According to CMS, health insurers have until Sept. 17, 2001, to announce whether they will cover beneficiaries in certain markets in 2002. Historically, health insurers have made that announcement in July and have had a deadline of Oct. 2 to notify affected beneficiaries in writing.

At the press conference, Scully said he could not yet say exactly how many beneficiaries would be affected by pullouts, but he added that "it could have been a lot worse." Last year, 934,000 Medicare beneficiaries had to enroll in new health plans or return to traditional fee-for-service Medicare after 115 HMOs withdrew from Medicare+Choice. Medicare HMOs cover 15 percent of the 40 million Medicare beneficiaries nationwide.

At the crux of the crisis are health insurers that say federal reimbursements for health care are too low and low- to moderate-income seniors who enroll in Medicare HMOs because most of them offer low-cost prescription drug coverage, a benefit not available to them under traditional Medicare.