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.

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.

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.

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.