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Foundation Health Planning Medicare Cuts

Health care: Insurer may drop 5% of enrollees in 2000, saying costs are rising faster than federal repayments.

June 12, 1999| From Bloomberg News

Foundation Health Systems Inc., one of California's biggest health insurers, said Friday it will probably drop about 5% of its current 283,000 Medicare enrollees in 2000.

The company said it is planning to drop Medicare health maintenance organization coverage in about 20 counties where it is losing money or in danger of doing so because health costs are growing faster than Medicare reimbursements.

"We continue to see cost increases that far outstrip the rate of increase in the reimbursement rate in many counties," said company spokesman David Olson.

He said a final decision on Medicare coverage in 2000, which must be submitted to the government by July 1, has not been made, and thus the company isn't releasing the names of the counties it is considering dropping.

Several large managed-care organizations have been ending Medicare coverage in some markets since the 1997 balanced-budget law that cut their reimbursements. More than 400,000 Medicare HMO enrollees were forced to find new coverage this year because of the cutbacks.

Foundation Health last announced reductions in its Medicare coverage in October, when it had nearly 325,000 enrollees.

Many of the new cuts will be from rural counties, Olson said. The company also will withdraw from counties where it is having trouble reaching agreement on payments to doctors and hospitals for treating Medicare patients.

Foundation Health also will generally reduce benefits or raise premiums in the counties where it continues to serve Medicare beneficiaries, Olson said.

Foundation shares fell 31 cents to close at $18.19 on the New York Stock Exchange.

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