While the president and Congress haggle over a mandatory prescription medicine benefit, many of the largest health plans will significantly cut the drug assistance they offer to seniors next year.
Those benefits have long helped drive enrollment growth in the Medicare-risk business, because traditional fee-for-service Medicare does not cover prescription drugs.
But rapidly escalating drug prices and lower HCFA reimbursement rates have put health plans in an untenable position, according to many Medicare HMOs around the country (See related story, p. 44).
HMOs that have limited year-2000 Medicare+Choice benefits by capping prescription benefits, adding or increasing copayments, or eliminating prescription drug coverage in some markets include industry giants such as Aetna U.S. Healthcare, Foundation Health Systems, Kaiser Permanente, PacifiCare Health Systems and UnitedHealth Group.
Virtually every Medicare+Choice plan has made some cutback in benefits for next year, according to Karen Ignagni, president and chief executive officer of the American Association of Health Plans.
Kevin Outterson, a healthcare lawyer at Baker, Donelson, Bearman & Caldwell in Nashville, said the impact will be most intense on the West Coast.
Nationally, more than 1 million Medicare-risk enrollees will be asked to make copayments for prescription drugs for the first time next year, according to HCFA figures released last week by Vice President Al Gore. Nearly one-third of all health plans will cap drug benefits at $500 or less per enrollee next year, compared with 21% now, HCFA reported.
PacifiCare, Santa Ana, Calif., which operates Secure Horizons, the nation's largest Medicare+Choice plan, with nearly 1 million members, is reducing pharmacy benefits for about 75% of enrollees next year, according to spokeswoman Alexandra Warnier.
About 55% of Secure Horizons' enrollees will get increases in supplemental premiums next year, and 60% will have to make copayments for office visits, Warnier said.
At Kaiser Permanente's Senior Advantage Medicare+Choice plan, which has 681,000 enrollees, seniors' prescription drug copayments will jump by an average $3 to $5 next year, and copayments for office visits will increase by an average $5 per visit, said Matthew Schiffgens, a spokesman for Oakland, Calif.-based Kaiser.
Foundation Health Systems is eliminating the pharmacy benefit in some markets, such as Fresno, Calif., and Palm Beach, Fla., according to spokeswoman Lisa Haines. Woodland Hills, Calif.-based Foundation has about 269,000 Medicare HMO members.
More than 6 million of Medicare's 39 million beneficiaries are enrolled in Medicare+Choice plans, but reduced benefits could drive many of them back into traditional, fee-for-service Medicare.
Even so, many health plans say they have no choice. "To continue to offer a viable Medicare HMO product, we had to make these adjustments," Haines said.