ElderWeb

Kris Hundley of the St Petersburg Times reports on a disturbing incident where an unwary senior citizen who thought she was discussing coverage for her drug costs found herself unwillingly enrolled in a Medicare HMO. A salesman came to her door to ask her if she was interested in having her drug bills paid. When she said she certainly was interested in that, she was pressured into signing papers to sign up for a Medicare HMO that included drug coverage. She soon found out that none of her doctors was in the HMO network and told the salesman not to sign her up until she had time to think more about it, but when she went to the doctor she found the change had been made and her bills were no longer covered under traditional Medicare. Eventually things got straightened out, but the story raises a question about whether other seniors in other parts of the country are falling for this kind of pitch. Kris calls it "slamming" in reference to the practices of the telephone providers who got in trouble a couple years ago for "slamming" people into new telephone service plans without their full understanding of what was going on. Read the full story on the St Petersburg Times web site.

Governor Gray Davis announced a new initiative to pay premiums of approximately 40,000 elderly and disabled Californians who faced disruption of their health care when nine Medicare+Choice HMOs in California implemented price increases on January 1, 2001. Last fall, nine Medicare+Choice HMOs in California and others nationwide announced plans to increase premiums to cover rising costs of health services. These increases affected beneficiaries who are eligible for both the state's Medi-Cal program and the federal Medicare program. By ending enrollment in their plans these individuals would have returned to a fee-for-service health care plan. These plans are more costly to the beneficiaries and the state.

Under the new program, California will pay the premiums for these individuals, effective January 1. The state is paying the HMOs directly, eliminating the need for individuals to make a payment each month. The payments are comprised of 50 percent General Funds and 50 percent federal matching funds. Initial annual cost projections for the program are $8 million in the current fiscal year and $17 million in subsequent years.

In response to concerns about the large number of insurance companies exiting the Medicare HMO market, Congress has enacted new increases in the payments that HMOs can receive. The HMOs received an increase of about 2% this month, but will receive another increase to raise their payments again in March.

Medicare HMOs receive county-specific rates, with the lowest rates in rural counties and the highest rates in urban areas. Rural areas, in particular, have been left without any Medicare HMO plans, since the insurance companies have insisted that the payments in rural areas were particularly inadequate. Based on this, the largest increases will go to some rural counties. Counties which were at the floor under the old rate schedule will see rates increase from $415 to $475 per member per month. The floor for urban areas has been increased to $525.

Managed care organizations will see an increase of $9 billion in reimbursement and risk adjustment rates over the next five years. According to the legislation signed on December 21, 2000, managed care organizations that currently contract with HCFA may use the funds only to reduce beneficiary premiums or co-pays, enhance benefits, stabilize or widen the network of health care providers available to beneficiaries, or reserve funds to help offset premium increases or reduced benefits in the future.

To qualify for the increased rates, which are effective beginning March 1, 2001, managed care organizations that renewed their contracts with HCFA for 2001 are required by law to revise their Adjusted Community Rate Proposal (ACRP) and submit this to HCFA by January 18, 2001.

Managed care organizations that notified HCFA that they are ending their contract or reducing their service areas for 2001 may rescind those decisions and receive the increased capitation payments if they submit a new ACRP for HCFA review by January 18, 2001.

Seniors who use up their prescription drug benefits are far more likely to drop their HMO coverage, according to research by Express Scripts Inc., one of the nation's largest pharmacy benefit managers (PBMs). The study confirms results of a earlier report by researchers at UnitedHealth Group, a Minneapolis, Minnesota-based managed care company, that linked Medicare HMO disenrollment to the exhaustion of drug benefits.

Although researchers concede that other forces may have factored into seniors' decisions to drop out of their HMOs, the study results suggest that drug caps do indeed sway enrollees' thinking in the matter. "What we found is that the relative risk of disenrollment is two to three times greater for those whose annual prescription drug costs exceed the coverage limits of their plan," Dr. Cox noted. "This finding held true, no matter how the plan was administered."

A synopsis of the study by Dr. Cox and colleagues at Express Scripts appears in a letter to the editor in the November 22/29 issue of The Journal of the American Medical Association.

