PACIFICARE: Does Reorganization Foreshadow Medicare Drop-Out?
PacifiCare Health Systems Inc., whose Secure Horizons program covers more Medicare recipients than any other Medicare HMO in the country, yesterday disclosed restructuring plans intended to reduce its dependence on Medicare by expanding its commercial insurance business. Consumer advocates fear the move might mean the company plans to exit government-funded health care altogether, the Los Angeles Times reports (Bernstein, 9/17). PacifiCare chair Alan Hoops emphasized that the company intends to "maintain its Medicare stronghold" but that, "in the short run," the commercial HMO business "is where the action is going to be." Pacificare, based in Santa Ana, insures 2.6 million commercial HMO members and about 1 million Medicare HMO recipients (Crabtree, Orange County Register, 9/17). The Times reports that Hoops said the company plans to nearly double its non-Medicare HMO business by acquiring smaller HMOs, and that the reorganization will split the company into three components dedicated to health plans, special business like vision services and non-Medicare services for seniors (9/17).
The Orange County Register notes that the "move underscores the turbulence in the managed care Medicare market, from which several insurers have all but fled" (9/17). And critics, already upset by PacifiCare's recent decision to raise rates next year for Secure Horizons enrollees, charge that the company's reorganization may pave the way for the insurance giant and other smaller insurers to extricate themselves from Medicare. "For the nation's largest Medicare HMO to say it wants to focus on its commercial business means that it doesn't see a future in serving Medicare patients anymore," said Jamie Court of Consumers for Quality Care. Other consumer advocates express concern that the company's decision is motivated more by a desire to placate Wall Street than to improve care. PacifiCare's stock has dipped recently despite the company's projections to hit targeted earnings growth, but the market may respond positively to the restructuring, as well as to plans to loosen some aggressive physician group pay arrangements (Los Angles Times, 9/17).