Rapid retreat; 2 Area Medicare HMOs Call It Quits

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Houston Chronicle

Two of Houston’s biggest Medicare HMOs said Thursday they will be pulling out of the market, reflecting the rapid national decline of these once-promising health plans for seniors.

Aetna U.S. Healthcare, the nation’s largest insurer, and MethodistCare in Houston said they will stop offering Medicare HMOs in this area.

More announcements of health plans abandoning their Medicare HMOs are expected by next week.

The for-profit companies running these plans, offering seniors benefits not normally covered by Medicare, particularly prescription drugs, say they are dropping out because the government payments are not keeping pace with escalating costs.

A survey released Thursday by the American Association of Health Plans, which represents more than 1,000 health plans, showed 711,055 beneficiaries will be affected next January by health plan withdrawals from Medicare HMO markets.

Aetna‘s decision Thursday will affect about 355,000 Medicare members in Texas and 10 other states. Its exit would leave about 53,000 Houston-area seniors here without HMO coverage by year’s end.

This applies to those enrolled in the Prudential HealthCare Medicare plans that Aetna acquired and the NYLCare 65 Medicare plans that Aetna administers for Blue Cross Blue Shield of Texas, which bought NylCare last fall.

MethodistCare in Houston also said it will not renew its Medicare contract with the government, leaving 5,000 Houston-area members without coverage. MethodistCare, the three-year-old health plan of Methodist Health Care System, said it has been difficult to make its MethodistCare 65 Plus plan financially viable.

Aetna blamed low government reimbursements for its decision to not renew its contract next January in the government health-insurance program for people age 65 and older.

“The decision to exit certain Medicare markets was reached with great reluctance but was made after an exhaustive review of alternatives, such as significant benefit and premium modifications,” Aetna chairman and chief executive William H. Donaldson said in a prepared statement.

A smaller player in the Houston area, Sierra Health Services, based in Las Vegas, said it will exit 14 counties in this part of Texas but remain in Dallas/Fort Worth and the Beaumont area.

More such decisions affecting Houston seniors are expected in the coming days.

Health insurance companies have until July 3 to notify the Health Care Finance Administration, the government agency that oversees Medicare, of their intention to renew contracts for the year 2001.

PacifiCare Health Systems, which offers seniors Secure Horizons in Texas, said it will announce its decision next Wednesday.

Humana said it also is evaluating its coverage. New membership in its Humana Gold Plus plan has been frozen since last month. Memorial Sisters of Charity’s health plan, now owned by Humana, froze sales of its Choice 65 last February.

The Washington-based American Association of Health Plans said its members pointed to inadequate funding and over-regulation as the main reasons they are being forced to withdraw from these markets.

“For two years America’s health plans have asked Washington to honor the promise made to seniors and individuals with disabilities, and to adequately fund the Medicare-Choice program. Last year, Congress improved the formula for paying for health plan participation in Medicare, but did not solve the basic problem of insufficient financing,” Karen Ignagni, president and chief executive of the American Association of Health Plans, said in a prepared statement.

Also on Thursday:

Oxford Health Plans of Trumbull, Conn., said it will discontinue its Medicare HMO in eight counties in New Jersey.

Health Net, one of California’s largest health plans, said it will drop its Medicare HMO plans in Fresno and Sonoma counties, affecting 2.6 percent of its members. Health Net said its medical costs increased 7 to 8 percent per year, while its federal reimbursement creeped up an average of 2 percent.

Foundation Health Systems of Los Angeles said it will withdraw in 18 counties in six states, affecting about 19,000 members.

Uncertainty contributed

In Houston, MethodistCare President and Chief Executive Jim Henderson said the uncertainty and constant changes in government rules contributed to the decision to withdraw.

“We did spend a lot of time and effort trying to restructure the benefit program . . . and we just can’t come up with a way of making it work,” Henderson said.

MethodistCare is a for-profit health plan, but its stock is wholly-owned by its not-for-profit parent, Methodist Health Care System.

Aetna said although the government increased its Medicare reimbursements last year, it was capped in most markets at 2 percent, which wasn’t enough to cover rising costs.

Aetna said it will remain in five states next year: Arizona, California, New Jersey, New York and Pennsylvania.

By year’s end, Aetna also plans to exit the Medicare HMO business in Connecticut, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Ohio and Washington.

Consumer advocacy groups charged that a for-profit health care company should not be allowed to pick which areas it will do business in, choosing only those that reap more profits.