Medicare beneficiaries in Maine have been dealt a "one two" punch by insurance companies. First they lost their only Medicare HMO, and now they are facing 25% increases in premiums for the Medigap policies they'll need when they return to the regular Medicare program.

The last Medicare HMO available in Maine, Aetna U.S. Healthcare, will no longer participate in the Medicare program and has announced that participants in their plan will no longer have coverage effective January 1. Since there are no other Medicare HMOs left in the state, all Medicare beneficiaries in Maine will have to rely on the standard Medicare program for coverage. Those who want to protect themselves against the significant deductibles and co-insurance in the standard Medicare plan will probably want to find a private MediGap insurance policy (also called a Medicare Supplement policy). Now it appears the state's residents may be in for another shock, since insurance companies that provide these policies have requested steep increases in their Medigap premiums effective January 1. Anthem Blue Cross is requesting an average rate increase of 13.5% and Banker's Life is requesting increases ranging from 7.5% to 30% on their Medicare supplement plans effective January 1, 2001. The Maine Department of Insurance reports that the average increase requested for Maine policies is 25.6%. The Department of Insurance is reviewing these requests, and must approve them before they would become effective.

Seniors in most major markets will incur significant increases in 2001 for out-of-pocket costs due to Medicare HMO benefit reductions, particularly for prescription drugs, and increases in both copayments and monthly premiums. HealthMetrix Research Inc., an independent managed care research firm, has released its 2001 Medicare HMO CostShare Report comparisons that estimate annual out-of-pocket costs for seniors enrolled in Medicare HMOs in 52 major markets across 24 states for premiums and benefits effective January 1, 2001. They report that healthy seniors in Medicare HMOs will see out-of-pocket cost increases as high as 200% in Boston, and 100% in Houston and Philadelphia.

HealthMetrix comparisons are estimates of the annual out-of-pocket costs for Medicare HMO enrollees based on projected health status examples ? GOOD, FAIR, or POOR health. The findings can be used to identify which plan(s) may be the most favorable in lowering your health care costs. The findings also identify how much your health care costs may increase as your health status declines and your utilization of health care services increases. People who visit the site can compare the costs of the specific Medicare HMO plans in the 52 major markets that HealthMetrix tracks.

Among the 237 HMOs reviewed by Weiss Ratings that opened their doors to Medicare beneficiaries in recent years, 147 will have fully or partially abandoned the business by December 31, leaving only 90 HMOs that are continuing to maintain their current Medicare business. Weiss reports that among these remaining 90 HMOs, 37 are losing money. They lost a total of $645 million in 1999, plus another $82 million in the first quarter of 2000.

"Seniors who have been dropped from their HMO should not rejoin another," commented Martin D. Weiss, Ph.D., chairman of Weiss Ratings, Inc. "The latest Medicare withdrawals greatly narrow the viable choices available to seniors down to just a handful of profitable and financially healthy Medicare HMOs, and even many of these may soon be dropping out of the business."

Whether they have been dropped from an HMO or not, Weiss Ratings recommends that seniors seriously consider returning to Medicare while buying a good Medigap policy. However, consumers should buy only those benefits they truly need and shop around carefully to avoid overpricing, which is still common in the industry.

Weiss issues safety ratings on more than 16,000 financial institutions, including life and health insurers, Blue Cross Blue Shield plans, property and casualty insurers, banks, and brokers.

On August 9, 2000, a proposed "settlement agreement" was filed with the federal district court in Arizona in Grijalva v. Shalala, a nationwide class action lawsuit brought by Medicare HMO enrollees. This lawsuit involves the type of information beneficiaries receive when their HMO wants to deny, reduce, or terminate services, and their appeal rights if they disagree with your HMO's decision. Everyone who is an enrollee of a Medicare-contracting HMO is a part of the nationwide class represented by the Medicare HMO enrollees who brought this lawsuit.

Under the proposed agreement filed with the court, Medicare would propose to create a new system where a HMO would be required to let beneficiaries know 4 days before it wanted to end home health, nursing home, or certain outpatient rehabilitation care. This advance written notice would explain:

• Why the HMO thinks that services are either not needed or are not covered
• How they can go about obtaining a fast appeal of the decision from an independent decision maker outside the HMO if you think the services are covered
• That payment for the costs of care will continue at least until noon of the day following the decision by the independent decision maker.

