Medicare+Choice: The More Things Change . . .
Last December, Congress approved $11 billion in extra funding over the next five years to encourage more HMOs return to the Medicare+Choice program and increase benefits for seniors in those plans. Robert Pear's article in The New York Times last Friday shows that HMOs are generally not improving benefits or reducing enrollee cost sharing.
Nor is there any early indication that HMOs will get back into the program anytime soon. Here are the results in Minnesota:
Medicare payment rates to Minnesota HMOs will increase sharply on March 1, but it may not make any difference in the shrinking availability of Medicare HMO plans here. Based on Congressional action in December, the federal Health Care Financing Administration (HCFA) has announced new rates effective in March. For example, the base rate in Hennepin County (Minneapolis) will increase 12.5 percent, from $467 to $525 per month. In fact, the rate will increase to $525 in all 11 metro area counties. In outstate counties, the minimum monthly rate will increase by 14.5 percent to $475.
On February 8, the two HMOs that still offer Medicare+Choice plans in Minnesota, HealthPartners and UCare, announced that they would reduce enrollee co-premiums by about $25 a month.
HCFA is opening the door so that HMOs that ended their Medicare+Choice plans can re-enter the market in March. Locally, Medica considered reversing its decision to end its plan in December and decided to stick with its original decision. Medica is the second largest HMO in the state. A Medica official said that even with the higher federal payments, the enrollee monthly payment would have to be $108 for the plan to break even. That would increase in succeeding years, and the HMO concluded that it would be unaffordable to most seniors. Instead, it will continue to sell other Medicare plans where the HMO does not assume risk.
What happened to the seniors who were in Medica's plan last year? According to the company, 4,000 converted to other Medica senior plans, 5,500 converted to competitors' senior plans and 3,500 had not decided at the end of December. Some of them went to UCare Minnesota, which gained 2,600 members at the end of December, up to 21,000.
With the withdrawal of HMOs from local service areas or from the Medicare+Choice altogether, the number of enrollees dropped by 10.5 percent nationally at the end of 2000. The table below shows the decreases in some key states.
Medicare+Choice Enrollment Changes
December 2000January 2001 Change Percent
United States 6,261,727 5,602,943 -658,784 -10.5%
Illinois 148,989 134,481 -14,508 -9.7%
Michigan 79,268 76,840 -2,428 -3.1%
Minnesota 47,108 38,518 -8,590 -18.2%
Ohio 294,107 238,345 -55,762 -19.0%
California 1,500,230 1,476,742 -23,488 -1.6%
Florida 739,471 682,698 -56,773 -7.7%
Texas 321,798 202,033 -119,765 -37.2%