More HMOs Leave Medicare
By: Source: AARP Bulletin Today Date Posted: November 2002
Nearly 217,000 Medicare beneficiaries will be dropped by their HMOs at the end of this year as more private health plans withdraw from the Medicare+Choice program.
At the same time, about 11 million beneficiaries will become eligible for a second type of managed care plan offered by preferred provider organizations (PPOs) through a Medicare pilot project.
The Bush administration hopes the new PPO plans will help shore up the ailing Medicare+Choice program (M+C), which generally offers more benefits than traditional fee-for-service Medicare but now serves fewer than one in eight beneficiaries.
The PPOs will offer private plans similar to those popular with younger workers, says Tom Scully, head of the federal Centers for Medicare & Medicaid Services (CMS). "We think that seniors increasingly want what their kids want—flexibility and choice."
Typically, people in PPOs can choose to stay within a network of doctors and other providers or pay more to go to providers outside the network. Enrollees do not need referrals to see specialists.
These plans are expected to cost more than HMOs but less than medigap insurance and to include limited drug coverage, says Joyce Dubow, an AARP Medicare expert.
PPO plans will be offered in 241 counties in 23 states during an experimental three-year period starting Jan. 1, 2003. The pilot project will test the plans' viability in the M+C program, which in the past has consisted mainly of HMOs.
Over the last four years, HMO pullouts have affected more than 2.2 million beneficiaries, and millions of others have faced yearly premium increases and reduced benefits. The plans blame inadequate Medicare reimbursement and double-digit inflation, especially for prescription drugs, which they say have slashed their profit margins.
This year nine HMOs will leave M+C entirely after Dec. 31, and 24 others will reduce their service areas in 2003, according to CMS. The pullouts will affect 176 counties in 24 states and the District of Columbia.
Of the 217,000 enrollees affected, 15 percent will have no choice other than to return to traditional Medicare, CMS says. But the rest will have at least one other M+C plan available to them. About 74,000 will have the option of joining one of the new PPO plans.
Many HMOs that continue in 2003 are expected to increase premiums or reduce benefits, or both, particularly for prescription drug coverage, CMS says. (As the AARP Bulletin goes to press, no details on 2003 rates for Medicare HMOs and PPOs have been released. An analysis will appear in the December Bulletin.)
If your plan intends to stop your coverage, it should have notified you by Oct. 2. If there are no other plans in your area—or if those that remain are not accepting new enrollees—you will be covered automatically by traditional Medicare from Jan. 1, 2003.
If you live in a county where new PPO plans are offered, you should receive plan mailings.
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