Under the proposed settlement, Medicare beneficiaries agree that certain issues would no longer be part of this lawsuit, such as how Medicare HMOs inform them when they want to reduce services. However, this agreement would not prevent anyone from starting another lawsuit about these issues, or about issues concerning whether your HMO covers all of the services that it should. This agreement would settle only the issue of what information they receive and how they appeal when their HMO wants to terminate or deny up-front your services. Beneficiaries would still be able to bring lawsuits appealing individual HMO decisions to terminate or deny services.

House and Senate Republicans Thursday unveiled details of a proposal to spend $28.2 billion over 5 years to give back funds to hospitals, managed care plans, nursing homes, and other health care providers whose Medicare payments were cut in the 1997 Balanced Budget Act and to expand benefits for Medicare patients. Last year Congress refunded about $17 billion to providers hurt by 1997 cuts that went deeper than intended.

An agreement has been reached on the Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000 by Commerce Chairman Tom Bliley (R-VA), House Ways and Means Chairman Archer (R-TX), Senate Finance Committee Chairman Bill Roth (R-DE), Health Subcommittee Chairman Bill Thomas (R-CA), and Commerce Health Subcommittee Michael Bilirakis (R-FL).

Managed care plans would receive most of the money, about $10.2 billion of the total. Democrats do not agree that the HMOs should receive that much money, and Clinton has threatened to veto such a bill. They say Medicare managed care are already overpaid and the funds should go to other providers, but Republicans said that managed care received a much smaller share of last year's bill and that it is important to prevent more plans from dropping out of Medicare.

• HMOs would receive $10.2 billion more from Medicare over five years than under current law ? $6.2 billion in basic Medicare payments, plus $4 billion to reflect the cost of new benefits and the higher rates for doctors, hospitals and nursing homes.
• Hospitals would receive $8.4 billion of additional Medicare money in the next five years. This includes a full adjustment in 2001 to cover inflation in the cost of goods and services used by hospitals.
• Nursing homes would receive $1.6 billion of additional Medicare payments. The bill would enable nursing homes to pay higher wages to nurses and nursing assistants but would not require them to use the money for that purpose.
• Home health care agencies would receive $1.3 billion in additional payments over the next five years. This would provide a 12-month delay in a 15% cut that is scheduled to take effect next October.

As reported earlier, many Medicare HMOs will no longer provide services in some or all of their service areas starting January 1, 2001. Although there has been speculation that the remaining plans would implement increases in premiums or co-payments or reduce benefits, there was no way to be sure until they announced pricing for 2001. Most of the new plan prices are now available, and it appears there is a definite increase in out-of-pocket costs. I analyzed plans available in Illinois to see what patterns seem to be emerging, using data from the Medicare.gov site.

14 plans will be discontinued in Illinois, including all of Aetna's plans, and 5 new plans will be implemented, leaving a total of 11 plans available in all of Illinois, most of which are only available in selected areas. Several plans with the highest premiums in 2000 were among the eliminated plans, which distorts the comparison of premiums in the two years. Even the companies that provided plans in both years have discontinued some plans and implemented others, making comparisons difficult. Four of the 14 remaining plans have no prescription drug coverage at all in 2001, including all of the plans that charge no premium. Of those that provide some prescription drug coverage, co-payments for generic/brand-name prescription drugs increased from $10/$10 or $5/$15 to $10/$35, and some plans have put caps on costs, as well. Some other comparisons drawn from the data:

Humana

The lowest cost Humana plan in 2000 has no premium, has no co-payments for physician or hospital stays, and requires $5/$15 co-payments for generic/brand-name prescription drugs. The lowest cost plan in 2001 still requires no premium, but has added a $15 co-payment for physician visits and no longer includes a prescription drug benefit.

The highest cost plan in 2000 has a $49 premium and calls for a $10 co-payment for a physician visit and $5/$15 co-payments for prescription drugs. The highest cost plan in 2001 has a $69 premium, keeps the physician visit co-payment at $10, but increases the co-payments for prescription drugs to $10/$35.

