Facing rapidly growing enrollment as well as rising red ink, New York's Empire Blue Cross and Blue Shield considered but then decided against pulling the plug on its 18-month-old Medicare HMO, MODERN HEALTHCARE has learned.
For now, the New York-based Blues plan will instead reduce marketing efforts for its BlueChoice Senior Plan Medicare risk product while officials evaluate a rapidly changing market.
"We have considered every option from abandoning the product to more aggressively pursuing sales," confirmed Peter Kerr, Empire's vice president for communications. "We rejected those extremes and chose a solution somewhere in the middle."
That one of the nation's largest Blues plans weighed getting out of the Medicare risk contracting business undoubtedly will be noted by hospitals and physicians who want to get into the game as Medicare provider-sponsored organizations.
In recent weeks, other insurers followed through on what Empire had considered:
In May, Anthem Blue Cross and Blue Shield said it was dropping Medicare HMO coverage in most of rural Ohio (June 15, p. 26).
Earlier this month, both PacifiCare of Utah and Intermountain Health Care, a large not-for-profit hospital system, said they were dropping their respective Medicare HMO products in Utah after losing nearly $25 million collectively last year (June 22, p. 10).
Health Net, the California HMO operated by Foundation Health Systems, also said late last week that it was getting out of the Medicare risk contracting business in 10 rural California counties (See story, p. 8).
Kerr said Empire's Medicare risk product is "not profitable for us right now," although he would not provide specific figures.
Michael Stocker, Empire's president and chief executive officer, was not available for comment on the issue.
Empire now covers about 18,000 Medicare risk enrollees in New York state and has been expanding those ranks at a rate of about 1,500 new members a month, officials said.
Seniors enrolled in Empire's BlueChoice Senior Plan make up a small but growing portion of the plan's total enrollment of more than 4 million (See chart).
To slow enrollment in the Medicare risk plan, Empire has decided for the time being to downplay its marketing efforts in that arena.
Despite its recent momentum, Empire's Medicare HMO enrollment as of April 30 trailed that of three other New York health plans: Oxford Health Plans, with nearly 130,000 New York Medicare risk enrollees; HIP Health Plans, with more than 66,000; and Aetna U.S. Healthcare with nearly 35,000 enrollees, according to HCFA reports.
Two smaller plans totaled more than 26,000 Medicare risk enrollees.
Empire's decision came after several months of internal debate, according to company officials.
It also occurred while the New York state attorney general's office is evaluating an application by Empire to convert to for-profit status. A decision on the filing is not expected until year-end-placing the controversial choice safely on the far side of this November's election.
Attorney General Dennis Vacco, a Republican, is up for re-election this year.
Empire officials deny there is any connection between their sidestepped Medicare decision and the pending conversion application and insist that the health plan is not abandoning the Medicare risk market, a move that would likely cause a political firestorm in New York because of fierce complaints from seniors.
Such a move can have political consequences, if Anthem's recent decision is any indication.
Anthem's planned Jan. 1 exodus from 19 Ohio counties and parts of three others has raised the ire of U.S. Sen. Mike DeWine (R-Ohio), who publicly blasted the company last week for abandoning seniors and disabled people in the state who had come to depend, sometimes reluctantly, on the Medicare HMO option.
In at least six counties, no other Medicare risk plan is available, DeWine noted in a June 20 letter to Anthem.
DeWine called on the company to reconsider its pullout from those counties and to hold public hearings in all affected counties to discuss the reasons for its reversal.
Anthem officials said they're working with DeWine and other political leaders on the issue, but the company has taken no steps to reverse its decision to exit the rural counties.
Empire spokesman Kerr stressed: "We're not withdrawing from the Medicare market, and we're not considering withdrawing," at this time, he said. "Our sales have been very strong, and the population that's been attracted is a very attractive population to us."
Even so, the Empire Blues plan will not aggressively market or advertise its BlueChoice Medicare plan while it re-examines the market, Kerr said.
Losses on its Medicare HMO pushed Empire into a $53.6 million underwriting loss on total premium revenues of about $3.2 billion. However, earnings from investments and the sale of its midtown Manhattan headquarters building helped push the plan $75.4 million into the black last year.