Medicare HMOs Improve Overall Value Ratings, Decline on Drug Coverage Ratings, Survey Finds

California Medicare HMOs have improved their overall value ratings, but their drug coverage ratings have declined, according to a California HealthCare Foundation and Consumers Union survey released Monday, the Los Angeles Times reports. To measure value, researchers added total benefits offered by each plan -- such as coverage for physician services and non-physician benefits including chiropractic care -- then subtracted members' out-of-pocket costs for fees such as copayments for prescription drugs and office visits. Researchers then rated the HMOs on a sliding scale of one to five stars. The survey found that nearly one-third of Medicare HMOs earned ratings of four or five stars, compared with only 11% that received similar ratings last year. Results "varied considerably" across the state, according to the Times. For example, Napa County's only Medicare HMO declined from a two-star rating last year to a one-star rating in 2004 (Costello, Los Angeles Times, 4/19). Los Angeles County plans received the highest ratings in the state, with 13 of 16 county Medicare HMOs receiving four or five stars (Bartholomew, Los Angeles Daily News, 4/18). According to the Times, the overall improved scores may be attributed partly to a provision in the recent Medicare legislation that increased payments to HMOs with Medicare beneficiaries provided that insurers use the money to restore benefits, lower costs or both.

This year, about 67% of Medicare HMOs received the lowest rating, one star, compared with fewer than 50% that received one-star ratings last year (Los Angeles Times, 4/19). Fifteen percent of HMOs received top ratings for drug coverage this year (Los Angeles Daily News, 4/18). For several years, HMOs have been "whittling away at the drug benefit," with some plans eliminating drug coverage altogether and others only paying for generic drugs, according to the Times. This year, drug coverage was the only category in the survey with declining ratings. According to Karen Ignagni, president of America's Health Insurance Plans, formerly AAHP-HIAA, many insurers "have pulled back on prescription drug coverage because federal reimbursement rates for Medicare have fallen so dramatically in recent years," the Times reports (Los Angeles Times, 4/19). The survey is available online.