It wasn't long ago that Medicare held a special lure for HMOs, which saw the government's foray into managed care as a lucrative opportunity. But if a PacifiCare decision last month is any indication, Medicare is no longer the golden egg.
The company's five-year strategic plan calls for aggressive expansion in the commercial market -- PacifiCare wants to boost its employer-based business 47 percent -- but no such grandiosity is slated for the Medicare side. PacifiCare's Secure Horizons HMO, which enrolls more than 1 of every 6 people in Medicare+Choice, is the biggest player in managed Medicare. But with tighter capitation rates squeezing HMOs, PacifiCare is thinking about balancing its revenue stream. Almost $3 of every $5 PacifiCare collects is from Medicare.
PacifiCare's plan puts an exclamation point on HMOs' continuing disenchantment with Medicare. Many of PacifiCare's competitors and other plans have left lower-paying counties or dropped out of Medicare altogether in the last year, disrupting coverage for more than 700,000 elderly.