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HMOs to drop 200,000 Medicare beneficiaries

An estimated 200,000 elderly and disabled Americans will be dropped from their Medicare HMO plans on Dec. 31, 2002, according to the American Association of Health Plans, a trade group representing many of the nation's health insurers.

Since 1999, approximately 2.2 million Medicare beneficiaries have been dropped from their health plans.


Although far fewer beneficiaries are losing their coverage in 2002 than in previous years, the number is still significant. Since 1999, approximately 2.2 million Medicare beneficiaries have been dropped from their health plans by insurers who say they were forced to withdraw from the Medicare+Choice program due to inadequate government funding.

The biggest problem facing elderly and disabled beneficiaries dropped from their managed care Medicare plans is that many don't have and can't afford Medicare supplemental coverage that would help them pay for prescription drugs. Even though the dropped beneficiaries can return to traditional fee-for-service Medicare, original Medicare does not pay for prescription drugs.

"[These Medicare beneficiaries] will have the rug completely pulled out from under them," says Robert M. Hayes, president of the Medicare Rights Center. "No doubt hundreds of thousands more will see their premiums increase and benefits cut. We expect people with Medicare will continue to vote with their feet and return to original Medicare."

Of the 40 million people with Medicare, only about 5 million have chosen the Medicare HMO option. Information on which plans will drop Medicare beneficiaries in 2002 will not be available from the Centers for Medicare and Medicaid Services until October.

Can PPOs save the day?

In an effort to beef up the Medicare+Choice program, the government has raised some of its reimbursement rates to hospitals and will begin offering new preferred provider organization (PPO) health insurance plans as an alternative to traditional Medicare or Medicare HMOs. The PPO plans — that offer prescription drug coverage and greater access to out-of-network providers — are part of Medicare's demonstration program, modeled after the PPO coverage that is widely popular with consumers under age 65. Read Medicare to test new PPO plans.

Medicare call center
People with Medicare questions can dial the toll-free telephone number of the Medicare call center: (800) 633-4227. The center is staffed with English- and Spanish-speaking call center experts 24 hours a day, seven days a week.

Medicare beneficiaries will be able to begin enrollment in the new PPO option in November 2002. The PPO plans, which go into effect on Jan. 1, 2003, will be available to more than 11 million Medicare beneficiaries in parts or all of 23 states: Alabama, Arizona, California, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maryland, Missouri, North Carolina, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Tennessee, Virginia, West Virginia, and Washington.

Beneficiaries will pay between $60 and $80 in monthly PPO premiums, compared with an average of $54 monthly for HMO premiums. Fee-for-service Medicare costs $54 a month and patients pay 20 percent of their medical bills.

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