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Fewer People on Medicare Are Dropped by H.M.O.'s

By Robert Pear

The New York Times, September 9, 2003

WASHINGTON, Sept. 8 — The exodus of health maintenance organizations from Medicare, a trend that has alarmed elderly people and members of Congress since 1999, will slow to a trickle next year, the industry said today.

Karen M. Ignagni, president of the American Association of Health Plans, the lobby for H.M.O.'s and other private plans, said they would drop 39,000 Medicare beneficiaries next year.

By contrast, health plans dropped 2.4 million beneficiaries from 1999 to 2003.

Some H.M.O.'s have pulled out of Medicare, while others have curtailed their participation by withdrawing from specific counties.

About 4.6 million beneficiaries, or 11.5 percent of the 40 million people enrolled in Medicare, are in H.M.O.'s, which have historically provided drug benefits and preventive care not available in the traditional fee-for-service program. The number of people in such private plans reached a peak of 6.3 million, or 16 percent of beneficiaries, in late 1999.

Today was the deadline for insurers to notify Medicare of their intentions for 2004, including benefits, premiums and co-payments. The association of health plans surveyed its members to find out if they planned to reduce their participation.

Ms. Ignagni said the new numbers showed that H.M.O.'s wanted to keep serving Medicare beneficiaries.

"Plans are doing whatever they can to offer choices to seniors," she said.

Insurers say Medicare pays too little to cover their costs, and they have been lobbying for an increase. "Private plans are poised to expand their participation in Medicare if Congress acts," Ms. Ignagni said.

Thomas A. Scully, administrator of the federal Centers for Medicare and Medicaid Services, said, "The trend is in the right direction."

Medicare's managed care program "is stabilizing, in anticipation that Congress will change it for the better," Mr. Scully said.

In June, the Senate and the House passed separate bills adding prescription drug benefits to Medicare. The House bill would significantly increase Medicare payments to private plans. The Senate bill calls for a smaller increase.

But Representative Benjamin L. Cardin, Democrat of Maryland, said that he, like many beneficiaries, was dismayed by the experience of the last few years.

"It's terrible that we are not seeing H.M.O.'s come into this market," Mr. Cardin said. "I have talked to a lot of private insurance companies, and I see no indication that they are really interested in the senior market. Private plans are worried about the uncertainty of government reimbursement, and they believe the senior market is not lucrative."

Mr. Cardin said that in 1997 eight H.M.O.'s were providing care for a total of 100,000 Medicare beneficiaries in Maryland. But, he said, the plans have all pulled out.

"It was quite a shock," Mr. Cardin said. "There's no confidence among seniors about private plans' willingness to stick with it."

H.M.O.'s could cut their losses by increasing premiums or reducing drug coverage and other benefits for the elderly. But Ms. Ignagni said the association had not collected information about such changes in its survey.

Blue Cross and Blue Shield of Georgia, a subsidiary of WellPoint Health Networks, accounts for 19,000 of the 39,000 beneficiaries being dropped next year. The 19,000 people live in eight counties in the Atlanta area, where the company's Medicare H.M.O. will no longer do business.

"We regret this action," Charles E. Harman vice president of Blue Cross and Blue Shield of Georgia, said. "The Medicare payments have been inadequate, and hospitals did not want to participate in the network for our Medicare H.M.O."

Private plans say Medicare payments have been rising 2 percent a year, while their costs have grown at least 10 percent a year.

Congress has decided to spend $400 billion over the next decade to add drug benefits to Medicare and to increase payments to doctors and other providers. Lawmakers say that any substantial increase in payments to H.M.O.'s might come at the expense of other health care providers or beneficiaries.

But Ms. Ignagni said beneficiaries would also suffer if more H.M.O.'s withdrew from Medicare.

The latest cutbacks will affect fewer people than in prior years. H.M.O.'s dropped 407,000 Medicare beneficiaries in 1999, 327,000 in 2000, 933,600 in 2001, 536,000 in 2002 and 198,315 this year, the Department of Health and Human Services said.

House and Senate negotiators working on the Medicare legislation are scheduled to meet on Tuesday to vote on several issues, including details of a drug discount card. The card would be offered to beneficiaries in 2004 and 2005, before Medicare provides a drug benefit in 2006.