MEDICARE+CHOICE I: HCFA Refusal Spurs Plan Withdrawals

      After a last-ditch effort failed to convince the Health Care Financing Administration that "mid-course corrections" were needed in Medicare+Choice, several of the nation's biggest HMOs announced plans to cut back their Medicare HMO plans in a move that could affect hundreds of thousands of seniors. Altogether, HMOs withdrew from 300 counties in 18 states. HCFA's deadline was yesterday for plans to withdraw from Medicare, and the managed care industry mounted a large-scale lobbying effort to persuade the agency to let plans resubmit benefit packages for 1999. The bid was unsuccessful (Pear, New York Times, 10/2). The impact of the denial reverberated throughout the industry, as United Healthcare, Blue Cross & Blue Shield of Minnesota and Allina Health System announced plans to withdraw from some Medicare markets (see following story), with industry experts predicting that "as many as 400,000 seniors will be dropped by their Medicare HMOS." The Wall Street Journal reports that "[m]ost will be able to switch to another HMO in the same area," but "28,000 don't have that option and will be forced to return to the traditional Medicare program, which is far more expensive for seniors" (McGinley, 10/2). The Times reports that managed care plans are pulling out of selected counties in New York, Colorado, New Jersey, Connecticut, Florida, Illinois, California, Delaware, Maryland, Massachusetts, New Hampshire, Ohio, Oregon, Rhode Island, Virginia and Washington (10/2).

Reax
      The American Association of Retired Persons backed HCFA's decision, with lobbyist Tricia Smith saying "Medicare HMOs haven't put forward convincing evidence that they should be allowed to alter their 1999 benefits packages 'at this late stage of the game'" (Journal, 10/2). However, AARP's Cheryl Matheis warned that "turmoil and uncertainty in this market could deter people from joining HMOs." She added, "HMOs have left the Medicare market in the past, but far fewer people were affected. The knowledge that HMOs can and do leave the program may make people a little wary about going into these plans in the future" (Times, 10/2). American Association of Health Plans President Karen Ignagni called the HCFA decision "a loss for Medicare beneficiaries." An AAHP release charged that "[a]s a result of the Administration's inflexibility, Medicare beneficiaries will have to pay more out of pocket and sacrifice the comprehensive benefits health plans have provided." The AAHP expects that in 1999 hundreds of thousands of beneficiaries will lose the health plan they have chosen and will face reductions in their choice of affordable health plan options (AAHP release, 10/1). Senate Finance Committee Chair William Roth (R-DE) echoed those sentiments, stating "that he was 'very disappointed by HCFA's continued resistance to facilitate private-plan choices for Medicare beneficiaries" (Journal, 10/2).

Making Partisan Hay
      Today's National Journal reports that "Republican policy-makers have a big stake in the outcome" of the Medicare+Choice program, as "[t]hey assumed that making HMOs more attractive to Medicare beneficiaries would help control costs and extend the solvency of the financially ailing program." And the programs have been successful -- if only at attracting members: "Medicare HMOs have wooed 17% of the elderly (6 million) away from traditional fee-for-service plans." Now that those plans are retreating, Democrats smell blood, and are circling. Rep. James McDermott (D-WA) said, "Republicans promised miracles and all kinds of wonderful things that cost nothing or less. ... But it was a limited success, if not an out-and-out fraud." Rep. Pete Stark (D-CA) said of Medicare+Choice, "It's kind of a poorly thought-out idea to go on the premise that anything that's profit driven and market driven is better than anything else. It's similar to saying the only laws the country needs are the Ten Commandments. It doesn't really deal with parking meters" (Werber Serafini, 10/3 issue).

Sliver Of Hope
      CongressDaily/A.M. reports "Congress still could act on the payment concerns of Medicare managed care plans," according to Rep. Bill Thomas (R-CA), "but only if the plans are more specific about the relief they need." Thomas said "he would be willing to look at relief for 'geographic areas that may be at extreme risk" because they have a limited number of Medicare HMOs to choose from if one plan withdraws. Thomas said lawmakers have "plenty of vehicles" to make the "mid-course corrections" the AAHP wants (Rovner, 10/2).