Contact: HCFA Press Office
(202) 690-6145
HCFA FACT SHEET
PROTECTING MEDICARE BENEFICIARIES AFTER HMOS WITHDRAW
Overview: Most of Medicare's 38 million beneficiaries receive care through original fee-for-service Medicare. However, more and more beneficiaries -- currently about 6.5 million -- have joined managed care plans known as Medicare HMOs.
Plans that decide not to continue serving beneficiaries must notify Medicare each year that they are "non-renewing" their existing contracts. This year, a non-renewal for calendar year 1999 represents a decision not to enter into a contract for Medicare+Choice, the program created in the Balanced Budget Act of 1997 to offer new options for beneficiaries. A plan's non-renewal can apply to an entire service area or only to selected counties in a service area.
For 1999, 45,074 Medicare beneficiaries -- less than 1 percent of the beneficiaries enrolled in Medicare managed care -- in 72 counties will be left with no managed care options because of plan non-renewals. A third of the people left without any managed care options live in Utah, where plans announced in May they were withdrawing from the market -- several weeks before the Health Care Financing Administration (HCFA) published the new Medicare+Choice regulation. As of today, 43 HMOs operating under risk contracts -- where the plan receives a fixed monthly payment for each beneficiary -- are not renewing their contracts, affecting 221,091 beneficiaries. Additionally, 52 HMOs are reducing their service areas, affecting another 193,201 beneficiaries. However, the vast majority of affected beneficiaries still have the choice of joining another Medicare HMO in their local area.
At the same time, other managed care organizations have applied to form new plans or expand their service areas. There are 48 pending applications for new plans, and the number of beneficiaries enrolling each month in existing plans continues to grow. As of Oct. 13, three pending applications would include several counties in the 72 counties where plan non-renewals have left no managed care options.
HCFA Works With Beneficiaries Who Lose HMO Coverage
To inform Medicare beneficiaries affected by HMO withdrawals of their rights and options, including the fact that they are automatically eligible to return to original fee-for-service Medicare and that they have guaranteed access to Medigap policies that help fill coverage gaps, HCFA will enlist public and private partners representing tens of millions of older Americans to provide information through newsletters, conferences and targeted information campaigns. These partners include the Leadership Council of Aging Organizations, the American Association of Health Plans, the American Association of Retired Persons, the National Council of Senior Citizens, the National Rural Health Association, the National Committee to Preserve Social Security and Medicare, the National Council on Aging, the National Hispanic Council on Aging, the National Caucus and Center on Black Aged and the Older Women's League, as well as the Social Security Administration, HCFA regional offices, the U.S. Administration on Aging, and State Health Insurance Assistance Programs. In addition, HCFA will post new information about plan withdrawals on the Medicare Internet site -- www.medicare.gov -- so that beneficiaries in every local area have the most up-to-date information on available coverage options.
HCFA Encourages Plans to Enter Markets Left Without an HMO Option
HCFA will expedite review and approval of HMOs seeking to enter markets that have been left without a managed care option. HCFA will give these applications first priority for review, and HCFA will help plans enter these areas quickly -- as long as they meet necessary solvency, quality and other standards that protect beneficiaries.
HHS to Develop Legislative Options
President Clinton also has asked Health and Human Services Secretary Donna Shalala to develop new legislative options to help assure beneficiaries are protected from these types of withdrawals in the future. The President stated his determination to work with Congress, health plans and advocates of older Americans to ensure an adequate range of health plan options for beneficiaries and to reduce the likelihood that beneficiaries will face this kind of turmoil in the future.
Beneficiary Options in Areas Where Plans Have Non-renewed
Plans that are not renewing their contracts for the 1999 contract year will continue to provide services to their Medicare enrollees through Dec. 31, 1998. These plans are required to send all affected beneficiaries an information package by Nov. 2, 1998 that explains beneficiaries' options to return to original fee-for-service Medicare with supplemental coverage or enroll in another Medicare HMO. All beneficiaries have the option of returning to original fee-for-service Medicare. If other Medicare HMOs are available in their area, beneficiaries also have the option of enrolling in another Medicare HMO.
HCFA reviews and approves all materials sent by plans to beneficiaries. HCFA will also remind plans of their responsibility to notify beneficiaries and provide plans with a model letter to do so. Current enrollees can remain in their HMO through Dec. 31, 1998, or they can disenroll prior to that time and either return to original fee-for-service Medicare or enroll in another Medicare HMO. If they take no action, they will automatically return to original fee-for-service Medicare on Jan. 1, 1999.
