HMOs To Drop 1 Million Elderly

Tuesday, July 25th 2000, 12:00 am

By: News On 6

WASHINGTON (AP) â€” Close to 1 million elderly and disabled Americans will be jettisoned by HMOs as they pull out of the Medicare program this year, the Clinton administration said Monday. The figure is more than 220,000 higher than the HMO industry estimated just two weeks ago.

HMOs participating in Medicare had until July 3 to inform the government of intentions to quit the program.

The earlier estimate in an informal survey by an industry group said at least 711,000 Medicare recipients would lose HMO coverage. The Health Care Financing Administration, which runs Medicare, put that number at 934,000 in Monday's announcement, based on figures compiled after the July 3 deadline.

Dropped Medicare recipients will have to switch to another HMO by the end of this year, if possible, and the HCFA said 83 percent of them have other Medicare-friendly HMOs in their area. The rest will have to use the original fee-for-service Medicare, which lacks many benefits of HMOs.

The American Association of Health Plans, which administered the original survey, said Medicare is ``overregulated and underpaid,'' which it said is why so many HMOs are abandoning the program. More than 700,000 recipients were dropped during a rash of HMO pullouts in 1999.

Federal officials said reimbursements are not the problem.

``The volatility of the Medicare managed-care market underscores the need for Congress to enact the president's legislative proposal to modernize and strengthen Medicare,'' said Nancy-Ann DeParle, the Medicare administrator.

Medicare says that of its 39 million beneficiaries, 27 million have at least one HMO open to them, and 6.5 million are enrolled in one.

Medicare payments were cut back in 1997 by legislation to balance the federal budget. Officials of the health plans association said 2 percent annual increases HMOs have had since have not kept up with rising costs of care.

Lawmakers of both parties, as well as President Clinton, have pledged to look for more money for HMOs this year.