A flurry of managed-care companies, led by giant United HealthCare Corp., late last week said they will not renew some or all of their Medicare risk contracts next year.
United, which said in early August it would re-evaluate its participation in 35 Medicare risk markets, let the other shoe drop Oct. 1, one day before the HCFA notification deadline (Aug. 10, p. 2).
The Minneapolis-based managed-care company said it will withdraw at year-end from 86 of the 206 counties where it currently offers Medicare HMO products. That decision will immediately affect 59,000, or 13.4%, of United's 440,000 Medicare enrollees.
United officials said the health plan's Medicare population could shrink an additional 20% by year-end because of benefit changes and problematic negotiations with providers.
Other managed-care companies announcing similar, albeit smaller, pullbacks from the Medicare risk business include MidAtlantic Medical Services' Optimum Choice, Kaiser Permanente, Blue Cross and Blue Shield of Minnesota, and Medica Health Plans (See related story, p. 6).
All told, since May, at least 12 major managed-care companies have ended or trimmed their Medicare HMO products, affecting more than 300,000 enrollees. All have blamed inadequate federal payment rates. That, combined with rising medical costs, has led many plans to rethink their Medicare participation.
"We historically have had a strong commitment to the Medicare marketplace and would like to offer Medicare beneficiaries access to Medicare+Choice in all the markets where we currently serve commercial members," said Jeannine Rivet, chief executive officer of United's healthcare services segment, which operates its national HMO, Medicare HMO, Medicaid and point-of-service plans.
"However, today (Oct. 1) United HealthCare indicated to HCFA that this will no longer be possible. Inadequacies in the Medicare reimbursement system, uneven provider support and challenges from our own expansion strategy prompted this difficult but necessary action," Rivet said.
Nationally, the rates HCFA pays to Medicare HMOs range from a base of $367 per enrollee per month in many rural counties to more than $700 per month in such metropolitan areas as New York and Miami. Under the Balanced Budget Act of 1997, those rates are scheduled to increase at just 2% per year, and HCFA last week refused to consider recalibrating those rates (See story below).
United will exit the entire state of Colorado, as well as major markets such as Dallas, the San Francisco Bay Area, San Diego and Orlando, Fla., according to spokesman Phil Soucheray. Other states that will bear the immediate brunt of the withdrawal include Arkansas, Georgia, Illinois, Louisiana, Maryland, New Jersey, New York and Ohio.
"Margins in Medicare can do nothing but go down for the foreseeable future," said Robert Hoehn, a healthcare analyst at ING Baring Furman Selz in New York.