The New Health Care Orphans

It looks like a Medicare experiment is coming to an end. Many seniors are losing the option of receiving their Medicare-covered health care through health maintenance organizations (HMOs). Over 1 million seniors will be dropped from their HMOs next year, because the HMOs are leaving the Medicare program. Over 900,000 of these seniors will have other HMOs available in their areas, though probably with higher premiums and co-payments than in the past. There is no certainty that these HMOs will accept Medicare participants in another year.

The problem is that Medicare is driving down reimbursements to HMOs. This is happening at a time when the number of expensive drugs available is increasing. Many HMOs offer substantial prescription drug coverage, but cannot afford to do so as reimbursement rates decline. The drugs keep seniors healthier longer, saving money in the long run. But Medicare doesn’t want to pay enough to cover the drugs.

Seniors were supposed to have a number of options under the 1996 Medicare reform. Instead, the implementation of that law is resulting in fewer options as HMOs drop out and insurance companies decline to offer the new options, such as Preferred Provider Organizations and Medicare Plus.

In some areas of the country HMOs simply aren’t a Medicare option any more. In other areas, some HMOs still will take Medicare. But they will have higher premiums and deductibles than before, and lower benefits.

For many seniors now, the only real option is the old combination of traditional fee-for-service Medicare and a Medicare supplement (Medigap) insurance policy to cover some of the items that Medicare doesn’t cover.

If your HMO is dropping out of Medicare, you should receive a letter from the HMO no later than Oct. 2. Your HMO coverage will end Dec. 31. You’ll be automatically enrolled in regular Medicare if you do nothing. Or you can enroll in any HMO that accepts Medicare members if you do so between Oct. 2 and Dec. 31.

Going back to traditional Medicare means that many items won’t be covered that were covered by your HMO. To get coverage for some or all of these items you need to purchase a Medigap policy. I’ve covered these policies and how to buy them in detail in past issues, and those articles are archived on the web site. You choose from 10 Medigap policies, labeled A through J. If you were dropped by an HMO, then you cannot be rejected because of a pre-existing condition for an A, B, C, or F Medigap policy. But you must you apply for the Medigap policy either within 63 days of receiving your termination notice or between Jan. 1 and March 4.

If you switched from Medigap to an HMO in the last year, you have additional protection. You are allowed to switch back to your original Medigap policy, if it still is sold in your state, when you apply within 12 months of dropping the policy.

The Medicare help-line can provide additional information (800-633-4227) or you can review the web site at www.medicare.gov. The Medicare web site offers a “Medicare Compare” service that lets you compare the coverage and out-of-pocket costs of the different plans available in your state. Your state probably has an insurance help-line or senior counselor available without cost and probably can access the Medicare Compare service if you don’t have Internet access. If you are considering an HMO, a web site that provides an estimate of your out-of-pocket costs based on the number of drugs you take and the number of doctor’s visits you make www.hmos4seniors.com.