About 200,000 Seniors Could Lose M+C Coverage as Health Plans Exit Market, Survey Indicates

HMOs serving about 200,000 seniors will drop out of the Medicare+Choice program next year in large part because of inadequate reimbursement rates from the federal government, according to an American Association of Health Plans survey released Sept. 9, the last day for health plans to tell the government whether they will participate in the program in 2003. The New York Times reports that Medicare HMOs have dropped 2.4 million beneficiaries since 1998. Beneficiaries who lose M+C coverage can either enroll in another Medicare managed care plan, if available, or receive coverage through fee-for-service Medicare. AAHP President Karen Ignagni said HMOs are being "forced out" of Medicare+Choice because federal reimbursement rates will increase only 2% next year, while health care costs are expected to rise 10% to 12%. She added that HMOs remaining in Medicare+Choice will likely increase premiums and copayments and institute "major changes in benefits," including cutbacks in prescription drug coverage, to remain profitable (Pear, New York Times, 9/10). More specific information on premium increases and benefit reductions is not expected for at least five weeks as CMS compiles HMO responses (Kemper, Los Angeles Times, 9/10). According to the AAHP survey, HMOs that are dropping large numbers of Medicare+Choice beneficiaries include:

• Aetna, which will discontinue plans affecting 16,000 beneficiaries in two New Jersey counties and three Pennsylvania counties (Lueck, Wall Street Journal, 9/10);
  
• Blue Cross and Blue Shield of Florida, which will no longer offer its Medicare & More program, which enrolls 20,000 beneficiaries, in three Florida counties (Hundley, St. Petersburg Times, 9/10);
  
• Kaiser Permanente, which will drop 55,000 beneficiaries in Ohio and several mid-Atlantic states; and
  
• PacifiCare, which will withdraw from three counties in the Houston area, leaving 25,000 beneficiaries without M+C coverage (Appleby, USA Today, 9/10).
  

Good Trend or Bad?
CMS Administrator Tom Scully on Sept. 9 said that while he was disappointed health plans are dropping out of Medicare+Choice, the number of beneficiaries who will lose coverage is less than expected (New York Times, 9/10). Officials at AARP had predicted that as many as 600,000 seniors might lose coverage next year (Los Angeles Times, 9/10). The New York Times reports that HMOs will drop fewer beneficiaries in 2003 than in any of the past four years; 407,000 lost coverage in 1999, 327,000 in 2000, 933,600 in 2001 and 536,000 this year (New York Times, 9/10). Ignagni said that the trend indicates the "groundwork has been set for a turnaround of Medicare+Choice" (Los Angeles Times, 9/10). The Chicago Tribune reports that the continued decline of HMO participation in Medicare+Choice "underscore[s] the Bush administration's failure to stabilize [the] program and reverse declining participation, despite vows to do so last year" (Graham, Chicago Tribune, 9/10). In addition, AARP Policy Director John Rother said the HMOs' withdrawal is a "further signal to Medicare beneficiaries that they can't count on these plans" (Los Angeles Times, 9/10).

Congressional Action Needed
To help encourage a turnaround in Medicare+Choice participation, Ignagni called on Congress to pass legislation increasing provider reimbursement rates (New York Times, 9/10). Earlier this year, the House approved a bill that would increase payments to Medicare+Choice providers by $3.2 billion over the next 10 years. The Senate has yet to vote on a similar measure, and President Bush has proposed a one-time 6.5% increase in the Medicare+Choice rates. However, senior advocacy groups have criticized supporters of a rate increase, saying what seniors really need is prescription drug coverage. "A prescription drug benefit for everyone on Medicare has to come first, before any (extra payments) to HMOs, doctors, hospitals or other providers," Joyce Dubow, senior policy adviser to AARP's Public Policy Institute, said (Chicago Tribune, 9/10).
NPR's "All Things Considered" on Sept. 9 reported on the decreasing number of HMOs participating in the Medicare+Choice program (Rovner, "All Things Considered," NPR, 9/9). The full segment is available in RealPlayer Audio online. PRI's "Marketplace" Sept. 9 also reported on Medicare+Choice (Ott, "Marketplace," PRI, 9/9). The full segment is available online in RealPlayer Audio. In addition, a HealthCast of AAHP's Sept. 12 Medicare and Medicaid Conference will be available online following the conference.