California's third-largest Medicare risk provider said late last week it would pull out of 10 mostly rural counties at the end of the year.
The pullout by Woodland Hills, Calif.-based Health Net will affect some 7,500 of its Medicare risk enrollees, out of a total of 150,000 in the state.
Health Net is a not-for-profit subsidiary of Foundation Health Systems, also based in Woodland Hills.
All 10 counties are in Northern California. They are Butte, Colusa, Glenn, Napa, Plumas, San Luis Obispo, Sierra, Solano, Sutter and Yuba.
In four of those counties, Health Net is the only Medicare risk provider through its Health Net Seniority Plus, formed in 1995. Service will not be affected in the 23 other counties in California where Health Net has Medicare risk enrollees.
Michael Myers, Health Net's vice president for Medicare sales and operations, said the 1998 rate increase of 2% granted by HCFA was not enough to cover escalating costs such as pharmaceutical benefits, which are up about 15% from 1997. The sparse populations in the counties also made providing care difficult.
No figures were available on the losses the plan has sustained.
"In these counties, there are a limited number of providers, and that makes it hard to maintain services with a reasonable cost structure," Myers said.
Reimbursements from HCFA in the affected counties are also among the lowest in California, averaging $483 per member per month. By comparison, the reimbursement is $648 in Los Angeles County and $582 in Alameda County. An average reimbursement rate for California was not immediately available from HCFA.
No changes are expected to be made to the provider networks in the counties, which also treat Health Net commercial enrollees, Myers said.
Health Net will offer Medigap coverage to affected enrollees after Jan. 1, 1999, Myers said. Health Net does not plan at this time to subsidize premiums, he added.
Health Net will actively market Seniority Plus to individuals and employers in the remaining 23 counties where it will do business, Myers said.
Health Net is the fourth HMO to announce a pullout from the Medicare risk program in recent weeks. It joins Anthem Blue Cross and Blue Shield in Ohio; PacifiCare of Utah and Intermountain Health Care in Utah.