News and Commentary

Health Plans Stream Out of Medicare While Medicare+Choice Starts Slowly


About 1 of every 14 Medicare enrollees is looking for new coverage this month. Call it fallout from Black Friday — Oct. 2, the deadline for health plans to decide whether to renew Medicare contracts with the Health Care Financing Administration. Citing unprofitable reimbursement, 43 HMOs and 22 other plans exited Medicare, while 52 HMOs trimmed service territory. A tenth of affected enrollees live in rural areas with no other managed care option.

HCFA got four Medicare+ Choice takers from provider-sponsored organizations, once seen as a catalyst for the proliferation of managed Medicare. One preferred-provider organization applied to enter Medicare. No insurers applied to offer medical savings accounts, another Medicare+Choice option.

The list of HMO casualties reads like a managed care Who's Who. Foundation Health Systems terminated contracts in six states; United HealthCare dropped out of 86 of the 206 counties it serves; Oxford left markets in four northeastern states, and Prudential bolted from parts of six states.

The pullout prompted Florida's attorney general to investigate whether six health plans conspired to violate antitrust laws. The American Association of Health Plans called the probe politically motivated.

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