Medicare HMOs will drop nearly 1 million

Tuesday, July 25th 2000, 12:00 am
By: News On 6

WASHINGTON – Nearly 1 million senior citizens and disabled people around the country will be dropped by their Medicare HMOs at year's end, according to federal figures released Monday. And Texas has more than twice the number of affected individuals as any other state.

Nationwide, 15 percent of the 6.2 million Medicare beneficiaries enrolled in health maintenance organizations will lose coverage Dec. 31, according to the Health Care Financing Administration, which oversees the program. About 159,000 people will be forced to return to the traditional Medicare program, which does not offer prescription drug coverage, vision services or dental checkups.

Health plans said that they are underpaid and over-regulated. They have been lobbying Congress for additional funding, and experts predict that lawmakers will listen to their cries this year. A group of Republican representatives introduced a bill Monday that would devote an extra $6 billion to Medicare HMOs over five years.

"If these companies thought they could make a profit, they would stay in the market," said Rep. Jim Greenwood, R-Pa., chief sponsor of the legislation. "The fact that the companies are withdrawing ... tells me that we don't have the numbers right yet. We have to adjust those numbers until they make sense."

The total number of affected individuals – 933,687 – is about 30 percent higher than predicted last month by the American Association of Health Plans, an HMO industry group based in Washington. In the previous two years, HMO withdrawals left 734,000 people searching for coverage.

In Texas, the HMO exodus will affect 180,749 elderly and disabled Americans. Of those, 24,496 people will be forced to rejoin the Medicare program because their locales will have no other HMO choices. That list includes Austin, El Paso and the northeast Texas counties of Cooke, Grayson, Palo Pinto, Smith, Somervell and Van Zandt.

In 2001, residents of Dallas and Tarrant counties will have two HMO choices, Secure Horizons and Golden Choice.

Health plans were required to notify the federal government by July 3 if they planned to leave the Medicare program. News of the withdrawals has trickled out since the end of June, but Monday marked the first time that exact details were available.

Dallas resident Gillian Bradshaw-Smith, 67, said she has lost count of the number of health plans that have dropped her in the last two years. Her current carrier, NYLCare 65, will be the third or fourth plan to leave the market, she said. She now favors a universal health-care system similar to England.

"What really annoys me is that they come and they seduce you," she said. "They send people over and they tell you how wonderful their product is, and then six months later, they dump you. And then they fire the poor people they hired to seduce everyone, as well."

Aetna Inc., which operates the NYLCare 65 product, has attributed its withdrawal to low reimbursements from the federal government and administrative hassles. Aetna would have been required to reapply for a Medicare HMO license in 2001 because it recently sold NYLCare to the parent of Blue Cross and Blue Shield of Texas.

Secure Horizons, run by PacifiCare Health Systems Inc., also withdrew from six North Texas counties, citing federal payments.

Some members of Congress say that HMOs have abandoned their commitment to seniors.

"We couldn't put enough money into HMOs to encourage the insurance companies to continue offering HMO coverage," said Rep. Martin Frost, D-Dallas. "Because of that, we have to make sure that regular Medicare is solid for seniors to fall back on."

Independent experts told a congressional hearing last week that HMOs should not receive additional funding because their members are healthier than patients in the traditional Medicare program, and therefore cost less to treat. In total, about 39 million people receive coverage from Medicare.

"Plans are paid too much for what was originally intended: funding a more efficient means of providing the package of Medicare-covered services," said William J. Scanlon, director of health finance and public health for the General Accounting Office. "Plans are saying, however, that they are paid too little to do what they've been doing: competing for beneficiaries by offering additional uncovered benefits for little or no additional premiums."

HMO officials questioned the data showing that they treat healthier patients, saying it is based on 1992 research.

"It would be very important for leaders in the policy community to get out of Washington and meet with beneficiaries who are being affected," said Karen Ignagni, president of the American Association of Health Plans. "I don't think that individuals can credibly suggest that there's not a problem and turn their back on it."

Congressional leaders agree that additional funding needs to be devoted to companies throughout the health-care industry, including hospitals, home-health agencies, nursing homes and health plans.

"It is an absolute priority," said Michele Davis, a spokeswoman for House Majority Leader Dick Armey, R-Irving. "It is on the short list of things that have to happen."

Individuals with questions about their options can call the government's Medicare hotline at 1-800-633-4227 (toll free) or visit the program's Web site at