In continuing fallout from the exit by three Medicare HMOs from the local market, Kaiser Permanente announced yesterday that it will raise its premiums sharply, while the Charlestown and Oak Crest retirement communities said they would seek approval to form their own HMO to care for their residents.
Both announcements were related to decisions by three insurers, including CareFirst BlueCross BlueShield, the state's largest, to stop offering Medicare HMOs in Maryland at the end of the year.
Kaiser is the only insurer that will remain in the Maryland Medicare market. It had said earlier that it would change some aspects of its Medicare HMO, but yesterday offered more specifics - including a planned premium increase from $19 a month to $79 in the Baltimore area.
Kaiser's actions, and the pullouts by CareFirst, CIGNA and UnitedHealthcare, were based on losses in the program. While health maintenance organizations can charge a premium to Medicare members, they get most of their revenue from federal payments for each member each month - payments the HMOs say have not kept pace with inflation.
Charlestown and Oak Crest, however, which have been providing Medicare HMO services to about 700 residents through CareFirst, said they were able to provide care and generate a slight surplus - enough that they might offer some additional benefits if they are approved to function as an HMO.
"We're doing well, and we're looking for more ways to give benefits," said Dr. Gary Applebaum, senior vice president and director of medical services for Erickson Retirement Communities, parent company for Charlestown and Oak Crest.
Erickson employs 14 internists, and contracts with specialists based near the two retirement campuses. Under its arrangement with CareFirst, Erickson has been getting a monthly fee from the HMO and paying all the claims for its members, including hospital treatment.
The key to generating surpluses, Applebaum said, was investing more in preventive care and case management, leading to a hospitalization rate of just 700 days a year per 1,000 members, compared with a rate of 2,700 days for CareFirst's other member groups.
Charlestown and Oak Crest have about 4,700 residents, he said. In addition to the 700 who have chosen HMO membership, others also receive treatment from the staff doctors, with payment coming from traditional Medicare coverage and Medicare supplemental policies.
If the federal Health Care Financing Administration (HCFA) approves Erickson's application, Applebaum said, it will seek state and federal regulatory approval to operate as an HMO.
With the retirement communities finding their program working through care given by a group of full-time doctors, Kaiser said it also planned to stop using a network of community physicians as part of its Medicare HMO.
Instead, its Medicare HMO members will receive care only through the doctors at Kaiser's own medical centers.
More than 80 percent of its 4,750 Baltimore-area members already receive their care at the centers, Susan Whyte Simon, a Kaiser spokeswoman, said.
Other members, however, would have to switch doctors if they want to stay in Kaiser. Kaiser has centers in downtown Baltimore, Towson, White Marsh, Severna Park and Woodlawn.
Simon said Kaiser, which initially said it would not specify how its Medicare HMO would change until it received approval from HCFA for the modifications, decided to be more specific now because of the pullout of the other HMOs.
"Our fear was that, especially in the Baltimore area, someone would look at the 2000 benefits and care network," and decide to enroll without realizing that they might be different in 2001, Simon explained.