Medicare HMOs are seeing a revival in Southeast Michigan, where one plan has hit the market and others are expected to follow in early 1997.
Health Alliance Plan, operated by Detroit-based Henry Ford Health System, unveiled its HAP Senior Plus plan in late February, and enrollment began April 1.
Other plans, including Blue Care Network of Southeast Michigan, are expected to roll out Medicare HMO products in early 1997. It's also likely that a national, for-profit HMO will enter the Detroit market.
Southeast Michigan has been a tough nut to crack for Medicare HMOs. Several HMOs, including HAP, started Medicare plans a decade ago, but most lost money and were discontinued.
Since then, Southeast Michigan providers have been working on lowering costs and learning the principles of managed care. For instance, HAP completely revamped its old Medicare HMO product, adding care managers for high-risk enrollees.
The Medicare population in Oakland, Wayne and Macomb counties is 600,000 and growing. Because of high utilization, Wayne County has one of the 35 highest Medicare HMO premium rates from HCFA.
However, about three out of four Medicare beneficiaries receive employer-sponsored benefits, such as Medigap coverage, which has slowed the entry of Medicare HMOs, said Steve Nelson, HAP's vice president of senior programs. He said many small and medium-sized employers appear ready to accept Medicare managed-care plans, thanks to some accounting rule changes, but the Big Three auto companies and their union workers could be harder to sway.
"Employees and seniors in general are more receptive to managed care and the idea of being restricted to a provider group," Nelson said.
Without the Big Three, HAP anticipates Senior Plus enrollment will reach 30,000 by the end of 1998. A contract with one of the automakers could double that figure, Nelson said. HAP plans to spend as much as $20 million to start the program this year and expects to reach profitability after two years.
The state has one other Medicare risk product, operated by Blue Care Network-Health Central in Lansing.