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Many H.M.O.'s for the Elderly Make Deep Cuts in Drug Aid
The nation's largest health insurers, which recruited elderly people to Medicare H.M.O.'s by dangling offers of free prescriptions, are eliminating drug coverage or demanding sharply higher payments for drugs and treatments from some of their sickest members. The companies say they are losing so much money providing drug coverage that they have to limit what they offer if they are to stay in the Medicare market. But the cutbacks effectively leave the companies providing insurance to their healthy members, while tens of thousands of elderly patients with serious diseases like cancer have no affordable insurance coverage for their basic medical needs. Secure Horizons, the nation's largest operator of Medicare H.M.O.'s, is raising co- payments for drugs in the eight states where it operates. Kaiser Permanente, the second largest, has placed new ceilings on drug payments. In New York, Aetna (news/quote) U.S. Healthcare eliminated drug coverage last year. Health Net (news/quote), formerly PHS Health Plans, set a $750 annual limit for drug costs for each member in Brooklyn and Queens this year, down from $1,000 in 2001. Eugene Sturm, a lung cancer patient who lives in Orange County, Calif., learned of the higher payments Secure Horizons was imposing when the outpatient clinic where he receives chemotherapy demanded $250 for his weekly treatment. Mr. Sturm, a retired ceramic tile installer, had been paying $5 each week. His wife was able to cash a check and deliver the money to the clinic. But Mr. Sturm, 73, is now scouring the brochures of other Medicare health plans near his home, seeking one that offers less costly drug coverage. Mr. Sturm is relatively fortunate. Many Medicare patients live in places where only one H.M.O. still offers any drug coverage. For example, Secure Horizons members in Fort Worth have no other Medicare H.M.O. available. Secure Horizons and other managed care companies signed up millions of elderly members for Medicare H.M.O.'s in the 1990's with offers of free prescriptions, perhaps the most important part of health care not covered by traditional Medicare. For the last several years, however, health maintenance organizations have faced soaring drug costs just as federal support was being cut. The H.M.O.'s have dropped 2.2 million Medicare members over the last four years. But federal regulators and public officials are outraged by the trend, and some managed care companies would prefer to stay in the Medicare market, anticipating an influx of patients as baby boomers age. Now, a number of Medicare H.M.O.'s are opting to remain in their existing markets but are charging more for costly benefits, particularly drugs. These insurers are avoiding a wholesale withdrawal from managed Medicare, but they are undertaking a brutal shifting of costs, scaling back or eliminating a lot of the insurance that helps some of their sickest members. Members of newly restrictive plans who can afford to do so may eventually buy expensive Medicare supplement policies, but others are looking for other H.M.O.'s or going back to traditional Medicare and forgoing coverage for most drug costs altogether. Elderly Americans are not the only people to have insurance coverage reduced for serious illness. Several of the nation's largest insurers are offering health plans for workers that cost less for healthy people but that make members pay thousands of dollars out of pocket when their medical costs exceed a set amount. Members of these plans also typically pay for most or all of their prescription drugs themselves. Insurance companies say raising rates and reducing coverage is a matter of survival. Since 1997, Congress has limited increases in Medicare payments to insurers to 2 to 3 percent annually in many regions, at the same time the insurers' drug costs were soaring 20 percent a year. "Congress put us into a death spiral," said Kathy Feeny, a senior vice president of Pacificare Health Systems, which owns Secure Horizons. So many Medicare H.M.O.'s have already been shut that only half of the 40 million people eligible for Medicare now live in a place where a Medicare H.M.O. covers drugs, according to the federal Centers for Medicare and Medicaid Services. In New Jersey, the Medicare H.M.O.'s have virtually eliminated drug coverage, but the state stepped in to help low-income Medicare beneficiaries pay for drugs. In Illinois, only one elderly or disabled person in 10 has access to drug coverage. Just three years ago, almost two-thirds of all Medicare beneficiaries across the country could join an H.M.O. that provided subsidized drugs. Often, members of the newly restrictive Medicare H.M.O.'s stay on because they think they have little choice. Ellen Schneier, a nurse in New York who is disabled by colon cancer, said she stayed with her Aetna Medicare H.M.O., even after it stopped paying for drugs on Jan. 1, because the Aetna network still includes her doctors at Mount Sinai Medical Center. "I don't know how I will be able to pay when I have chemotherapy again later this year," she said. "I live minute to minute." Physicians and patient support groups are distraught. "Medicare H.M.O.'s are withering on the vine," said Robert M. Hayes, president of the Medicare Rights Center in New York, a national advocacy center. The higher drug fees are "just one more piece of evidence that this experiment, no matter how noble, is an abject failure." Eight advocacy groups for the elderly wrote a letter last month to Thomas A. Scully, who oversees Medicare and Medicaid, arguing that the new charges, including a $50 fee charged by some H.M.O.'s to replenish an oxygen supply, "clearly discriminate against particular elderly and disabled men and women based on their health status." Dr. William Jordan, president of Texas Cancer Care, a physicians' group in Fort Worth, said: "This is a betrayal of trust. Our patients are paying the price. It's a matter of life and death for them." Mr. Scully said the H.M.O.'s were caught in a cost squeeze. "It's a Catch-22 situation, trying to get them to stay in the program, to give seniors the choices," he said. In fact, officials at the Medicare office reviewed Secure Horizons' new fees and found they did not exceed the out-of-pocket costs for injectable drugs to patients in the traditional fee-for-service Medicare program. But those costs can be quite high. Medicare beneficiaries without drug coverage must pay 20 percent of the approved price of certain injectable drugs, which can cost many thousands of dollars. For pills at the pharmacy, they pay the entire cost. Even before the latest H.M.O. cutbacks, 27 percent of beneficiaries did not have drug coverage of any kind. Ms. Feeny of Secure Horizons said that with drug costs rising, Secure Horizons had three choices: adding the new charges, driving away members by raising premiums steeply across the board, or closing up shop in some communities. "If we think this is bad, it is going to get more dramatic in 2003," she said.
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