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?

Mark Richardson of Columbus, OH, asks: As the CEO for one of HCFA's PSO Medicare Demonstration projects, I have to express an enormous amount of frustration with HCFA's lack of interest over the past 2 months to recognize and work with us to address this issue. In your dealings with HCFA since the Oct 2 deadline passed, have they shown any willingness to address this issue head-on? Do they recognize that many plans may lose millions of dollars and potentially go bankrupt causing them to pull out midstream in 1999 (especially PSO's that aren't funded to the extent that plans sponsored by large insurance companies are funded) What can we do as individual plans to help AAHP and others address this issue? Karen Ignagni responds: Thank you for the report from the front lines. Improving the Medicare+Choice program so that seniors and disabled persons can continue to reap its large benefits will take much hard work. I encourage you to explain your efforts to members of Congress and to HCFA. Explain the problems in very specific, concrete terms and outline how we can work together to fix them. While HCFA turned down our request for flexibility to amend Adjusted Community Rate filings, there has been some positive movement on some other issues, such as QISMC and provider contracting rules. There's still a long way to go, and I'm hopeful that health plans and HCFA can work together in the interests of Medicare beneficiaries to devise the needed mid-course corrections. AAHP has carefully analyzed the program's problems and is developing proposed solutions. I invite you to join with AAHP in this work. Finally, important changes are needed to make this program work. And plans can't be expected to provide the type of health coverage consumers want and need if they are underpaid. I'm not sure that this is yet fully appreciated by all of the relevant parties. However, at this point I would not want to suggest that we anticipate a series of bankruptcies leading to mid-year withdrawals. We believe that, with the good faith of all parties, 1999 can be the year to make the corrections needed to move the program in the right direction for seniors and disabled persons. Diane Archer responds: I do not understand the question. If the thought is that the managed care industry must get Congress to put more money into Medicare managed care, the problem is that the government wants to reduce Medicare spending, not increase it. To date, the government has not saved any money by offering a Medicare HMO option. In fact, several reports show that the government has lost money. The government spends less money per beneficiary in traditional Medicare than in an HMO. To the extent that plans are losing money on their Medicare contracts, Congress will have to rethink its Medicare strategy. The goal should be to offer comprehensive and affordable health care to seniors and people with disabilities. Click to return to the front page...