Study Says 13% Quit Medicare HMO Plans

Only 13% of Medicare beneficiaries who were enrolled in health maintenance organizations quit the health plans in 1996, according to the first nationwide tally of movements in and out of the fast-growing managed-care business.

The “dis-enrollment” rate was 10.6% in California, significantly below the national average.

The comparatively modest dropout rate suggests a significant level of satisfaction with HMOs among the elderly population. Medicare beneficiaries can leave an HMO and return to the regular fee-for-service Medicare program the next month.

This gives them much more mobility than workers with group coverage on the job, who must choose a health plan once a year and cannot switch until the next open-enrollment period.

The low dropout rate is likely to encourage Congress in future efforts to change Medicare policies to increase HMO participation.

The federal survey covered a different group of people than a California-only health insurance survey reported Thursday by The Times. That one, which found that 42% of Californians with medical insurance had problems with their coverage in the past year, covered all insured persons, not just Medicare enrollees.

California’s Medicare market is dominated by two giant plans, PacifiCare Health Systems and Kaiser Permanente. Between them, the two plans have as customers more than half the 1 million state residents enrolled in Medicare HMOs.

The dropout rates last year for these firms were: PacifiCare of Southern California, 8.8%; PacifiCare of Northern California, 11.3%; FHP (which merged with PacifiCare), 14.5%; Kaiser of Northern California, 2.6%; and Kaiser of Southern California, 3.8%.

The comparison of dropout rates among individual plans is “an important consumer resource that should be made available to Medicare beneficiaries,” said Ron Pollack, executive director of Families USA, a Washington-based consumer group that prepared the report based on data gathered by the federal Health Care Financing Administration, which runs Medicare. It was the first time the public has been given access to the dis-enrollment figures for every Medicare HMO plan in every state.

“HMOs with high ‘quit’ rates often mean that plan members express dissatisfaction with their feet, and prospective enrollees better beware,” said Pollack.

The nation’s 38 million Medicare beneficiaries--persons over 65 and the disabled of all ages--have the widest range of choices of all consumers in receiving their health care. The majority, about 86%, use traditional fee-for-service medicine and can select any doctor or hospital participating in the Medicare program. The others select a health maintenance organization.

HMOs are far more popular in California than in the rest of the nation. About 30% of Medicare enrollees in California belong to HMOs, compared with 14% nationally. The participation rate exceeds 40% in Los Angeles and Orange counties.

The HMO industry, responding to the report, indicated there are a variety of reasons, other than dissatisfaction, that cause changes in enrollment.

“Only 3% of people are leaving HMOs and going back to fee-for-service medicine,” said Susan Pisano, spokeswoman for the American Assn. of Health Plans, the industry trade group. The other 10% who drop out may have switched to other HMOs, moved or died.

Kaiser Permanente, which had the lowest dropout rates in the state, said its success shows “you can’t beat the concept of integrated care and one-stop shopping, with clinics, hospitals, pharmacies . . . all in one location,” said Beverly Hayon, national media relations manager.

PacifiCare, which offers its plan under the name Secure Horizons, said its dropout rate is “in line with the membership we have” as the biggest Medicare plan in both California and the nation.