Mercy Health Plans

The lowest cost Mercy Health Plans HMO in 2000 has a $39 premium, and requires a $10 co-payment for physician visits and prescription drugs. The lowest cost plan in 2001 has a $69 premium, and requires a $15 co-payment for physician visits, has added a $200 co-payment for hospital stays, and requires a $10/$35 co-payment for generic/brand-name drugs.

The highest cost plan in 2000 has a $69 premium, and requires a $10 co-payment for physician visits and prescription drugs. The highest cost plan in 2001 has a $89 premium, and requires a $15 co-payment for physician visits, has added a $200 co-payment for hospital stays, and requires a $10/$35 co-payment for generic/brand-name drugs.

Changes in Out-Of-Pocket Requirements for HMOs in Illinois
From 2000 to 2001

PacifiCare, which runs Secure Horizons, the largest Medicare HMO in the country, announced premium increases for its HMO members for 2001. In some cases premium increases will be quite significant. The company pointed out that this will vary widely from area to area, depending on the level of reimbursement the company gets from the federal government, which is different in each county. For instance, they said that in Los Angeles County beneficiaries will pay no monthly premium other than the regular Medicare Part B premium, and the copayment of $5 to see doctors, $7 for generic drugs, and $15 for brand-name drugs will remain unchanged for the second year in a row. In contrast, in Pueblo County, Colorado, where Secure Horizons will be the only Medicare+Choice health plan operating next year, beneficiaries will be charged a $99 monthly premium over and above the regular Medicare Part B premium. They will also pay $15 co-payments for doctor and specialist visits, and will receive a $750 annual prescription benefit for brand-name pharmaceuticals and an unlimited prescription benefit for formulary generics.

The Office of the Inspector General (OIG) of the Department of Health and Human Services just released a report that assesses the impact on Medicare beneficiaries of the withdrawals of HMOs from the program in 1999. This report does NOT include information about the current withdrawals, which are expected to impact 934,000 beneficiaries this year.

The 1999 HMO withdrawals affected fewer beneficiaries than the 1998 withdrawals (about 300,000 in 1999 compared to about 400,000 in 1998), but a greater percentage of them were left without an HMO option in 1999. 30% of beneficiaries had no HMO available to join after the 1999 withdrawals, up from 12% after the 1998 withdrawals.

Fewer beneficiaries chose another HMO. 55% of the affected beneficiaries joined another HMO in 1999, down from 66% in 1998. Most beneficiaries encountered few transition problems when their HMO withdrew, but about 18% beneficiaries expressed some difficulty, mostly increased cost, primarily related to prescription drugs. Of beneficiaries who went to traditional Medicare, 63% said they would now have to pay for some services which had been covered by their former HMO. Of beneficiaries who joined another HMO, 19% said their new HMO would cover fewer services than their former HMO.

Most beneficiaries said notification of HMO withdrawals was timely and adequate. Beneficiaries viewed their health care to be about the same or better after their HMO withdrew. About 90% of beneficiaries who went to traditional Medicare, and 69% of those who went to another HMO said they kept the same primary care physician, and most beneficiaries also kept at least some of their specialists.

The financial impact was greater on beneficiaries who went to traditional Medicare because most purchased supplemental insurance. The average monthly insurance premium was $108.82 for those who went to traditional Medicare, an increase of $84.06 over what they had been paying in the HMO. The average new HMO premium was $20.27, an increase of $9.08 for beneficiaries who joined another HMO. 69%-75% of those who chose to switch to the traditional Medicare program obtained supplemental insurance. Of those who did not, 55% said it was too expensive.

More than one-fourth of beneficiaries also expressed concern about future HMO withdrawals.

Press Release from HealthMetrix Research Inc.
For Immediate Release July 26, 2000

There is "more than what appears on the surface" to the HCFA announcement this week regarding the 934,000 Medicare beneficiaries whose enrollment in Medicare HMO plans will terminate at the end of this year. The HCFA announcement (7/24/00) concludes that about 83% (775,000) will be able to enroll in another Medicare HMO, if the HMO is accepting enrollees.