Choosing Another Medicare HMO
Other Medicare HMOs that operate in the same area as a non-renewing plan may be open to accept new enrollments in October, and they are required to be open for enrollment during November. In general, if a beneficiary enrolls in another HMO, the enrollment is effective the second month following the month of enrollment. For example, beneficiaries who submit an application for enrollment in October can be enrolled in their new plan as early as Dec. 1. Beneficiaries who enroll in another plan are automatically disenrolled from their current plan and do not need to submit a disenrollment form. However, it is important to remember that beneficiaries enrolled in an HMO that is leaving the Medicare program can do nothing at all and will be enrolled in original fee-for-service Medicare automatically.
Returning to Original Fee-For-Service Medicare
Beneficiaries who want to return to original fee-for-service Medicare should make sure that they consider their need for supplemental coverage prior to disenrolling. For most beneficiaries, it will be to their advantage, because of certain Medigap rights, to stay enrolled in their current plan until their coverage is terminated on Dec. 31, 1998. However, if they wish to disenroll and return to original fee-for-service Medicare before Jan. 1, 1999, they can obtain a disenrollment form from their plan, a Social Security Administration (SSA) office, or a Railroad Retirement Board (RRB) office. They need to complete the disenrollment form and submit it to the plan, the SSA or the RRB. Their disenrollment will be effective the first day of the month following the month in which the plan, SSA or RRB receives the form. For example, if the plan, SSA or RRB receives the form any time in October, the beneficiary will be disenrolled Nov. 1. Beneficiaries who do not file a disenrollment form will automatically be enrolled in original fee-for-service Medicare effective Jan. 1, 1999.
Supplemental Insurance through Medigap
If beneficiaries choose to return to original Medicare, they may decide that they need more coverage than Medicare provides. Supplemental insurance polices -- known as Medigap -- may pay some or all of the Medicare coinsurance amounts; some or all deductibles; and certain services not covered by Medicare. Beneficiaries whose plans have non-renewed have the following options regarding Medigap policies:
- As long as beneficiaries apply for a Medigap policy not later than 63 days after their coverage with their current plan terminates on Dec. 31, 1998, they are guaranteed the right to buy any Medigap plan designated A, B, C or F available in their state. Companies selling these policies cannot place conditions on the policy such as an exclusion of benefits based on a pre-existing condition or discriminate in the price of the policy because of beneficiaries' health status, claims experience, receipt of health care or medical condition. Caution: While beneficiaries can apply for one of these policies before Dec. 31, 1998, the protections described above will not apply if they voluntarily disenroll before their coverage terminates. Beneficiaries should keep a copy of their notification letter from their Medicare HMO as proof to the Medigap insurer that their coverage was terminated.
- If beneficiaries dropped a Medigap policy to join their current Medicare managed care plan and they have never enrolled in a similar health plan since starting Medicare, they are guaranteed the right to return to the Medigap policy they dropped if: the Medigap policy they dropped is still being sold by the same insurance company; they disenroll from their current health plan no later than 12 months after they initially enrolled in it (they do not have to wait until Dec. 31, 1998); and they reapply for the policy they dropped no later than 63 days after they disenroll from their Medicare managed care plan.
In addition, by law, beneficiaries' current Medicare managed care plans must arrange for them to be protected against any pre-existing condition exclusions under a Medigap policy for up to six months after it terminates their coverage. Beneficiaries' plans must notify them of the arrangement that the plan has made available.
Supplemental Coverage Through a Former Employer
Beneficiaries who have coverage with a Medicare HMO through their former employer should consult with their former employer's retirement office before making any changes.
Possibility of Seeing the Same Doctor as Before
Beneficiaries who choose to return to original fee-for-service Medicare will probably be able to continue to see the same physicians that they had seen through the HMO because most HMO physicians -- more than 90 percent -- also participate in original fee-for-service Medicare. If there are other Medicare HMOs in the beneficiaries' geographic area, some of their current physicians may also participate with those HMOs.
Information on Other Medicare HMOs
Starting in November, up-to-date information about other Medicare HMOs available during 1999 can be found in Medicare Compare at the Internet site www.medicare.gov. Information can be accessed by zip code, by state and by county. Some Medicare HMOs are available only in certain counties within a state or zip codes within a county. Many libraries and senior centers can help beneficiaries obtain information from this source.
General Assistance for Medicare Beneficiaries on Health Insurance Matters
Beneficiaries can contact their State Health Insurance Assistance Program for assistance. They can also contact the U.S. Administration on Aging's central toll-free number at 1-800-677-1116 to be referred to their local area agency on aging.
Last Updated October 26, 1998