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1 Million Medicare HMO Enrollees Must Change Plans

Tue, 07/25/2000 - 11:00pm — Karen Stevenson
Description: 

Health Care Financing Administration (HCFA) Administrator Nancy-Ann DeParle announced that previous gloomy estimates that about 750,000 Medicare HMO beneficiaries would have to find a new Medicare plan by next January were not gloomy enough -- the actual number of affected beneficiaries has reached 934,000! In the three years this program has been in place, nearly 2 million beneficiaries will have been forced to change plans due to program withdrawals or service area reductions.

For the year beginning January 1, 2001, 65 Medicare+Choice HMOs chose not to renew their Medicare+Choice contracts and 53 reduced their service areas. In past years HCFA has had a number of new plans stepping in to replace the programs that exited, but this year HCFA is only reviewing 5 new M+C applications, and only 5 current M+C organizations have submitted service area expansions.

Ms. DeParle tried to soften the impact of this announcement by pointing out that about 85% of affected beneficiaries live in areas where another Medicare HMO is available, but that does not take into account concerns beneficiaries may have about joining any HMO after seeing the turmoil in this program for the last three years. I examined the list of affected beneficiaries and noticed another problem -- in addition to the 15% of beneficiaries that have no other HMO to use, about 36% of the affected beneficiaries have only one other Medicare HMO in their area. If that last remaining HMO is at capacity, they will not be accepting new members, and the beneficiaries who lost coverage in those areas will have no option but to return to the standard Medicare program. Beneficiaries may also want to return to the standard fee-for-service Medicare program if their physician is not included in the network of the alternative HMO plan, or if the premiums for that plan are unacceptably high (many plans have announced that they will be increasing premiums next year.)

By most accounts, the Medicare managed care option, called Medicare+Choice, has failed to accomplish its objectives. Although about 70% of seniors and disabled people covered by Medicare live in areas served by at least one managed care plan, only about 16% of all Medicare beneficiaries chose to enroll in a Medicare health maintenance organization.

Plans that are not renewing their contracts for the 2001 contract year will continue to provide services to their Medicare enrollees through December 31, 2000. These plans are required to send all affected beneficiaries an information package by October 2, 2000 that explains beneficiaries? options to return to original fee-for-service Medicare or enroll in another Medicare+Choice organization, if one is available. All beneficiaries have the option of returning to original fee-for-service Medicare and may also have rights to supplemental coverage. Beneficiaries also have the option of enrolling in another Medicare+Choice organization, if one is available. If they take no action, they will automatically return to original fee-for-service Medicare on January 1, 2001. Beneficiaries may call 1-800-MEDICARE (1-800-633-4227) for assistance in making the right health care option decision.

Other Medicare managed care plans and private fee-for-service plans that operate in the same area as a nonrenewing plan are required to be open to accept new enrollments during a Special Election Period, October 1 through December 31, unless the plan has a capacity limit. Beneficiaries can choose an effective date of November 1, December 1 or January 1, as long as the plan receives the completed election form before the effective date.

Beneficiaries in Medicare+Choice plans who want to switch to original fee-for-service Medicare may do so as soon as they receive their final notice from their Medicare+Choice plans. If they choose this option, beneficiaries have 63 days from the date of the notice (from October 2, 2000 until December 4, 2000) to apply for a Medigap policy and be guaranteed the same protections they would have if they waited until their coverage expired on December 31, 2000. To exercise this option, beneficiaries must disenroll from their Medicare+Choice plan in October or November, and arrange for their Medigap policy to start the first day of the next month so they will have seamless coverage between the plans they choose. As long as they apply for a Medigap policy no later than 63 days after the coverage with the nonrenewing HMO expires (December 31, 2000), the beneficiary is guaranteed the right to buy any Medigap policy designated "A," "B," "C" or "F" that is available in the state. If the beneficiary applies for one of these Medigap policies no later than March 4, 2001, companies selling these policies cannot place conditions on the policy (such as an exclusion of benefits based on a pre-existing condition) or discriminate in the price of the policy because of health status, claims experience, receipt of health care or medical condition.

Individuals must keep a copy of their HMO?s termination letter to show a Medigap insurer as proof of loss of coverage under this HMO, whether they terminate their membership in October or November or wait until their coverage ends at the end of December. They should also keep a copy of their Medigap application to validate that they acted within 63 days of the final notice of termination.

If beneficiaries dropped a Medigap policy to join their current Medicare managed care plan and they have never enrolled in a similar health plan since starting Medicare, they are guaranteed the right to return to the Medigap policy they dropped if: the Medigap policy they dropped is still being sold by the same insurance company; they disenroll from their current health plan no later than 12 months after they initially enrolled in it (they have to disenroll from their plan before their coverage terminates on December 31, 2000); and they reapply for the policy they dropped no later than 63 days after they disenroll from their Medicare managed care plan.

In addition, beneficiaries who were new to Medicare at age 65 and chose to enroll in their Medicare+Choice plan during their initial election period, and are still in their first 12 months in the Medicare+Choice plan, may choose any Medigap policy sold in the State, including those providing some outpatient prescription drug coverage. These individuals must voluntarily disenroll from the Medicare+Choice plan before the 12 months ends and apply for the Medigap policy within 63 days of their coverage ending.

http://www.hcfa.gov/medicare/nrwebdat.htm Complete list of non-renewing plans and service area reductions

>> Statement by Nancy-Ann DeParle

Health Care Financing Administration (HCFA) Administrator Nancy-Ann DeParle announced that previous gloomy estimates that about 750,000 Medicare HMO beneficiaries would have to find a new Medicare plan by next January were not gloomy enough -- the actual number of affected beneficiaries has reached 934,000! In the three years this program has been in place, nearly 2 million beneficiaries will have been forced to change plans due to program withdrawals or service area reductions.

