Making a grab for more market share as Congress contemplates lowering per-capita Medicare payments to HMOs, managed-care companies are flooding the market with new products for seniors.
With the new insurance products, seniors can go to out-of-network providers by paying higher copayments and deductibles, an option not available in standard Medicare risk HMOs.
Allowing seniors to go out of an HMO network to receive medical services is considered a key to winning over more elderly enrollees to managed care. Currently only 12% of the nation's Medicare population is enrolled in an HMO.
Although Medicare recipients may want to try an HMO, many have been reluctant to do so because they have built relationships with non-network providers over the years.
Cypress, Calif.-based PacifiCare Health Systems, which operates the nation's largest Medicare risk HMO, has weighed in with what it claims is the most generous point-of-service HMO available to individual beneficiaries in California.
For a monthly premium of $45, seniors in PacifiCare's Secure Horizons Choice Plan can choose doctors outside the HMO, including podiatrists and chiropractors, for a $25 copay per office visit and no deductible. Doctors will be paid the Medicare allowable rate. The plan pays 90% of hospital charges, with a cap on enrollee coinsurance of $1,000. The maximum annual benefit is $300,000.
Larry Costello, director of product management at PacifiCare, says about 17 plans nationwide allow seniors to opt out of their HMO, but most have more limited out-of-network benefits.
For example, Las Vegas-based Sierra Health Services' zero-premium senior HMO allows enrollees to go out of network but imposes a $5,000 annual maximum for those services, for which it pays only 80%, a spokeswoman said.
Group Health Cooperative of Puget Sound's point-of-service HMO is richer. Seniors can go out of network for a monthly premium of $25 with an annual deductible of $100. The plan pays non-HMO providers 80% of Medicare's standard reimbursement, a spokesman said, and there is no annual maximum benefit.
Secure Horizons Choice is being launched in seven Southern California counties because PacifiCare has signed up most of the medical groups there. "That cuts our risk down," Costello said.
"We are moving slowly and cautiously," he said, because the plan's benefits are rich and there is no experience to predict what out-of-network costs will be.
PacifiCare has 577,000 Medicare enrollees. It recently acquired FHP International, which offers a Medicare risk plan to more than 415,000 enrollees.
Companies with similar products include Aetna U.S. Healthcare, which offers a Medicare POS product with a $50,000 annual maximum benefit. Employers can upgrade that for retiree groups to a $250,000 maximum. Another Aetna product for individuals raises the annual maximum benefit to $250,000 if the senior gets a referral from a primary-care doctor to go out of network.
Kaiser Permanente also has submitted Medicare POS products to HCFA for approval and expects to begin selling them in Southern California soon.
Health Net, Health Systems International's California HMO, offers a point-of-service HMO that has enrolled 1,000 retirees in a group plan. HSI's application to offer such a product to individual beneficiaries in California is pending with HCFA.