Health Insurer to Drop Medicare HMO Services in Parts of Colorado

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California and Northeastern states

Associated Press State & Local Wire

Foundation Health Systems Inc. said Thursday that it will drop health maintenance organization coverage for nearly 16,000 Medicare recipients in parts of the West and Northeast where federal reimbursements don’t cover the cost of services.

A consumer advocate said the decision could create a health-care crisis for elderly patients who must find a new provider.

The decision will affect about 15,900 recipients in parts of New Jersey, California, Colorado, Connecticut and New York. The company will continue to offer HMO services to more than 260,000 Medicare patients nationwide.

Seniors on Foundation Health HMO plans were being notified and will receive assistance in moving to other health plans, the company said in a news release. The company plans to stop offering the programs on Jan. 1, 2000.

“These were difficult decisions for our health plans, but they were decisions we had to make,” said Jay M. Gellert, president and chief executive officer of Foundation Health. “We have repeatedly said that we cannot continue to provide health-care coverage to seniors in areas where we project that reimbursement rates do not cover the trends in actual health care costs.”

The decision continues a practice in which 400,000 elderly patients were dropped by HMOs last year because of the companies’ dissatisfaction with reimbursement rates, said Jamie Court of Santa Monica-based Consumers for Quality Care.

“This has been a pattern in the industry where HMOs are basically holding the government up for more money by holding seniors’ health and health security hostage,” said Court, a longtime critic of HMOs.

“Our concern is that these patients were marketed aggressively and told an HMO to be there for them in all weather and now that it is drizzling a little the HMOs are pulling out,” he said.

Seniors who lose coverage and can’t find another HMO will have to buy so-called Medigap insurance policies to cover the gap between the cost of health care and the amount Medicare will pay, he said.

Foundation Health’s average reimbursement rate increase for 2000 is 3.8 percent, but costs are expected rise by 6 percent on average, Gellert said.

The cutbacks were based on local reimbursement rates, which vary widely, Gellert said. Even in some adjoining counties in the same state the reimbursement rate can vary by as much as 30 percent. For example, in Manhattan the company’s reimbursement rate is 30 percent higher than in Bergen County, N.J., just across the Hudson River. Health care costs in the two areas is about the same, he said.

In some states, the number of affected patients is small. In California, for example, Foundation Health will cut services to 190 patients in Madera and Mariposa counties. It will continue service to 137,000 customers in 22 other counties.

Other states and the number of patients who will be dropped include:

New Jersey, 2,000 patients statewide; Colorado, 6,400 patients in Boulder, El Paso, Pueblo, Adams and Denver counties; New York, 4,400 patients in Westchester, Dutchess, Orange, Putnam and Rockland counties; Connecticut, 3,000 patients in Windham and Tolland counties.

“This is a crisis of care for seniors who need to find another HMO or will have to pay more to buy back into a Medigap policy,” said Court.

Consumer Watchdog
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