TENET: Says It’s Dropping Medicare HMO Plans In San Luis Obispo County
Tenet Healthcare Corp. Friday "finalized the decision" to "drop all its Medicare HMO plans in San Luis Obispo County by April 1999," according to a company official. The San Luis Obispo Telegram-Tribune reports that Tenet has decided to "drop Medicare HMO contracts it held with PacifiCare's Secure Horizons and Blue Cross for Seniors." Tenet's withdrawal affects 6,000 seniors "whose doctors work for Mission Medical Associates." The decision "also means that Sierra Vista Regional Medical Center in San Luis Obispo and Twin Cities Community Hospital in Templeton will stop accepting Medicare HMO plans." Kris Kington, director of business development for Tenet's Central Coast division, said Tenet "can't afford" to offer the Medicare HMO plans in San Luis Obispo because the county draws one of the lowest federal reimbursement rates in the state. "The finances in this market for a (Medicare) HMO product just don't make sense. The reimbursement that comes through the Health Care Financing Administration for all parties ... just isn't adequate to cover the cost for provision of care," she said.
The Telegram-Tribune reports that only one Medicare HMO plan -- SLO Select -- remains in the county because two other companies -- Lifeguard and Health Net -- "both said this summer they're dropping" Medicare HMO coverage there. Lifeguard and Health Net cited low reimbursement rates as well. According to the Telegram-Tribune, HCFA pays less than $395 a month to an HMO caring for a Medicare patient in San Luis Obispo, while a Los Angeles-area counterpart would receive $635 per month. Sara Singer of Stanford University's Center for Health Policy said, "Because the reimbursement rate in the rural areas is lower, and because health care costs in general, especially pharmaceutical costs, have been increasing at a rapid rate, the HMOs become less capable of making a profit in rural areas and even breaking even in some cases." Sol Mussey, director of HCFA's Medicare and Medicaid Cost Estimates Group, "speculated rural areas likely fell lower on the reimbursement scale because they have less access to specialized services that tend to drive up health care expenses." The Telegram-Tribune reports that U.S. Rep. Lois Capps (D-Santa Barbara) is cosponsoring a bill that would revise the current reimbursement formula to increase Medicare HMO payments in rural areas. Capps said, "There is absolutely no reason why people should suffer because of what amounts to bureaucratic unfairness" (Lyons, 9/19).
In a separate article, the Telegram-Tribune reports that Tenet's decision has seniors in the county concerned about the future of their health care. One senior said, "This will create one hell of a problem. Either the hospitals and the HMOs will continue to withdraw from their contracts, or other areas will have to subsidize for this area, and I don't see that happening." Click here to read the article.