HMO Pullout Threatens Health Care Coverage of Elderly

More than 4,000 elderly Californians could be without medical insurance for as long as two to three months because of a decision by a Southern California health maintenance organization to drop a program under which it provides health care at Medicare rates.

Health Plan of America, based in the city of Orange, announced Thursday that it would not renew contracts with the federal government calling for it to provide care to elderly clients in return for Medicare reimbursement.

U.S. Sen. Pete Wilson (R-Calif.), who said six other HMOs have made similar announcements, sent a letter Thursday to Dr. William Roper, administrator of the U.S. Health Care Financing Administration calling for:

- A task force of medical industry experts to study the problem and draw up recommendations on interim coverage for the elderly persons affected and changes in regulations to avoid further problems.

- Establishment of a federal toll-free hot line with information on how beneficiaries can find alternative HMO programs, sign up directly with Medicare and locate supplemental insurance coverage for Medicare co-payments.

Wilson also asked Roper to provide special waivers for seven California residents who are currently ineligible for hospital benefits due to “unique circumstances.” Bill Livingstone, a spokesman for Wilson, said he didn’t know exactly what those circumstances were but said he believed that it was related to their citizenship status.

“Many senior citizens are now facing a frightening situation because there just isn’t enough time to find an alternative health care program before their benefits run out,” Wilson said in a prepared statement.

The beneficiaries of Health Plan of America who don’t sign up with another HMO by Jan. 1 will be automatically reinstated to Medicare, said Margaret Shea, director of California Medicare Review Inc., an organization that monitors HMO operations. However, they will face a two- to three-month waiting period because of a time lag in Medicare computer files, she said. They also may also face difficulties obtaining supplemental insurance to pay for the part of medical bills that Medicare doesn’t cover, she said.

Health Plan of America vice president Eleanor Brewer said her firm is dropping its Medicare program because of financial losses. She said the program relied on flat fees from Medicare that were not sufficient to cover beneficiaries’ needs.

Although she could not provide specific figures for Health Plan of America, she cited a Maxicare operation in Illinois that lost about $4 million in six months.

More than 1,800 of those affected by Health Plan of America’s decision live in Orange County. They were given two months’ notice of the suspension of the company’s Medicare program, as required by the federal government. Wilson said he is recommending that the notice period be increased to at least 90 days.

Brewer said Health Plan of America has set up toll-free line (800) 447-2669 to give beneficiaries information on picking up coverage.

“I’m worried that, if the members are waiting for something to happen, they’ll be stuck without coverage,” she said. “Then it’s even more critical. They have to begin the process now.”

Brewer said most of the beneficiaries who face problems live in the San Francisco area, where other HMOs have shown an un willingness to pick up new clients.

“In L.A. and Orange County, a number of other HMOs will take them with no waiting period. They don’t lose anything going from one HMO to another,” she said.

In San Francisco, officials at St. Mary’s Hospital and Medical Center said Thursday that they were fielding about 100 calls a day from Health Plan members concerned about being caught without coverage.

In Orange, a spokeswoman for St. Joseph Hospital said calls had been averaging about 50 a day last week but have leveled off recently. While callers weren’t frantic, she said, many expressed some anger about the situation. One woman described herself as “another victim” of the cutback, she said.

Another HMO based in Orange, General Med, also announced Thursday that it did not intend to renew a Medicare contract. However, Clive Hallett, a spokesman for General Med’s parent firm, Maxicare, said the firm will offer beneficiaries the opportunity to sign on with another company-owned HMO.

Hallett said Maxicare also is shutting down a Medicare operation in Detroit and that the two decisions will affect a total of about 1,600 senior citizens.