“If Aetna doesn’t want to serve patients in Harris County and certain counties, then it shouldn’t be able to serve patients in Los Angeles County where it’s more profitable,” said Jamie Court, advocacy director for the Foundation for Taxpayer and Consumer Rights, a consumer watchdog group in Santa Monica, Calif.

“The government has to show these managed care HMOs a little bit of tough love and create some new rules which make sure the companies don’t simply cherrypick the risks and counties they like. This is a concerted effort on the part of the biggest HMOs in the nation to basically highjack the government for more money.”

But others expect that eventually Medicare HMOs will disappear completely and seniors will return to traditional Medicare.

Dr. Paul Handel, chairman of the Council on Socioeconomics at the Texas Medical Association, said health care companies underpriced their medicare HMOs to gain marketshare and are now paying the consequences. He predicted that once Medicare offers a prescription drug benefit – a plan proposed by both political parties – Medicare HMOs which offer drug benefits, will vanish.

Look at supplementals

Lisa McGiffert, senior policy analyst at Consumers Union in Austin, a consumer advocacy group, advised seniors who are going from a Medicare HMO to traditional Medicare coverage to start shopping for supplemental insurance to cover expenses not covered by the government plan, including prescription drugs.

“There’s a window of opportunity to get back into a supplemental plan,” she said. Supplemental plans cover items traditional Medicare does not pay for, including prescription drugs.

Rodney Williamson, president of Texas Business Group on Health, which represents employers, said it was unfortunate that large insurance companies were being forced out of Medicare markets. He blamed not only insufficient government funding, but also the anti-managed care sentiment in Congress as part of the reason for the mass exits.

Texas Insurance Commissioner Jose Montemayor advised consumers to avoid hasty decisions on replacement coverage.

“Don’t panic. You can continue to see your doctor, get referrals and receive other HMO services through the end of the year,” said Montemayor in a written statement. “You have time to find alternatives.”


Health plan trend

Aetna U.S. Healthcare’s and MethodistCare’s withdrawal from offering Medicare coverage is part of a growing trend. Here is information on what other plans are doing:

Starting in mid-July, Medicare will be able to tell you if your managed care plan will continue to participate in the Medicare program.

The 2000 Guide to Health Insurance for People with Medicare publication is available online or by calling the toll-free number.

Phone: 1-800-MEDICARE (633-4227)

Hearing impaired: 1-877-486-2048

Web site: http://www.medicare.gov

Your options

If your plan decides to leave Medicare, you can:

1. Stay in the plan through Dec. 31, 2000 and

Return to the original Medicare Plan, with or without a Medigap policy.

Join another Medicare health plan effective Jan. 1, 2001.

2. Leave your managed care plan before Dec. 31, 2000 and:

Return to the original Medicare Plan, with or without a Medigap policy.

Enroll in another Medicare health plan. (Providers are required to be open for enrollment in October, November and December, unless they already have as many members as they are able to serve.)

Status of HMO Medicare providers in Houston

Company   Plan name   Houston-area members*   Status   Phone number  

Cigna HealthCare of Texas   Cigna HealthCare for Seniors   2,734   Withdrawing from Houston area   1-800-547-5843  

Humana Texas Health Plans of Texas   Humana Gold Plus-Houston Value   21,947   Accepting members with certain restrictions   1-800-336-6702  

Memorial Sisters of Charity HMO (1)   Choice 65   19,799   Not accepting new members   1-800-909-6724  

MethodistCare   MethodistCare 65 Plus   3,324   Withdrawing from Houston area   1-800-619-9080  

NylCare   Various   49,148   Withdrawing from Houston area   1-800-377-3807  

PacifiCare of Texas   Secure Horizons   14,670   Accepting members; annoucement expected Wednesday   1-800-950-9355  

Prudential HealthCare   Prudential HealthCare SeniorCare   9,708   Withdrawing from Houston area   1-800-992-2273  

Texas Health Choice   Golden Choice   5,358   Withdrawing from Houston area   1-888-293-6831  

*Membership as of Dec. 31, 1999 from Texas Department of Insurance reports.


Find out more

Additional information is available from the Texas Department of Insurance by checking its Web site, http://www.tdi.state.tx.us, or calling its consumer help line at 800-599-6467. The agency offers free publications, including the Medicare Supplement Insurance Handbook and Rate Guide, as well as the 2000 Guide to Health Insurance for People with Medicare.

GRAPHIC: Graph: 1. Health plan trend (color, TEXT); Drawing (color); Graph: 3. Find out more (b/w, TEXT, p. 2); 1. Robert Dibrell / Chronicle, Sources: Medicare, Health Care Financing Administration, Texas Department of Insurance, Chronicle survey


LOAD-DATE: July 1, 2000

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