MEDICARE+CHOICE: Clinton Decries HMO ‘Hostage’-Taking
President Clinton yesterday came out strongly against those HMOs that have fled the Medicare program after the Health Care Financing Administration refused to allow benefit and rate structures to be adjusted. At a White House press conference yesterday, Clinton said: "As we all know, in recent weeks the HMO industry announced that unless all Medicare HMOs could raise premiums and reduce benefits -- all -- some health plans would drop their Medicare patients by the end of the year. We told them, no deal. That's what we should have done. We were not going to allow Medicare to be held hostage to unreasonable demands." The president presented three steps to "protect Americans who have been dropped by their HMOs and to protect the health care options of all seniors in the future": HCFA will expedite approval for HMOs that have applied "to serve seniors in deserted areas"; Health and Human Services Secretary Donna Shalala will develop new strategies to "prevent another disruption in coverage like the one we are seeing now"; and the Clinton Administration will implement "a comprehensive, public information campaign to make sure all affected seniors understand the health coverage plans that are already available to them" (White House release, 10/8). Click here to read a transcript of Clinton's statement. NPR's Mara Liasson reported that yesterday's "announcement was damage control -- last year the White House and Congress tried to encourage Medicare patients to sign with HMOs to save money for the Medicare program" ("All Things Considered", 10/8).
Chip Kahn, president-designate of the Health Insurance Association of America, said, "Sadly, President Clinton's latest attack against the private health insurance industry is yet another politically motivated smokescreen, intended to cover up the administration's complicity in driving up costs to private health plans in the Medicare+Choice program." Kahn charged that Clinton signed a law last year "that cut funds for private health plans ... so they can't keep up with the rate of medical inflation" (HIAA release, 10/8). House Ways and Means Chair Bill Archer (R-TX) said he is "hopeful the president's actions will correct HCFA's earlier missteps" (Archer release, 10/8).
The National Journal reports that "even [HCFA] administrators agree that the decision" not to allow renegotiated benefit structures "had its downside, a point of view emphatically seconded by the health care industry." The agency said it was faced with a choice of having some beneficiaries lose their plans or having nearly all Medicare recipients see higher premiums and reduced benefits. Families USA President Ronald Pollack "predicted that if HMOs can't raise prices or cut benefits outright, they'll try to save money in 'hidden' ways -- by decreasing or quietly limiting services." Pollack added, "I have no doubt that for an HMO that wished to save greater amounts of money, it can tighten the screws even tighter." He defended HCFA's decision not to allow health plans to resubmit their rates, saying the government "has to be a prudent purchaser." And former HCFA head Gail Wilensky "concedes that HCFA has a right to feel frustrated," noting that health plans "had until this past May 1 to notify HCFA of any changes they wanted in participants' benefits or sharing of costs. Few did."
The latest health plan defections from the Medicare market are leading to a change of heart among members of Congress about managed care. Karen Ignagni, president of the American Association of Health Plans, said, "The irony is that, when you had such an anti-managed-care debate, what is actually encouraging to me is that members (of Congress) are calling us, wanting to work with us, and they're putting political issues aside" (Werber Serafini, 10/10 issue). Ignagni sent a letter to Shalala Wednesday emphasizing that the AAHP "stands ready to continue discussions immediately" on how to "fulfill the promises made to Medicare beneficiaries about access to expanded choices." She added, "While we were disappointed that HCFA rejected our proposal ... we continue to be prepared to work with you on any counter proposals that you might develop" (AAHP release, 10/8).
Bad News, Good News
AvMed Medicare HMO announced Wednesday that it is withdrawing from seven Florida counties, a change that will affect 6,400 seniors. The company "emphasize[d] that AvMed members who take no action automatically will be re-enrolled in standard Medicare effective Jan. 1." The St. Petersburg Times reports that 1,600 residents of Citrus county will have no Medicare HMO option with the departure of AvMed. Also affected were Marion, Baker, Clay, Gilchrist, Nassau and St. Johns counties. AvMed is Florida's "oldest and largest not-for-profit health plan" (Ross, 10/9).
The Houston Chronicle reports that Houston's Medicare HMOs are bucking the national trend, saying "they are committed to the city and have no intention of pulling out." The answer lies partly in the city's long history of managed care, and in Houston's above-average reimbursement rates -- the city's Medicare reimbursement "is 15% higher than in Dallas" (Sit-DuVall, 10/9).