Senior Warned Against HMO's

Seniors Beware

Seniors Warned About HMOs
Medicare Patients Said to Face Rejection

By Bill Brubaker
Washington Post Staff Writer
Thursday, November 9, 2000; Page E03

The head of a company that rates the financial condition of health maintenance organizations yesterday urged Medicare patients who have been dropped by their money-losing HMOs to steer clear of other HMOs. No exceptions.

"Seniors who have been dropped from their HMO should not rejoin another," Martin D. Weiss, chairman of Florida-based Weiss Ratings Inc., said in a statement.

"The latest Medicare withdrawals greatly narrow the viable choices available to seniors down to just a handful of profitable and financially healthy Medicare HMOs," he said, "and even many of these may soon be dropping out of the business."

Weiss's comments come as dozens of health insurers around the country have announced they will shut down their Medicare plans after Dec. 31, saying reimbursements from the federal government are inadequate.

In the Washington area, seniors will have no choice but to follow Weiss's advice: Beginning Jan. 1, only one company will offer a Medicare HMO--Kaiser Permanente.

And Kaiser's plan will be offered only to existing members.

The announcements this summer left about 934,000 Medicare recipients--about 50,000 in the Washington area--with new coverage decisions to make by the end of the year.

Richard Coorsh, a spokesman for the Health Insurance Association of America, a trade association, disputed Weiss's warning. But he did encourage senior citizens to compare benefits offered by HMOs with traditional Medicare plans.

"They ought to have that option," he said. "It's important to seniors to know that there remain several Medicare [HMO] plans which provide excellent value and can continue to provide coverage that meets their needs. I would encourage seniors to compare plans closely and to look into Medicare [HMO] plans because in many cases they might be ideal choices.

"We believe there is a role for Medicare [HMOs] and that role ought to remain," Coorsh added. "But it's increasingly difficult for many of these plans to be competitive in the face of insufficient money from the government."

Congress is still trying to reach agreement with the White House on giving billions of dollars to HMOs that offer Medicare plans. President Clinton has said the industry doesn't deserve that much.

About 6 million of the nation's 39 million Medicare patients joined HMOs when the option was first offered in 1997. A key attraction was that, unlike traditional Medicare, the HMOs offered a prescription-drug benefit.

Seniors who lose Medicare HMO coverage are guaranteed coverage under traditional Medicare. Medicare recipients not enrolled with an HMO can choose from one of 10 supplemental Medigap policies, the costliest of which offer prescription benefits. These policies usually are more expensive than those offered by an HMO.

Weiss, in a telephone interview, said senior citizens should steer clear of Medicare HMOs because of the "vulnerable" financial condition of some insurers.

Weiss said that in previous years he advised seniors to choose carefully between HMO and traditional Medicare plans. "But this year we modified our advice," he said. ". . . Rather than put the consumer through the trauma of having to go to another HMO and have to confront the same decision next year, we made the decision that it's best just to exit before they drop you."

In a survey of 237 health insurers, Weiss's company found that 147 will have fully or partially dropped their Medicare plans by the end of the year, he said. That leaves 90 HMOs that continue to operate such plans--37 of which are losing money. They lost $645 million in 1999 and $82 million in the first quarter of this year.