Citing Losses, Cigna to Drop Medicare HMO

Cigna Corp., one of the nation's largest health maintenance organizations, said Friday it will abandon the Medicare market, forcing more than 100,000 seniors nationwide to find new health insurance.

The move, effective Jan. 1, 2001, is expected to be followed by other managed care companies, which have been scaling back their Medicare participation since the federal government three years ago began reducing the amount of money it pays to take care of seniors.

Aetna US Healthcare, which covers 650,000 people in its Medicare plan, is considering reducing its participation in the program, a spokeswoman said, but a final decision will not be made for several weeks. Even Pacificare Health Systems, which covers 1.1 million seniors and remains committed to the Medicare business, is "evaluating all of the options" and may drop out of some markets, the company said.

"The program is in free fall," said Karen Ignani, president of the American Assn. of Health Plans. "We're in the middle of a real crisis."

Medicare beneficiaries who find themselves without an HMO will still be covered under regular Medicare. But HMO care for seniors is generally more comprehensive and cheaper than traditional Medicare and Medi-gap.

So many companies have dropped out of Medicare managed care over the last two years that there is no managed care plan available for seniors living in 160 counties nationwide. Others have been bounced from plan to plan as companies such as Cigna have reduced their involvement in the business.

Health plans have dumped 750,000 Medicare beneficiaries from their rolls since 1998, according to the American Assn. of Health Plans.

Announcements of additional reductions are expected to come during the next four weeks, as a July deadline nears for health plans to notify the federal government whether they will participate in the program in 2001. By October, those plans that intend to drop out must write to members who are affected, telling them what happened and providing the names of alternate insurers.

"For the lowest tier of elderly, this is really a dramatic problem," said Linda Bergthold, a Santa Cruz-based health care analyst and consultant. "It's extremely disruptive and difficult."

In those areas where Cigna is the last remaining Medicare managed care provider, seniors and disabled Americans who rely on the 1960s-era program for their care will be forced to return to the traditional fee-for-service form of Medicare coverage.