with many anomalies. Urban areas generally get more than rural areas, but some urban areas, like New York City and Miami, get much more than others, like Minneapolis or Portland, Ore.
Medicare pays $747 a month for a person living in Philadelphia, but only $422 for a resident of York County, Pa. That disparity is far greater than the difference in medical costs and helps explain why H.M.O.'s are pulling out of York County. Moreover, Medicare generally spends less on an H.M.O. patient than on a fee-for-service patient in the same locale, and the gap is growing.
In October 1998, soon after the first large group of health plans announced that they were cutting back their Medicare operations, President Clinton said, "These decisions have brought uncertainty, fear and disruption into the lives of tens of thousands of older Americans across the country." He vowed then to "prevent another disruption in coverage like the one we are seeing now."
When the same thing happened a year later, the California Legislature passed a resolution saying that thousands of H.M.O. patients were "in a state of panic and confusion regarding their future ability to access health care services, including pharmacy benefits, at a reasonable cost."
Clinton administration officials initially denied that there was a serious problem and insisted that H.M.O.'s were just making routine business decisions, based on many factors. But now, with more health plans joining the exodus, officials have become more worried.
In the last few weeks, federal officials have been quietly calling H.M.O.'s to ask about their plans for the coming year and to find out what the government could do to keep them in the program.
The Clinton administration emphasizes that such calls do not reflect any change in policy, and officials still maintain that H.M.O.'s are overpaid for the patients they treat. But Karen M. Ignagni, president of the American Association of Health Plans, said, "Our members would not be leaving Medicare if they were overpaid."
Federal officials say some H.M.O.'s may be cutting back participation in Medicare because of pressure from Wall Street.
In a recent report on the H.M.O. industry, Mr. Frazier of Deutsche Banc said, "We hold little hope that Medicare is going to emerge as an attractive business for publicly traded managed-care organizations in the near future."
In an interview, Mr. Frazier said, "Investors have rewarded managed-care companies that stayed away from Medicare."
Melissa L. Rehfus, vice president of Blue Cross and Blue Shield of Florida, which runs an H.M.O. serving 151,000 Medicare beneficiaries, said, "Our costs went up 6 percent to 8 percent last year, but our Medicare payments have increased only 2 percent."
Mr. Jennings, the White House official, said the best thing Congress could do for H.M.O.'s would be to pass Mr. Clinton's plan to revamp Medicare and guarantee prescription drug coverage as an option for all beneficiaries. Then, he said, H.M.O.'s would get a "direct subsidy" for the drug benefits they provide.
When H.M.O.'s pulled out of Medicare in the past, members of Congress in the affected states were inundated with telephone calls from constituents. Democrats say they have come to realize that some of their traditional constituency groups are particularly vulnerable.
A recent study by the Kaiser Family Foundation said blacks, Hispanics, low-income people and disabled people under the age of 65 "experienced the greatest problems" when H.M.O.'s withdrew from Medicare.>>
nytimes.com |