Based on telephone contacts with Medicare HMOs this week, HealthMetrix Research Inc. president Alan Mittermaier anticipates that fewer than 50% (467,000) of those losing their Medicare HMO coverage will be able to join another Medicare HMO by next January 1. "The widespread exodus by Medicare HMOs in many markets has triggered remaining HMOs to suspend enrollment or consider doing so very soon. In most instances, these plans simply do not have adequate numbers of primary care physicians to absorb a large influx of new members. From a bottom-line standpoint, it is a losing proposition for the last remaining Medicare HMO in a market to keep its enrollment open when there is a disproportionate number of high-risk, high-cost beneficiaries leaving other Medicare HMOs with nowhere else to go."

Houston is the hardest hit area where six Medicare HMOs will exit at year-end leaving nearly 60,000 beneficiaries without an HMO option. PacifiCare of Texas is the only remaining HMO that will serve the Houston market in 2001. Other hard hit markets include Albuquerque, Atlanta, Baltimore, Cincinnati, Galveston, Hartford, Minneapolis, Santa Fe, Sarasota, Seattle, and Tucson.

HealthMetrix Research predicted in March that up to 1 million enrollees would be impacted by next year's HMO withdrawals. For additional background on HMO withdrawals, visit the HMOs4seniors.com website.

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

Insurance companies had to inform the Health Care Financing Administration (HCFA) by July 3 of planned withdrawals from the Medicare managed care or HMO program for changes they expect to make January 1 of the following year. Many of the largest insurance companies in the program have announced program cutbacks, and estimates are that a total of 700,000+ beneficiaries will be affected by these changes this year, the largest mass-withdrawal in the history of the program.

This is the third year for major changes in this marketplace. In 1999, 41 organizations chose not to renew their Medicare+Choice contracts and 58 reduced their service areas for the year 2000. As a result of those withdrawals, more than 327,000 Medicare beneficiaries were affected and about 79,000 were left with no Medicare managed care options. A year earlier, in 1998, plan nonrenewals and service area reductions affected approximately 407,000 Medicare beneficiaries enrolled in managed care plans and of those, approximately 47,000 had no other managed care options.

Announcements made so far include:

The nation's largest health insurer, Aetna U.S. Healthcare, said that it will not renew its Medicare contract next year in 11 states -- Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Ohio, Texas and Washington, as well as some counties in New York, Pennsylvania and Northern California. The Aetna withdrawals would affect 355,000 Medicare beneficiaries.

• UnitedHealth Group Inc., the nation's No. 2 health insurer, said it will stop providing Medicare coverage in parts of in 45 counties in seven states -- Arizona, Florida, Georgia, Illinois, Maryland, Massachusetts and Rhode Island. The cutbacks will affect about 56,000 of United's 400,000 Medicare customers.
• Pacificare Health Systems, the nation's largest Medicare HMO with 1 million customers, said it will not have any cutbacks in California, its biggest market, but said it was closing its managed healthcare unit in Ohio and Kentucky, where it has more than 60,000 customers, to concentrate on operations in the western United States.
• Humana said it will withdraw its Medicare plans in parts or all of six states at the end of the year. The decision affects about 84,000 of their 518,000 members, including those in parts of Florida, Texas, Ohio, Kentucky, Illinois and Missouri.
• Cigna Corp. said it was pulling out of certain Medicare markets, affecting about 104,000 beneficiaries, but has not announced the specific regions which will be affected.
• Foundation Health Systems (FHS) said that its subsidiaries would no longer offer a Medicare+Choice product in 18 counties in Arizona, California, Connecticut, New Jersey, New York and Pennsylvania, as of January 1, 2001. The action will affect approximately 19,000 of their 259,000 Medicare HMO members.
• Sierra Health Services said that it would pull its Medicare+Choice products out of 14 counties in the Houston, Texas area, affecting about 1,500 people.
• Oxford Health Plans said that it intended to discontinue offering its Medicare+Choice program in eight counties in New Jersey beginning next January, affecting approximately 7,200 beneficiaries. The company said that to would continue to offer its Medicare products in 12 counties in New York, New Jersey and Connecticut.

The American Association of Health Plans (AAHP), America?s largest managed healthcare trade association, earlier announced the results of a survey showing that 711,055 beneficiaries will be affected in 2001 by health plan withdrawals from Medicare+Choice markets. The survey includes health plans serving 5 million beneficiaries, about 85% of all beneficiaries in Medicare+Choice. The survey does not identify the specific plans or regions affected by planned withdrawals.

