HMO WOES

November 1998
		On January 1, almost half a million elderly and disabled Americans will lose their health coverage when several managed care plans no longer cover Medicare patients. What is the fate of Medicare? What options do people have? Experts answer your questions.

How do I know if I will lose medical coverage? Is the pullout legal? Why is healthcare so expensive? Can people just go back to Medicare? Why don't we raise rates? Does the medical industry charge too much? How can HMO's work with the government?

Disa Sacks of Rockledge, FL, asks : As I watched this segment, I realized that if something sounds too good to be true, it probably is. Why are the HMO's not required by law to honor their contracts? There is simply no accountability demanded of these companies. What punishment for making promises that they can't honor? Tricia Neuman responds: Medicare HMOs are required by law to honor their contracts with the Federal government. The decision of HMOs to pull out of the Medicare market has created problems for thousands of beneficiaries, costs, but it is not illegal. Plans that contract with Medicare are required to comply with a variety of rules and regulations that affect issues such as premiums, benefits, quality assurance, grievance and appeals procedures, and marketing. The Health Care Financing Administration (HCFA), which oversees Medicare, is responsible for assuring that plans fulfil the obligations of their contracts, are in compliance with laws and regulations. HCFA has the authority to impose sanctions on plans that do not comply with requirements, although it has rarely done so. As Medicare moves more in the direction of expanding the role of private plans to serve beneficiaries, there is some question as to whether HCFA will have the resources and staff to monitor and enforce plan compliance. You raise an interesting point when you ask if Medicare HMO benefits have been "too good to be true." HMOs have been able to offer more generous benefits, often for low or no premiums, because of Medicare's payment rules. If Medicare payments exceed the plan's cost of providing basic Medicare benefits, then plans are required to return any "excess" payments either to beneficiaries, in the form of additional benefits, or to the program itself. Most Medicare HMOs have elected to offer additional benefits. In the future, as payments from Medicare to plans are compressed, HMOs may not be able to continue to offer such generous benefits and continue to operate profitably. Karen Ignagni responds: I appreciate your recognition that private health plans participating in Medicare have been of real value to the Medicare beneficiaries who choose them. I can't agree, however, that the significant advantages health plans offer their Medicare members are "too good to be true". With some reasonable mid-course corrections to the program's rules, health plans participating in Medicare will be able to continue offering their members quality medical care, along with much superior benefits and lower out-of-pocket costs than the traditional Medicare program. It is important to recognize that HMOs participating in Medicare, including those that have withdrawn from some counties, have fully honored their contracts. All of the plans were required to comply with rules that the federal government set for withdrawals-and withdrew from some counties they previously served only with great reluctance. The plans had sought flexibility from the federal government that would have allowed many to remain in the program for 1999, during which they would work to achieve the needed mid-course corrections. However, this flexibility was not granted. Finally, in assessing why some plans withdrew from some counties, you may want to look at how much the government changed the rules since the plans first agreed to participate in Medicare. While some changes are always necessary to keep up to date, Medicare unfortunately has made a number of changes that make it harder for plans to offer consumers the kind of health coverage they need and expect. For this program to work better, we need the government to take a new look at some of the changes that we believe work against rather than for seniors and disabled persons who want to enroll in a private health plan. Diane Archer responds: These companies make a contract for one year only. That is all the government requires them to do. If they want to drop out of Medicare at the end of the year, they currently can. The fault is the government's for not making this information clear to beneficiaries who enroll in HMOs. The government should make sure that HMO marketing material explains right up front in big letters that HMOs can raise their premiums, cut their benefits or terminate their contracts with Medicare from one year to the next. Congress also has not appropriated enough money to allow the Health Care Financing Administration to oversee the HMOs and ensure that they are complying with Medicare laws and rules. People on Medicare need to know their Medicare rights and benefits and understand the HMOs' rules before they join so that they get the health care they need. Click to continue...