Updated: May 3, 2013 12:14PM
Originally published: August 7, 2001
More than 20,000 Chicago area seniors who have been notified that their Medicare HMO coverage will be terminated at year-end are some of the 450,000 elderly Americans who will suddenly find themselves facing new, and probably more expensive, health care choices.
The change will be abrupt and shocking to many seniors. If you have received one of these notices - or know someone you has - be warned in searching for new coverage: It probably will cost more and offer less.
Seniors were eagerly recruited by health maintenance organizations a few years ago, attracted by promises of low, fixed costs and prescription drug coverage. So they dropped their expensive Medicare supplement policies and joined HMOs. But those organizations have found that the government reimbursement for seniors’ care is not keeping up with costs.
With the government holding the line on increasing payouts, the HMOs have decided to drop coverage for seniors. They had until Nov. 1 to notify members they will not be covered after Jan. 1.
The change will affect 4,600 senior members of NYLCare of Illinois in Cook, DuPage and Kane counties; about 5,400 seniors who were covered by Principal Healthcare of Illinois in Cook County; nearly 12,000 seniors in the United Health Care of Illinois HMO in DuPage, Kane, McHenry, Will and Lake counties, and several thousand more in other Chicago area HMO plans.
If you lose HMO coverage
The first step is to look for another HMO in the area willing to take on Medicare patients.
If you have been terminated, your HMO must send you a list of other managed care plans in your area which are accepting new members. (Some rural areas will no longer have providers of managed care.) HMOs that offer plans to seniors may either include seniors in standard HMO coverage, or they may be certified to offer a separate Medicare HMO. In either case, the HMOs must conform to strict regulations and required service coverages for Medicare patients.
Their plans must be approved by the Health Care Financing Administration and their fees are also subject to approval.
If you have a choice of plans, check with your primary physician or your preferred local hospital to see which HMOs contract for their services. Then, contact the HMOs to see if they are taking on new members, what services will be covered and what fees the patient must pay. If the senior uses expensive prescription medicine, this coverage will be especially important in choosing a new HMO. But check to see if the specific prescription is covered, or if generic drugs are substituted.
While changing health care coverage may be both distressing and expensive, no seniors will be left uncovered. If seniors take no action by Jan. 1, they’ll automatically be enrolled in Medicare Part A, which covers most hospital expenses. They can also re-enroll in Medicare Part B, which will cost $45.50 in 1999 (up from $43.80 this year), but requires satisfying an annual deductible and making 20 percent co-payments for any physician services. Neither Medicare Part A nor Part B covers prescription drugs.
So the next step is finding an affordable Medicare supplement plan to cover those deductibles, co-payments and prescription drugs.
The government requires that if you’ve been dropped from an HMO you must be allowed to purchase any of the first four levels (A, B, C and F) of Medicare supplement plans, regardless of your medical history.
But you may not be accepted into the six higher coverage plans, including those that cover prescription drugs.
There is one exception: If you dropped your Medicare supplement policy within the last 12 months to join an HMO, your former supplement plan must reaccept you. Also, if your former employer offered supplemental coverage (before you joined an HMO) check to see if you can reinstate that coverage.
To find a new Medicare supplement policy, go to your state insurance department to get a list of companies offering these plans.
Since it may take a month or two to process your application, get started on this search right away. The state Insurance Department phone number is in the back of the Medicare Handbook, which is free from the government by calling (800) 638-6833. Call (800) 548-9034 for the state’s Senior Health Insurance Program.
Many seniors may be better off in traditional Medicare plus a supplemental policy, especially if cost is not a major consideration.
Traditional Medicare offers a choice of physicians and specialists.
If a senior spends part of the year in a warmer climate, an HMO probably won’t cover costs out of their service area except in emergencies. But for the many seniors who joined HMOs to avoid the cost of co-payments, deductibles and prescriptions, it will not be easy to find comparable coverage at a low price.
The Medicare program has a Web site at www.medicare.gov. You can get a list of HMOs and their coverages by clicking on ``Medicare Compare’’ when you reach the site.
The Medicare Rights Center, a consumer activist group, is in New York, (212) 869-3850, and has a Web site: www.medicarerights.org. You can get the latest information on managed care plans and access a hotline service to answer your questions and help you deal with Medicare problems.
The group’s director, Diane Archer, worries that the nation’s 39 million Medicare recipients are not getting the promised care under HMOs, while those in traditional Medicare will be unable to pay the rising prices for supplement plans.
Warns Archer, ``Get reliable information from your own physician and others in managed care plans before you sign up. And expect that coverage under HMOs will become more expensive and less extensive in the years ahead.’’
Terry Savage is a registered investment adviser for stocks and commodities and is on the board of directors of McDonald’s Corp. and Pennzoil Co. E-mail: savage@ suntimes.com. Her second book, published by HarperCollins, is Terry Savage’s New Money Strategies for the ‘90s. Copyright Terry Savage Productions.