The health plans responding to the survey cited inadequate funding and over-regulation as the primary reasons they were forced to withdraw from these markets. HCFA executives continued to maintain that program funding is adequate, and have announced an expedited process for approving plans which would provide coverage in the areas affected by the withdrawals. In spite of HCFA's reassurance, it certainly appears that the Medicare+Choice program has been less than a resounding success.

HCFA Administrator Nancy-Ann DeParle cautioned beneficiaries that they do not need to do anything until they receive an official letter from their HMO in October, and that they will have coverage under their current HMO until January 1, 2001. However, it is not too early for affected beneficiaries to begin educating themselves about their rights and the alternatives available to them.

HCFA will post a detailed list of HMO withdrawals in all affected areas by July 10 on http://www.medicare.gov, as well as information for beneficiaries about next steps and alternatives. HMOs4Seniors has posted some additional information about plan withdrawals and beneficiary alternatives at http://www.hmos4seniors.com/briefing2.htm. Watch for more information in upcoming issues about Medicare HMO beneficiary rights and alternatives.

Partly as a response to the exodus of HMOs from the Medicare program, the Health Care Financing Administration (HCFA) issued relaxed rules designed to make it easier for HMOs to remain in, or return to, the Medicare program. The new rules allow for increasing flexibility in establishing a provider network, improving freedom of choice by allowing plans to offer beneficiaries a point of service option that broadens access to health care services from both in-network and out of network providers, allowing organizations that left Medicare+Choice to return in two years, instead of five, and easing compliance plan reporting by eliminating the self-reporting component of the Medicare+Choice program.

Medicare HMO beneficiaries may end up paying more money for fewer health benefits if current trends continue, according to a study released on Monday at the annual meeting of the Association for Health Services Research (AHSR).

They reported that the percentage of Medicare HMOs that offer a "zero premium" product as their basic Medicare+Choice plan dropped to only 42% in 2000, down from 62% in 1999 and 70% in 1998. At the same time, the percentage of plans which charged a premium of $50 or more increased from 7% in 1999 to 23% in 2000.

The number of basic plans that offer prescription drug coverage dropped from 73% in 1999 to 68% in 2000, and many had increased cost-sharing requirements. The percentage of plans which charged a co-payment of $20 or more on brand-name drugs increased from 18% in 1999 to 32% in 2000, and the percentage which provide generic drugs without a co-payment dropped from 6% in 1999 to 4% in 2000.

"Policymakers interested in encouraging more equitable and complete access to comprehensive benefits would be well-advised to consider alternatives for reforming Medicare benefits and reducing the geographic disparity in options available to beneficiaries," the authors concluded. Marsha Gold of Mathematica Policy Research Inc. and Amanda Cassidy, a former Mathematica analyst, now with the Health Care Financing Administration (HCFA) presented results of the study, which was funded by The Commonwealth Fund.

The Health Insurance Association of America (HIAA) has issued a report, "The Medicare+Choice Program: Is it Code Blue?" In this report, the HIAA discusses the continuing problems faced by the Medicare managed care program as HMOs continue to exit the program. Two years ago 99 plans either reduced or eliminated their participation in the Medicare managed care program, impacting about 407,000 beneficiaries, last year another 99 plans reduced or eliminated participation, impacting another 327,000 beneficiaries, and this year two of the largest insurers have announced that they will likely cut back. Both Aetna and CIGNA have announced that their Medicare HMOs will probably withdraw from most or all markets in the coming year.

All these cuts have severly impacted beneficiaries. When a plan withdraws from the program, all the beneficiaries in the plan are forced to find a new HMO or return to the standard Medicare program. The new HMOs may not include the doctors or other provider the beneficiary prefers, they may cost more, or they may not cover prescription medications or other costs the former plan provided. Some beneficiaries live in areas where no other Medicare HMOs are available, and had to return to the standard Medicare program. In many cases, they also would have had to purchase private Medigap insurance at the same time, a cost which can be quite significant.

HIAA blames inadequate funding for the problems. They state that Federal funding increases have been only 2%, while the annual cost of medical care has increased around 8%, and the cost of prescription drugs is increasing around 15% each year. These inadequate payments, as well as the crushing cost of excessive government regulation, are causing HMOs to withdraw from the Medicare program "at an alarming rate," HIAA notes.

