MEDICARE HMOs: N.Y. Times Looks At Ohio Experience
In a front-page story, today's New York Times looks at Anthem Blue Cross and Blue Shield's recent decision to withdraw Medicare HMO services in "19 Ohio counties and parts of 3 others." Anthem pulled out of the rural counties after it "found itself over-extended, over-subscribed and under-paid by the federal government." According to the Times, the company's "experience highlights the difficulties managed care companies face as they try to extend service ... outside the bigger cities." In addition, the Anthem decision, as well as similar ones made by HMOs in California, Utah and South Carolina, "casts a shadow over the decision by Congress and the Clinton administration, as part of the 1997 Balanced Budget Act, to steer more of the nation's retirees into managed care."
Lynne Gross, Anthem vice president for government programs, said the company found itself losing money on the rural Medicare HMO enrollees. In urban areas, the insurer "collected an average of $389 a month in Medicare reimbursements for each subscriber and spent $345, for a profit of $44." But in the rural areas, Anthem was collecting only $325 per patient while spending $361. Gross also noted that the company failed to predict the high demand for Medicare HMO services in the rural areas. Many rural retirees had been unable to afford fee-for-service Medicare. "Fee-for-service wasn't meeting the needs of these folks. I think managed care in rural communities may have created a demand for care where there wasn't any care before," Gross said.
Kathy Keller, spokesperson for the American Association of Retired Persons' Ohio office, said the Anthem experience may "erode the elderly's confidence in managed care" since the government touted Medicare HMOs "as the salvation of the Medicare program." She also said the move to cut Medicare HMO services can "disrupt" seniors' health care, "pushing them back into traditional fee-for-service medicine without the preventative care that many HMOs promise." According to the Times, "[e]xperts say there are cautionary lessons in Ohio for federal health planners" as the government readies the new Medicare+Choice program. Sen. Mike DeWine (R-OH) said, "It would not shock me if Anthem is just the beginning of this. The preliminary evidence would indicate that there is a bigger issue than Anthem making bad business decisions" (Kilborn, 7/31).