The American Association of Retired Persons has selected nine HMOs to serve its members in 18 markets across the United States. The association will negotiate terms with those HMOs and hopes to make their products available by mid-1997.
These would be the first endorsements for managed-care insurance by the AARP. Currently 5.7 million members buy group health insurance, mainly Medicare supplemental coverage, through the association. The AARP wants to expand the range of options available. It will still offer traditional health insurance products.
One requirement of the bidders was that they offer health insurance to members age 50 to 64. For the first time, those people will have a full range of products to choose from.
In September, the AARP announced three insurers would participate in contracts for health insurance worth $4.5 billion in annual premiums (Sept. 16, p. 8). United HealthCare Corp. will supply Medicare supplement and hospital indemnity insurance, Metropolitan Life Insurance Co. will offer long-term-care insurance and ITT Hartford Group will provide customer service for all AARP health insurance products. All those functions had previously been offered through Prudential Insurance Co.
The winning HMOs are Kaiser Permanente, U.S. Healthcare, United HealthCare, Cigna, Humana, HealthNet, NYLCare, Fallon Community Health Plan and Group Health Cooperative. Some will be offered in more than one market, such as U.S. Healthcare, which will be offered in five Northeastern states. Most markets have only one endorsed provider, although a few have two and Southern California has three.
The AARP will not be able to estimate the total value of premiums for the HMO contracts or the 50-to-64 products until contract negotiations have been completed. The products will carry the AARP label.
Plans were judged on their financial security, National Committee for Quality Assurance accreditation, ability to provide educational information, and experience in servicing patient claims. They also had to prove they had enough primary-care physicians accepting new Medicare patients.
Initially, the AARP identified 120 managed-care providers in 23 markets. In five markets, the proposals didn't meet the criteria, spokesman Tom Otwell said. "No companies in Florida matched our criteria for the total program. Some chose not to meet the needs for the 50- to 64-year-old market, for example."
The association hopes to extend the insurance program nationwide by the end of 1998. "This is the first whack at it, the first step in a continuum," Otwell said.