Elderly may get HMO squeeze Rural Medicare clients could face a new cost and a cut in benefits

December 23, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Saying they are losing money because of low federal reimbursements, several Maryland HMOs are moving to charge premiums and reduce benefits for Medicare members in rural areas.

Thus far, most Medicare HMOs, which receive monthly payments from the federal government, have not charged members premiums.

They also offer more benefits than do many Medicare supplemental insurance policies, so they have been growing rapidly in popularity. They cover 5.9 million people nationally -- up from 2.1 million three years ago.

Blue Cross Blue Shield of Maryland is seeking permission from the federal Health Care Financing Administration to charge a $75 premium for its MediCareFirst HMO in 16 counties on the Eastern Shore, in Southern Maryland and in Western Maryland, although it is not planning any benefit cuts.

That would hit about 10,000 of MediCareFirst's 23,000 members, said Jeffery W. Valentine, director of corporate communications for Blue Cross.

Mid Atlantic Medical Services Inc. (MAMSI), which offers Medicare membership in its Optimum Choice HMO, is asking less of a premium -- $45 in four Maryland counties and $65 in three -- and is proposing eliminating a prescription drug benefit.

NYLCare Health Plans of the Mid-Atlantic is also reportedly seeking benefits changes in Maryland, but officials declined to discuss them until HCFA acts. The federal agency is supposed to decide by Jan. 1, although it may not meet that deadline.

Similar premium increases and benefit cuts are showing up in other rural Medicare HMOs throughout the country, said John Rother, legislative director for the American Association of Retired Persons.

HCFA pays lower rates in rural areas, where medical costs are generally lower. Some critics have said rates are too high in urban areas, where HMOs have marketed aggressively in the past few years to boost membership.

Congress last year moved to make rural reimbursements closer to those in urban areas, he said, but the change was phased in because of budget concerns, and it will be several years before it is clear whether the adjustment solves the problem of the rural HMOs.

Cathy Riggs, a social worker who is community care coordinator for the Queen Anne's County Department of Aging, said her department has advised seniors to enroll in the no-premium HMO plans. She said they are "horrified" by the proposed premium, will not be able to afford to stay in the plan and will have to "fill less prescriptions, go to the doctor less, or end up with unpaid bills."

"It's a real letdown to start us with this great program that's helping a lot of people, then force people out," she said.

Valentine said Blue Cross was asking for the $75-a-month premiums, which will produce about $9 million a year, "just to break even in the rural areas." He said Blue Cross had considered benefit cuts and increases in deductibles and co-payments, but decided the premium was the best way to balance costs and continue to offer the plan throughout the state.

"We did it with great reluctance," he said, "but we needed to stop the bleeding."

He said HCFA pays HMOs a base rate of of $632 per member per month in Baltimore City, but just $356 in Somerset County. (Actual payments vary with the age, gender and health status of the enrollee.) He said Blue Cross had lost $5 million through September this year on the Eastern Shore alone.

Elizabeth Sammis, director of MAMSI's government health services division, said, "I'm reluctant to talk about how much we're losing for competitive reasons, but we would not be increasing premiums and decreasing benefits if we were not losing money."

Valentine said rural enrollees in MediCareFirst tended to be older and require more medical care than those in more urban areas.

Also, he said, "if you're on the Eastern Shore and need heart bypass surgery, you come to Hopkins or University of Maryland. So we're paying metropolitan rates, and being reimbursed at rural rates."

The AARP's Rother said HMOs may find it more difficult to negotiate discounted rates in rural areas, where there may be only a few doctors, than in urban areas.

David Sayen, chief of the Medicare managed care branch at the HCFA regional office in Philadelphia, which oversees Maryland, said the per-member-per-month payments were based on the average fee-for-service cost for Medicare enrollees in each county.

Valentine said Blue Cross will offer Medicare supplemental policies (sometimes called Medigap insurance) to any HMO members who want to switch back without regard to pre-existing medical conditions.

But Riggs said most of the Queen Anne's members did not have Medigap insurance before because they could not afford it. Blue Cross' lowest-cost policy costs about $70 a month.

The counties where the $75 premium for MediCareFirst would be charged are: Allegany, Calvert, Caroline, Cecil, Charles, Dorchester, Frederick, Garrett, Kent, Queen Anne's, St. Mary's, Somerset, Talbot, Washington, Wicomico and Worcester.

Optimum Choice is seeking a $65 premium in Caroline and Wicomico and $45 in Allegany, Washington, Frederick and Howard. It will also drop the option of prescription drug coverage up to $2,000 a year, which it has been offering for $35 a month. Sammis said Optimum Choice has 11,000 Medicare members in Maryland, Delaware, Virginia and the District of Columbia, but she did not have a count of how many would be hit with the new premiums.

Last year, MAMSI pulled out of 59 counties in the region, including, in Maryland, Cecil, Dorchester, Garrett, Harford, Queen Anne's, St. Mary's, Somerset, Talbot and Worcester, because it said it was losing money.

Pub Date: 12/23/97

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