Beneficiary representatives started gearing up to respond to HMO terminations before the latest round of announcements were made. Our clients, as we expected, have been frightened by the prospect of terminations and the lack of health care alternatives. They have been confused by conflicting information about their rights and responsibilities. Some Connecticut residents were concerned to SHIP counselors that if HMOs pulled out of Medicare, they would also pull out of providing retiree health coverage. Other Connecticut residents expressed dissatisfaction with the entire Medicare+Choice program.

The toll on beneficiaries of the termination of HMOs is, of course, even greater than the toll on groups that assist them. For example, individuals with chronic conditions will have to change HMOs and providers in the middle of a course of treatment. Those with end stage renal disease (ESRD) are ineligible to enroll in another HMO. Many beneficiaries will lose access to prescription drug coverage, especially those in states like Arizona that have no state prescription drug assistance. Nationwide, individuals whose income is too high for Medicaid assistance with premiums and co-payments but too low to afford Medigap will be left without any supplement to Medicare.

An 87 year old woman who spoke with the program managed for the Alameda County, California, HICAP office typifies the confusion and concerns of those whose HMOs are terminated. The woman has congestive heart failure, has had cancer and other health problems, and wants to be able to keep her doctor as well as her specialists. She cannot afford a Medigap policy and is already having difficulty affording her arthritis medication, which her current HMO has stopped covering. The woman is lucky in that her doctors belong to a medical group that is contracting with two of the remaining HMOs. There is no guarantee, however, that the medical group will continue to contract with those HMOs, or that the woman will be able to afford the premium charged by the other plans.

In a forum on HMO non-renewal sponsored by Congressman Larson in Connecticut this past Monday, participants express the greatest concern over the loss of prescription drug coverage. Many of those in attendance had joined an HMO to get drug coverage, which they will no longer have. Although the ConnPACE program provides some assistance with drug costs, the program has strict eligibility criteria, making it difficult for many people, especially couples, to qualify for assistance. And, like the woman in California, many people cannot afford the cost of Medigap insurance.

Even HMOs that decide to stay in the Medicare market make decisions that adversely impact beneficiaries. They get approval from HCFA to charge or increase premiums for benefits not covered under traditional Medicare, or to reduce or eliminate prescription drug and other additional benefits. Such modifications also have grave impact on beneficiaries. For example, when Kaiser this year implemented a premium for its plans in the Washington, D.C. - Baltimore area, over 2000 beneficiaries failed to make the premium payment and faced involuntary disenrollment from the plan. For many, the Kaiser plan had simply become unaffordable.

History has shown us repeatedly what happens when we depend on the private insurance market, which includes the managed care industry, to offer insurance to vulnerable populations. This market simply ignores poor people, the elderly , the disabled, and persons in geographically isolated areas.

Medicare was enacted 35 years ago because private insurers were reluctant to provide insurance for the elderly, except at very expensive prices, leaving about half of all older people without medical insurance. As a result, Congress was called in to create a public program, Medicare, to help improve the health of older people and to help save them and their families from the financial difficulties caused by lack of health insurance coverage. In the 1970's Medicare coverage was extended to individuals eligible for social security disability benefits for the same reasons.

The HMO terminations we are seeing fall within the same pattern of unwillingness to serve older people and people with disabilities. The decision by a managed care organization (MCO) to leave the Medicare HMO market, to increase beneficiary cost sharing, to reduce additional or supplemental benefits, or to stop contracting with a provider network is a business decision made by an entity looking out for its own bottom line and not for the health needs of Medicare beneficiaries. For example, concerns about market share, concerns about adequacy of physician networks, including specialists, and generally bad marketing and business strategies play a role in the decision whether to continue as a Medicare HMO.

Just as in the 1960's Congress was called upon to assure access to quality health care for older people, Congress is being called upon today to assure access to prescription drug coverage for older people and people with disabilities. Unfortunately, the prescription drug bill that passed the House of Representatives does not provide the solution. Rather, the bill falls into the private insurance trap all over again. Drug coverage would only be available through private insurance companies which would be given the flexibility to vary the coverage they offered, as long as it met the actuarial equivalent of a very weak prescription drug benefit.

But think about how this program would work. Every year, each of these individual insurance companies providing prescription drug coverage would have the same option as Medicare HMOs of making a business decision not to renew its contract with HCFA. Every year, the private insurance companies offering drug coverage would have the option, now available to HMOs, to decrease the drug benefit offered, and/or to increase the premiums for coverage. Every year, beneficiaries in private insurance drug plans would have the same worries as those in HMOs: Would their prescription drug provider remain in business, or would they have to switch to a new company with new benefits and new procedures? Every year, beneficiaries would also have to worry whether the coverage they had was worth the premium paid, or whether they could even afford to pay the premiums.

Today, only 16% of the Medicare population is enrolled in an HMO sponsored by a private insurance organization, and so only a small percentage of beneficiaries face the risk of disruption to the delivery of their health care that the vagaries of the private market cause. Yet the disruption to the lives of the affected beneficiaries is huge, as is the burden upon advocates who assist beneficiaries in negotiating their rights upon an HMO termination. Imagine the magnitude of disruption to older people and people with disabilities, their families, and their supporters, if all Medicare beneficiaries receive prescription drug benefits through private insurers who choose when, how, and where to offer prescription drug coverage.

The solution, then, is not to throw good money after bad and simply increase payments to managed care organizations in the hope that they might stay in the Medicare market and might continue to provide good prescription drug coverage. The solution is not to pass a bill that funds insurance companies to provide a prescription drug benefit without assuring that the benefit would be available, adequate or affordable. The simple solution for our clients would be to incorporate a universal, meaningful, and affordable prescription drug benefit into the Medicare program. That way, regardless of whether they were in traditional fee-for-service Medicare or a Medicare+Choice plan that dropped out of the market, beneficiaries would always be assured of access to prescription drug coverage and to fewer out-of-pocket expenses.

Thank you for convening this forum and for giving me the opportunity to testify.

DESCRIPTION OF ORGANIZATIONS 

Consumer Coalition for Quality Health Care is a national, non-profit organization of consumer groups dedicated to protecting and improving the quality of health care for all Americans. To fulfill its mission, the Consumer Coalition advocates for consumer quality improvement programs and policies in the public and private sectors. The Coalition works to help educate, assist and protect the rights of individuals under managed care plans and for quality assurance programs that evaluate, monitor and improve these health plans.

National Academy of Elder Law Attorneys (NAELA) is a professional association of attorneys concerned with improving the availability and delivery of legal services to older persons. With the emergence of elder law as an acknowledged area of practice, NAELA is striving to define the area of practice, establish practice standards, and create an information network among elder law attorneys. Through NAELA, attorneys exchange ideas and information on substantive elder law issues, including Medicare and other health-related issues, and the development of an elder law practice.