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Study: Thousands to Lose HMO Aid

Health: At least 200,000 seniors will be dropped when providers opt out of Medicare, survey says. Few withdrawals are expected in California.


WASHINGTON — At least 200,000 older Americans will lose their Medicare HMO coverage next year, while many more will face significant cuts in benefits, officials said Monday.

Though not unexpected, the estimates of further attrition in the Medicare+Choice plan highlight the growing divide between Medicare coverage and the health care needs of the 40 million Americans age 65 and older.

More than a third of Medicare beneficiaries have no coverage for prescription drugs, the fastest-growing health care cost. And increasing numbers of physicians and health maintenance organizations, citing insufficient payments from the government, are dropping Medicare patients or refusing to accept new ones.

The American Assn. of Health Plans, the trade organization for more than 1,000 HMOs, released its annual survey of Medicare+Choice enrollment on the last day that participating HMOs could reveal their plans for next year.

More specific information, including which plans will drop Medicare patients and how many Medicare recipients will have their benefits reduced, will not be available until the Centers for Medicare and Medicaid Services compiles the HMO data, expected in about five weeks. But several of California's leading HMOs, which have a combined Medicare enrollment of more than 1.2 million, said they are planning few, if any, withdrawals.

"The groundwork has been set for a turnaround of Medicare+Choice," said Karen Ignagni, AAHP president and chief executive, noting that the number of beneficiaries expected to be dropped next year is far below the 536,000 who lost coverage at the beginning of this year. Since 1999, 2.2 million Medicare beneficiaries have lost coverage from plans that were "forced to drop out" of the program because of inadequate government funding, she said.

AARP, the 35-million-member advocacy group for older Americans, had predicted that as many as 600,000 beneficiaries could be dropped from Medicare+Choice next year, but it said Monday that the actual number would likely fall somewhere between the 200,000 cited by AAHP and its own estimate.

Whatever the final number, the continued withdrawal of HMOs sends a "further signal to Medicare beneficiaries that they can't count on these plans," said AARP policy director John Rother.

Looking for a way to control Medicare spending, Congress created the Medicare+Choice program in 1997, predicting that by this year, almost a third of Medicare beneficiaries would be enrolled in HMOs. Medicare+Choice plans, which contract with private HMOs, are an alternative to the traditional Medicare plan, which has significant gaps in its coverage and could result in high out-of-pocket expenses for seniors without supplemental "Medigap" insurance.

Early on, the plans offered "terrific value," especially to low-income seniors, by providing preventive care, disease management and prescription drug coverage, Rother said. But as HMOs have cut back on benefits or dropped out of the program altogether, its advantages over conventional fee-for-service Medicare have nearly disappeared. Only about 10% of Medicare beneficiaries now belong to HMOs, and that number is falling.

For Congress, already under fire from seniors for failing to pass a minimum $350-billion prescription drug benefit, Medicare HMOs represent another health-care provider crying out for more government money--and they are likely to get at least some of it.

"No one's given up on the issue of prescription drugs," said Mike Siegel, Democratic spokesman for the Senate Finance Committee, "but it's clear that ... we will be looking at Medicare givebacks"--increased payments to doctors, hospitals, nursing homes and other providers.

Robert M. Hayes, president of the New York-based Medicare Rights Center, on Monday called on Congress to "fill the coverage gaps in Medicare and enact a meaningful prescription drug plan immediately."

Instead, with midterm elections less than two months away, Congress is more likely to provide at least $30 billion to Medicare providers, which have been lobbying strongly for higher reimbursement rates. Congressional aides acknowledge that paying the providers--instead of putting money toward programs that benefit consumers--could be a hard sell with seniors as they go to the voting booth.

Kaiser Permanente, California's largest Medicare HMO with 621,000 members, declined to specify where it was pulling back next year, but it said the move would affect fewer than 2,500 people.

Kaiser also would not comment on premium increases or benefit changes that it is seeking for next year. This year, it increased Medicare co-payments for brand-name prescription drugs to $25 from $10 and limited the overall drug benefit to $2,000 a year.

Health Net Inc. said Monday that its withdrawals in Alameda and Santa Barbara counties would affect fewer than 1,000 of its 188,000 Medicare beneficiaries. "The business is profitable," said spokesman David Olson.


Times staff writer Don Lee in Los Angeles contributed to this report.

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