USA Today reports that Sterling Life Insurance, a subsidiary of Aon Corporation, has developed a new alternative to Medicare HMOs. They will offer Medicare patients a fee-for-service alternative in the first program of its kind. The program will allow patients unlimited access to physicians and other providers, like traditional Medicare, but will charge patients a $10 per visit co-payment for physician visits and $300 per stay hospital co-payment, rather than asking beneficiaries to pay 20% of approved charges as the traditional Medicare program does. The projected cost for this plan is $55 a month over and above the regular Part B premium, but beneficiaries would not need to purchase Medigap coverage, which could cost far more than $55 a month. The plan does not include coverage for prescription drugs, however, and no other insurer has attempted to provide this sort of coverage, so it is to early to tell how well this will work in actual practice. The plan will be available in 17 states starting July 1, including Alaska, Arkansas, Idaho, Kentucky, Louisiana, Minnesota, Mississippi, Nebraska, New Mexico, Nevada, Ohio, Oregon, South Dakota, Tennessee, Texas, Utah, and West Virginia.

Aetna announced plans to eliminate Medicare HMO plans in many market areas. They stated that a "substantial" number of its 670,000 Medicare health maintenance organization members will be affected, mainly in the Northeast, California and Texas. They will disclose specifically which cities will be affected on July 1, when they make their annual filing with the government. This will be the third year that turbulence in the Medicare HMO marketplace will force beneficiaries to find a new Medicare plan due to the withdrawal of their carrier from their marketplace. Two years ago about 400,000 people were affected, and last year another 300,000 beneficiaries were impacted when insurers exited dozens of markets across the country.

Medicare beneficiaries have had the option since 1998 to join a managed care plan, or HMO, as an alternative to the standard Medicare program. Many beneficiaries made the switch in order to reduce the out of pocket expenditures from deductibles or co-insurance, to avoid the need to purchase a Medigap policy, or to get the coverage for outpatient prescription drugs which is lacking in the standard program.

Changes in Medicare HMOs impact beneficiaries in two very significant ways, the impact on their ability to retain their current physician and the amount and cost of their prescription drug coverage. A beneficiary who must change from one Medicare HMO to another may lose prescription drug coverage, or may have to change physicians. A beneficiary who leaves a Medicare HMO and returns to the standard Medicare program will probably need to obtain a Medigap policy to insure against the deductibles and co-insurance requirements of the standard Medicare program. Federal law mandates that beneficiaries who are forced to purchase Medigap coverage because their HMO plan is no longer available cannot be denied coverage due to their medical condition, but only the most expensive Medigap plans include any coverage for prescription drugs.

Kaiser Permanente, Foundation Health Systems, and United Healthcare are all now recommending to their patients that they buy higher dose pills and cut them in half to save money, since larger pills cost about the same as smaller ones. The American Pharmaceutical Association warned patients to be cautious about this practice, since it's difficult to cut many pills precisely in half, and because of the risk that the patient will inadvertently swallow the uncut pill and receive too high a dosage. The HMO's have made this practice optional, but some patients are willing to do it to save money on their co-payment.

Alan Mittermaier, President of HealthMetrix Research Inc predicts there will be widespread withdrawals of Medicare HMO plans by 2001. He bases this prediction on the curtailment of marketing activity and the reduced open enrollment periods the plans are offering, as well as the financial distress of the industry as a whole. He sees little hope for legislative support that would make Medicare HMOs more financially attractive, since there is not much sympathy on Capitol Hill for the HMO industry. Based on this information, his suggestion is that beneficiaries in areas with only one or two Medicare HMOs stick to the traditional Medicare plan. This would ensure they don't have to deal with the upheavals already experienced by several hundred thousand beneficiaries in 1998 and 1999, when dozens of insurers exited Medicare HMO markets.

Medicare HMO Humana has settled for $800,000 in a suit which alleged they defrauded Medicare beneficiaries in Florida. Humana's plan enticed beneficiaries to join the plan with a promise of $700 off the price of hearing aids, then charged plan participants more than they charged others for the hearing aids, effectively wiping out the promised discount. The company admitted to no wrong-doing and cooperated with the investigation by the state Attorney General's office.