PACIFICARE: HMO Drops Another 26,600 Patients
PacifiCare Health Systems announced yesterday that it will cut an additional 26,600 members from its Medicare managed care plans, bringing the total number of seniors jettisoned from the program to 69,000. PacifiCare's departure from the Medicare+Choice program comes as many of the nation's other Medicare HMOs are expected to collectively drop some 700,000 beneficiaries in 2001. In addition to pulling out of "unprofitable" markets, primarily in rural areas, the managed care plan will also raise premiums and lower benefits for the nearly one million remaining participants. As the nation's largest HMO, PacifiCare's actions have sparked concern among consumer and elderly advocates. "When a big organization like PacifiCare pulls out of a market, it's quite likely that no one else is there" to cover patients who have lost their insurer, AARP legislative representative Pat Luby said. Despite posting $10 billion in sales last year, PacifiCare has been plagued by Wall Street woes, with its stock plunging 26% since early June. "The market is afraid that Medicare is a bad business, and that PacifiCare is too deeply into it to either see it or do anything about it," health care analyst Todd Richter of Banc of America Securities said. Noting that many Medicare HMOs, including PacifiCare, are exiting rural and suburban areas because of low federal reimbursement rates, Alan Hoops, PacifiCare's president and CEO, expressed concern about the impact of the political process in managed care. He said, "I'm afraid that the politics associated with Medicare will result in it becoming an urban program." According to Hoops, urban areas not only pay more, but they also have the politicians with enough clout to ensure that residents continue to have coverage under Medicare HMOs. Both Richter and Hoops contend that by saturating urban markets, the industry limits its ability to expand (Bernstein, Los Angeles Times, 7/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.