UC DAVIS: Health System Could Exit Medicare HMO Market

      UC Davis Health System warned five Medicare HMOs that it must receive higher reimbursements in order to continue caring for the 6,901 Sacramento-area seniors enrolled in the plans, the Sacramento Business Journal reports. The announcement follows a recent decision by Aetna U.S. Healthcare to pull out of the Medicare HMO market in the region. According to UC Davis officials, the system anticipates a $6 million loss on its Medicare HMO contracts in the fiscal year that ended June 30. Martha Marsh, COO for Davis, said, "The reimbursement is simply too low. We are losing a significant amount of money." The system already announced plans to freeze enrollment for new Medicare patients after Oct. 1, and could exit the market if health plans "don't offer a better deal" (Robertson, 7/10). The health plans involved include Blue Cross of California's Senior Care, Blue Shield of California's 65 Plus, Health Net's Seniority Plus, PacifiCare's Secure Horizons and Western Health Advantage's Care Plus. In a letter to UC Davis Medical Group's patients, Dr. Allan Siefkin, executive director of the group, wrote, "Unfortunately the payment we receive from the Medicare managed care program is not enough to pay for the care our patients need and deserve." The health system notified patients of the situation so they would be prepared if UC Davis was forced to leave the market. Tricia Neumann of the Kaiser Family Foundation said, "It's a clarion call to seniors that they really need to pay attention. They need to be aware that when they sign up (for a Medicare HMO), it's not a lifetime contract" (Fisher, Sacramento Bee, 7/11). Despite the warning, both UC Davis and the health plans expressed optimism that a compromise could be reached and urged seniors not to be alarmed (Sacramento Business Journal, 7/10).