How will the HMO pullouts affect you

Two years ago, 15 percent of seniors belonged to managed care plans, and 90,000 more were joining each month. It seemed likely that the majority of Medicare patients would eventually sign on with HMOs. It doesn't look that way anymore. Today, only 16 percent of the 39 million Medicare beneficiaries are HMO members, and the monthly enrollment rate has dropped by half.

One of the main reasons why the program's growth has flattened is that HMOs are leaving unprofitable markets. On July 1, nearly 100 plans announced they would either withdraw from the Medicare program or reduce their service areas at the end of the year. About 327,000 beneficiaries will be affected, on top of the 407,000 who had to choose other options when plans pulled out of Medicare at the end of last year. Virtually all Medicare HMO members will receive fewer benefits next year or pay higher premiums--or both.

What happened? Insurance companies blame the Balanced Budget Act of 1997, which limited annual HMO payment increases to 2 percent in markets where Medicare's historical costs were relatively high. While HCFA says it will boost HMO payments across the country by an average 5 percent next year, that average factors in bigger raises to be awarded in many rural counties where few or no HMOs operate. Not surprisingly, the latest round of HMO defections is focused on big cities like Cleveland, Dallas, Milwaukee, Philadelphia, and San Diego.

HMOs' marketing tactics have also contributed to the problem. To lure seniors, plans offered benefits not provided by Medicare, coupled with zero premiums. Since their administrative costs are far higher than those of traditional Medicare, the only way they can finance prescription drug and other extra benefits is to cut payments to doctors and hospitals, notes health economist Uwe E. Reinhardt of Princeton University.

Because senior HMOs are paying less than traditional Medicare in some areas, they're finding it increasingly difficult to recruit physicians in those places. That, in turn, has caused some plans to pull out.

Seniors will need your guidance

The coming and going of Medicare HMOs is not only costly but frustrating to doctors, says Owen Dahl, a New Orleans-based practice management consultant. "If a lot of your patients have joined a senior HMO, you've got a problem when the plan says it's going to drop out. It adds a tremendous burden to your employees, who have to inform the patients of their options and check on their eligibility every time they visit."

HMO pullouts can also create bad feelings between doctors and patients, adds Dahl, "because the doctor gets blamed for a lot of the inconvenience to patients." One way to minimize this, he says, is to send letters to patients telling them which other Medicare plans you participate in.

HMOs were required to inform HCFA by July 1 of their intentions for next year. But that doesn't mean they had to tell you. So check with your senior HMOs before one of your patients asks a question you're not prepared for.

HCFA also encouraged exiting HMOs to send patients brief letters by the end of July. However, it doesn't appear that all plans did. HCFA doesn't require plans to mail patients detailed letters explaining their options until Oct. 15.

That will give seniors about 10 weeks until the end of the year to decide what to do. If they don't want to switch HMOs, they'll return automatically to traditional Medicare on Jan. 1. But if they wish to get their Medigap insurance back, regardless of their medical condition, they must apply for it within 63 days after their HMO coverage ends on Dec. 31. To prevent a lapse in coverage, they should try to enroll in a Medigap plan before the end of the year.

Patients who do want to join another HMO shouldn't disenroll from their current plan before checking the enrollment policy of the new one. While some plans will sign up seniors at any time, they don't have to. HCFA requires contracting HMOs to enroll new members only once a year, in November.

This can be a confusing process for seniors, so expect many to ask you for help. You have to tread carefully, notes Dahl, to avoid violating HCFA regulations that prohibit you from marketing for HMOs you participate in. So you can't tell the patient which HMO you prefer. All you can say is which plans serve the area and which you contract with.

Don't let an anti-managed care bias show, because it puts patients on the defensive, cautions Judy Capko, a consultant with The Sage Group in Newbury Park, CA. "All the patients know is that they'll get more for their money and less out-of-pocket expense if they join a senior HMO," she says. Therefore, she adds, you should identify both the benefits and the risks of Medicare HMOs, including the restrictions on choice of providers and the possibility that a health plan might pull out of your area. (To find out which Medicare HMOs are available locally, call HCFA at 800-MEDICARE or check its Web site: www.medicare.gov )

The Health Care Financing Administration (HCFA), the administrator of Medicare, are advising those who will be affected of the following:

5 THINGS TO REMEMBER

1. You should know that no matter what happens, you are still covered by the Medicare program.

2. If you are affected by a plan withdrawal, you will have to make a choice about who provides your health care. Make sure you have answers to all your questions before you make a decision.

3. While you have decisions to make, your current managed care plan is required to cover you until December 31, 2002.

4. Resources are available to help you make a new health care choice.

5. You will receive additional information about your available Medicare choices, including the Original Medicare Plan and protections you have in choosing a Medigap insurance policy to supplement your Medicare benefits, in September 2002.

You may read or hear about managed care plans leaving the Medicare program in your area. If you are in the Original Medicare Plan, you are not affected. If you are in a Medicare managed care plan, you may be affected, but you are still covered by Medicare.

Medicare benefits will always be available to Medicare beneficiaries. Medicare benefits can be delivered either through the traditional fee-for-service arrangement, known as the Original Medicare Plan, or in some areas through managed care plans.

If you are affected by a withdrawal, you will have to make a new health care choice. But for most beneficiaries, you have time to make a choice. Since changing the way you receive your health care is an important decision, you may wish to ask those you trust such as family or friends for help. Special rules may apply when you disenroll from a Medicare health plan and return to the Original Medicare Plan with a supplemental insurance policy (Medigap). If you or your spouse have health care coverage through a former employer or union, contact a company representative before you make a new health plan choice. If you have Medicaid coverage, do not make a new health plan choice until you contact the State Medical Assistance Office or the State Medicaid Program.

Individuals affected by a plan withdrawal should receive a letter from their plan in July 2002. In addition to this letter, all beneficiaries affected by a plan withdrawal will receive another letter from their plan in September 2002. The September letter will provide you with more detailed information about your health care options, including information about Medigap insurance.

We understand that the withdrawal from Medicare of some managed care plans causes disruption for those enrolled in these plans. To ease this transition, HCFA is committed to ensuring that beneficiaries have useful information about Medicare and the rights and protections available to beneficiaries affected by these plan withdrawals.

To assist beneficiaries and their caregivers, HCFA established the Medicare Choices Helpline. The Medicare Choices Helpline can be reached by dialing 1-800-MEDICARE (1-800-633-4227). Hearing impaired individuals using a telephone device for the deaf can call 1-877-486-2048 for assistance. This toll-free number is staffed by English and Spanish-speaking customer service representatives from 8:00 a.m. to 4:30 p.m. local time. Customer service representatives at the Medicare Choices Helpline can:

• answer your questions about plan withdrawal,
• provide the names and phone numbers regarding your other health care options. Information about benefits and costs for the year 2003, beginning January 1, 2003, will be available in mid-September. NOTE: We expect that complete information about plan withdrawals for calendar year 2003 will be available in mid-July; and,
• refer you to other organizations, such as the State Health Insurance Assistance Program, that can help you with your health care choices.