Optimum Choice joins rush from Maryland Medicare United HealthCare HMO also quits most of state

Health insurance

October 02, 1998|By M. William Salganik fTC | M. William Salganik fTC,SUN STAFF Bloomberg News contributed to this article.

Another HMO, Mid Atlantic Medical Services Inc.'s Optimum Choice, pulled out of the Maryland Medicare market yesterday, joining a flow that has become a flood.

Also, United HealthCare Corp.'s Medicare HMO announced it was pulling out of the Eastern Shore, Southern Maryland and Western Maryland, but would continue to operate in the Baltimore-Washington metropolitan area.

HMOs are complaining that they're losing money on Medicare, but as the deadline for deciding whether to participate in Medicare next year arrived, the Clinton administration told a trade group yesterday that it would not allow HMOs to cut benefits or increase premiums.

Within the past month, Aetna U.S. Healthcare, NYLCare (which is being acquired by Aetna) and Prudential HealthCare announced they were leaving a number of markets, including Maryland. Along with Optimum Choice's exit and United's cutback, that leaves about 37,000 Marylanders needing to find new HMOs or return to traditional, fee-for-service Medicare coverage by Jan. 1.

That can be a problem, said Kathleen Haddad, director of health policy at Families USA, an advocacy group in Washington. Seniors may not find another policy that offers the same benefits, or the cost may be prohibitive, she said.

Patients switching coverage can also have "continuity of care issues," since some of their doctors may not be in the new HMO's network, said Joe Baker, associate director of the Medicare Rights Center in New York.

"It's not an unmitigated disaster in every market, but it is a concern," Baker said.

MediCareFirst, the Medicare HMO of FreeState Health System, owned by Blue Cross and Blue Shield of Maryland, continues to offer membership in all counties of Maryland. Kaiser Permanente also offers a Medicare HMO in Maryland.

The problem is not limited to Maryland. The American Association of Health Plans, an HMO trade association, estimated yesterday that as many as 300,000 people nationally in at least 17 states are being forced to rush for new coverage.

However, the Health Care Financing Administration, the federal agency that runs Medicare, said that is a small percentage of the 6 million seniors who have chosen Medicare HMOs, and that some new HMOs are coming into the Medicare program.

Rockville-based Mid Atlantic Medical Services (MAMSI) said yesterday that it had decided to pull out of the Medicare market altogether. It also serves between 1,000 and 1,500 members in adjacent states.

Despite losses in Medicare, MAMSI "would have been willing to stay with our current members at current rates," but feared "a large influx of membership" from the plans that were closing, said Elizabeth Sammis, senior director for corporate communications.

For the first six months of the year, she said, Optimum Choice paid out $1.05 in benefits for each premium dollar it received from Medicare. That was down from $1.23 the previous year, and MAMSI felt it might have been able to pull the program into the black.

Richard Zoretic, chief executive officer of United HealthCare of the Mid-Atlantic, said lower reimbursement rates in rural counties would not "allow us to stay in the program and still make a respectable return."

United will continue to operate its Medicare HMO in Baltimore and nine counties: Anne Arundel, Baltimore, Carroll, Cecil, Charles, Harford, Howard, Montgomery and Prince George's. It has about 17,900 members in those counties and 3,160 in the counties it is leaving, Zoretic said.

Pub Date: 10/02/98

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