For the year beginning January 1, 2001, 65 Medicare+Choice HMOs chose not to renew their Medicare+Choice contracts and 53 reduced their service areas. In past years HCFA has had a number of new plans stepping in to replace the programs that exited, but this year HCFA is only reviewing 5 new M+C applications, and only 5 current M+C organizations have submitted service area expansions.

Ms. DeParle tried to soften the impact of this announcement by pointing out that about 85% of affected beneficiaries live in areas where another Medicare HMO is available, but that does not take into account concerns beneficiaries may have about joining any HMO after seeing the turmoil in this program for the last three years. I examined the list of affected beneficiaries and noticed another problem -- in addition to the 15% of beneficiaries that have no other HMO to use, about 36% of the affected beneficiaries have only one other Medicare HMO in their area. If that last remaining HMO is at capacity, they will not be accepting new members, and the beneficiaries who lost coverage in those areas will have no option but to return to the standard Medicare program. Beneficiaries may also want to return to the standard fee-for-service Medicare program if their physician is not included in the network of the alternative HMO plan, or if the premiums for that plan are unacceptably high (many plans have announced that they will be increasing premiums next year.)

By most accounts, the Medicare managed care option, called Medicare+Choice, has failed to accomplish its objectives. Although about 70% of seniors and disabled people covered by Medicare live in areas served by at least one managed care plan, only about 16% of all Medicare beneficiaries chose to enroll in a Medicare health maintenance organization.

Plans that are not renewing their contracts for the 2001 contract year will continue to provide services to their Medicare enrollees through December 31, 2000. These plans are required to send all affected beneficiaries an information package by October 2, 2000 that explains beneficiaries? options to return to original fee-for-service Medicare or enroll in another Medicare+Choice organization, if one is available. All beneficiaries have the option of returning to original fee-for-service Medicare and may also have rights to supplemental coverage. Beneficiaries also have the option of enrolling in another Medicare+Choice organization, if one is available. If they take no action, they will automatically return to original fee-for-service Medicare on January 1, 2001. Beneficiaries may call 1-800-MEDICARE (1-800-633-4227) for assistance in making the right health care option decision.

Other Medicare managed care plans and private fee-for-service plans that operate in the same area as a nonrenewing plan are required to be open to accept new enrollments during a Special Election Period, October 1 through December 31, unless the plan has a capacity limit. Beneficiaries can choose an effective date of November 1, December 1 or January 1, as long as the plan receives the completed election form before the effective date.

Beneficiaries in Medicare+Choice plans who want to switch to original fee-for-service Medicare may do so as soon as they receive their final notice from their Medicare+Choice plans. If they choose this option, beneficiaries have 63 days from the date of the notice (from October 2, 2000 until December 4, 2000) to apply for a Medigap policy and be guaranteed the same protections they would have if they waited until their coverage expired on December 31, 2000. To exercise this option, beneficiaries must disenroll from their Medicare+Choice plan in October or November, and arrange for their Medigap policy to start the first day of the next month so they will have seamless coverage between the plans they choose. As long as they apply for a Medigap policy no later than 63 days after the coverage with the nonrenewing HMO expires (December 31, 2000), the beneficiary is guaranteed the right to buy any Medigap policy designated "A," "B," "C" or "F" that is available in the state. If the beneficiary applies for one of these Medigap policies no later than March 4, 2001, companies selling these policies cannot place conditions on the policy (such as an exclusion of benefits based on a pre-existing condition) or discriminate in the price of the policy because of health status, claims experience, receipt of health care or medical condition.

Individuals must keep a copy of their HMO?s termination letter to show a Medigap insurer as proof of loss of coverage under this HMO, whether they terminate their membership in October or November or wait until their coverage ends at the end of December. They should also keep a copy of their Medigap application to validate that they acted within 63 days of the final notice of termination.

If beneficiaries dropped a Medigap policy to join their current Medicare managed care plan and they have never enrolled in a similar health plan since starting Medicare, they are guaranteed the right to return to the Medigap policy they dropped if: the Medigap policy they dropped is still being sold by the same insurance company; they disenroll from their current health plan no later than 12 months after they initially enrolled in it (they have to disenroll from their plan before their coverage terminates on December 31, 2000); and they reapply for the policy they dropped no later than 63 days after they disenroll from their Medicare managed care plan.

In addition, beneficiaries who were new to Medicare at age 65 and chose to enroll in their Medicare+Choice plan during their initial election period, and are still in their first 12 months in the Medicare+Choice plan, may choose any Medigap policy sold in the State, including those providing some outpatient prescription drug coverage. These individuals must voluntarily disenroll from the Medicare+Choice plan before the 12 months ends and apply for the Medigap policy within 63 days of their coverage ending.

http://www.hcfa.gov/medicare/nrwebdat.htm Complete list of non-renewing plans and service area reductions

>> Statement by Nancy-Ann DeParle