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Loss of HMOs was costly to some elderly; They were among 35,000 stranded when 4 insurers quit Md.; Most found another HMO; But some are paying thousands more for traditional Medicare; Managed care


Most of the 35,000 seniors left high and dry after four Medicare HMOs quit the Maryland market have found other coverage, though some are now paying thousands of dollars more in premiums.

In all, more than a third of the 100,000 Marylanders in Medicare HMOs had to change plans.

The majority joined one of the state's four remaining Medicare HMOs.

MediCareFirst was the big gainer -- its membership increased from 28,000 in November to 45,000 now.

MediCareFirst, the Medicare HMO of CareFirst BlueCross BlueShield, decided to stick it out, saying it was about at the break-even point and felt it could make a profit.

While its customer service department normally fields 10,000 to 12,000 calls a month, said Mary Ann Heckwolf, vice president for government programs, it fielded about 21,000 in December and 17,000 in the first two weeks of January.

As the exit of the four HMO plans became effective Jan. 1, the three other Maryland HMOs were busy as well.

Terry Farsace, senior director of the Medicare program for United HealthCare of the Mid-Atlantic, said phone calls increased from the usual 4,000 a month to 40,000. "Normally, we have 10 personal service representatives. At one point, we had added 12 or 14 temps -- we had more temporaries than regular employees."

United added about 4,300 Medicare enrollees in January to the 16,000 it had in Central Maryland. Kaiser Permanente picked up about 3,500 members, adding to its 13,000. And CIGNA, new to the Medicare market here, signed up 3,800 members in January.

But while seniors were generally able to move quickly into another HMO, some had to choose new doctors. And others, wary of HMOs, opted for traditional Medicare coverage with supplemental insurance, but are facing much higher out-of-pocket costs.

James Connor of Ellicott City said when Aetna U.S. Healthcare notified him it was pulling out, "I checked, and I couldn't find one plan with all our doctors." So he bought a "Medigap" supplemental policy -- and will pay $2,455 in premiums this year for his wife and himself.

He also expects to pay another $1,000 to $1,500 for prescriptions that would have been covered by his HMO. "People are being pinched more and more at a time in their life they should have some latitude," he said.

Those Medigap premiums are a key reason that seniors, though shaken by being terminated by one HMO, are choosing another, according to those working with seniors.

The Medicare HMOs are often offered at no cost to seniors beyond the $45.50 per month that all Medicare beneficiaries pay. That was part of the inducement to control Medicare costs by getting seniors into managed care, with the federal government paying HMOs monthly for seniors enrolled.

"A lot of callers to our hot-line told counselors they were not interested in another HMO, but they couldn't afford the Medigap premium, so they felt forced to join one," said Joe Baker, associate director of the Medicare Rights Center, an advocacy group in New York.

"Many felt they were stuck in the program, although they are anxious and frightened about what would happen next year," when other HMOs may pull out.

Germano Gomez, coordinator of insurance counseling for the Baltimore Commission on Aging and Retirement Education, said, "A lot of seniors were pretty confused, but most went ahead and joined one of the other HMOs. The average income of seniors in the city is much lower than in the rest of the state, and HMOs are the most cost-effective option."

In addition to low or no cost, Medicare HMOS offer more benefits -- particularly some coverage for prescription drugs -- although patients are restricted to doctors and hospitals in the HMO's network.

As a result, Medicare HMOs have grown dramatically over the past few years, from 2 million members nationally four years ago to 6.5 million now.

HMOs first found the Medicare business profitable, in part because they were attracting younger and healthier seniors, and fed the growth with aggressive recruiting.

Profits turn to losses

But many saw their profit turn to losses -- partly because the federal government limited increases in payments to HMOs and partly because they began drawing a sicker population.

"As the HMO market matures and more people join, the HMOs have less opportunity to cherry-pick," said Baker of the Medicare Rights Center. "They have a very difficult time controlling costs for this population."

So when it came time to sign contracts for this year, a number of HMOs bailed out.

Nationally, according to the Health Care Financing Administration (HCFA), HMOs covering 406,538 seniors -- 6.5 percent of the Medicare HMO enrollment -- left the market.

In Maryland, Aetna U.S. Healthcare, NYLCare, Optimum Choice and Prudential pulled out altogether. They covered about 33,000 Maryland members.

United dropped its Medicare plan in 14 counties, covering about 3,500 people in Western Maryland, Southern Maryland and the Eastern Shore. It also limited its doctor network in the metropolitan area to four large physician-hospital groups that now bear most of the insurance risk. More than half of United's members had to choose new doctors.

United also picked up Central Maryland members abandoned by other HMOs, so its statewide enrollment remains about 21,000.

Only MediCareFirst continued to offer its plan throughout the state, and it imposed a $75-a-month premium in the rural counties, where the federal reimbursement rates are lower.

Delay in getting cards

The rush of enrollments created some delays in getting cards out, although Heckwolf and Farsace said they were able to get new members treated by phoning or faxing membership information to doctors.

In the end, however, advocates said, it appears anyone who wanted to enroll in another HMO was able to do so.

None of the HMOs left in the market moved aggressively to recruit the members of the HMOs that were leaving. "Things happened so quickly," said CareFirst's Heckwolf. "People were calling us [after getting cancellation notices from other HMOs] before we had the opportunity to do any targeted marketing."

Robert Essink, vice president for marketing, sales and business development for Kaiser Permanente of the Mid-Atlantic, said: "We didn't want all of them [members abandoned by competitors] because we do have capacity constraints in our centers. We knew we were going to get about 25 percent" because only four HMOs remained in the Maryland Medicare market.

Clearly, some HMOs also were concerned that more Medicare members would hurt their bottom line. "The reason a number of plans decided not to do an extra marketing push is their concern about the federal government being a stable, reliable, long-term partner," said Karen Ignagni, president of the American Association of Health Plans.

The exodus of HMOs from Medicare last year was caused in part by a new 2 percent cap on rate increases. Ignagni said the industry needs better reimbursement rates. "Congress needs to act this year," she says.

Pub Date: 1/31/99

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