MEDICARE HMOs: Benefits Down, Premiums Up, Plans Out
Most Medicare HMO beneficiaries will see reduced benefits or increased premiums next year, the American Association of Health Plans said yesterday, and at least 250,000 will be forced out of their plans altogether as HMOs pull out of certain markets. Reps. Michael Bilirakis (R-FL) and Peter Deutsch (D-FL) rushed to offer a measure to change the Medicare+Choice risk adjuster, which if unchanged would reduce Medicare managed care reimbursements by $11 billion over the next five years. AAHP President Karen Ignagni said that the cuts, a product of the 1997 Balanced Budget Act, are directly to blame for the plan pullouts, benefit reductions and premium increases. She said, "We believe this is happening because payments are inadequate." But an unusually blunt Rep. Pete Stark (D-CA) challenged Ignagni's assertion that plans are underpaid, saying, "She's as full of s*** as a Christmas goose" (Rovner, CongressDaily/A.M., 7/2).
Over/Under Paid
According to a new AAHP poll of 23 member plans covering about 4 million enrollees, 38% of beneficiaries will see monthly premium increases next year -- 23% will experience hikes of $20 of more, and 10% up $40 or more. Six in ten seniors in plans surveyed will have their prescription drug benefit reduced, and more than 70% will pay higher drug co-pays (Jeffrey/McGinley, Wall Street Journal, 7/2). Ignagni insisted that federal reimbursements, which typically total about 95% of fee-for-service per-beneficiary spending, are directly to blame, despite charges by federal auditors that plans are overpaid. "Overpaid plans don't leave the program. Overpaid plans don't cut benefits to beneficiaries," she said. HCFA chief Nancy-Ann Min DeParle responded, "We're disappointed that HMOs are making decisions that will force some Medicare beneficiaries to change their health coverage and at the same time scaring them about their Medicare benefits." Federal officials have repeatedly charged that Medicare HMOs cherry-pick the healthiest enrollees, and that their reimbursements should therefore be adjusted downward (Pear, New York Times, 7/2).
'Bait & Switch'
Consumer advocates blasted the managed care industry. Families USA Executive Director Ron Pollack said, "It has all the feeling of bait and switch. You bait people into a plan based on promising the sky, even if that promise should have been known to the HMOs as unrealistic" (Goldstein/Hilzenrath, Washington Post, 7/2). Commonwealth Fund President Karen Davis added, "It certainly leaves beneficiaries in the lurch. They were really counting on their coverage to pick up their prescription drugs or other benefits. ... That kind of instability doesn't work very well for a lot of seniors with limited incomes" (Ornstein, Dallas Morning News, 7/2). Some legislators were equally incensed. Rep. Sam Gejdenson (D-CT) said, "What is happening is unconscionable. A year ago, HMOs told seniors that they had fixed the problem. Now, without even trying, they have given up" ( AP/Newsday, 7/2). The Medicare Rights Center's Joe Baker said the pullouts and cutbacks signal that President Clinton was right to avoid a premium support-style Medicare reform package, as the "private marketplace may not stay the course." Rep. Benjamin Cardin (D-MD) echoed, "We cannot rely on private insurers to meet the health needs of our seniors" (Post, 7/2).