3 HMOs cut back Medicare-Medicaid roles Prudential, United stop as of tomorrow

FreeState limits scope

Health insurance

September 29, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

Three HMOs have cut back participation in a state program covering people eligible for both Medicare and Medicaid after the state health department reduced premium rates and demanded reimbursement of overpayments.

Joseph M. Millstone, director of the Medical Care Policy Administration for the health department, said Prudential HealthCare and United HealthCare will end their participation tomorrow. FreeState Health Plan will continue for another month in Baltimore City and Baltimore County only, while it evaluates whether to continue.

The state program enrolls 2,500 people who, through combination of age, poverty and handicap, are covered by both Medicare and Medicaid. With the state's Medicaid portion being cut back, enrollees can continue to see their doctors, and the state will pay on a fee-for-service basis for services not provided by Medicare, said Millstone.

The change does not affect more than 100,000 Marylanders enrolled in Medicare HMOs or about 300,000 in Medicaid HMOs -- only those eligible for both, who have been sent letters by the state explaining the change.

Prudential enrolls about 1,000 of those; United about 400, according to Millstone. FreeState has about 1,000 participants as well, but only 600 live in Baltimore City and Baltimore County, the areas where FreeState will continue to offer the program.

There are more than 40,000 people eligible for both Medicare and Medicaid who are not enrolled in HMOs.

FreeState and Prudential also said they do not agree with the state that they owe money for last year, for what the state says are overpayments. United had no comment yesterday.

Since the HMO was paid the rates specified by contract, it should not owe anything, said Henry F. Keaton, vice president of health plan operations for Prudential HealthCare of the Mid-Atlantic. "Our position is that we entered into the contract in good faith, with the understanding that those were the rates."

Lorraine Doo, director of the Medicaid program for FreeState, said her health maintenance organization takes the same position.

The health department, however, said earlier this month that its consultant had calculated premium rates incorrectly. In addition to reducing the rates to a level it considers correct -- in some cases, about half of the old rates -- the state asked Prudential to pay back $1.4 million, FreeState $1.1 million and United $500,000.

The HMOs and the state will meet to discuss the payments after the enrollees have gone through the transition to fee-for-service coverage.

Keaton said Prudential decided to drop the program because "it required a fair amount of administrative work, it was a small population, and the rates were severely reduced."

Since members can continue to see the same doctors and receive the same services, he said, dropping out "wouldn't harm anybody."

Doo said FreeState would tighten its network to a group of doctors specializing in the elderly, and consider how the program could work going forward.

Millstone said he did not believe the HMOs dropping out could indicate trouble in the future for the 300,000-member Medicaid HMO program, which has had its own payment dispute.

Dr. Martin P. Wasserman, Maryland health secretary, told legislators in July that the state had miscalculated premiums and overpaid by about $80 million in that program, but the HMOs disagreed. The state then named a consultant to study the question and report later this fall.

Pub Date: 9/29/98

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