Feb. 8--Health America yesterday became the third contender in a race to enroll the region's senior citizens in health maintenance organizations.
The region's second-largest managed-care insurer unveiled two HMO plans -- one with no monthly premium, the other with a monthly fee of $13 -- that are similar to plans introduced here last year by U.S. Healthcare and Blue Cross of Western Pennsylvania.
For the insurers, the HMO plans could open the door to a lucrative market: Some 400,000 Medicare beneficiaries in a region where benefits spent on each are richer than they are in most other parts of the country.
For retirees, the introduction of more HMO options as alternatives to traditional fee-for-service Medicare coverage and Medigap supplements may cause confusion and concern, but also a chance to save money. HMOs and other managed-care plans are far less expensive than Medigap supplements, but they limit choices of physicians and, some consumers worry, also may put limits on medical treatment.
The extent to which the region's elderly switch to managed care also will have a huge impact on hospitals. The relatively large Medicare population here, which accounts for more than 50 percent of hospital revenues, has buffered health-care institutions from the admissions declines they've seen in the private sector, where health-care plans have been shifting to managed care at a rapid rate.
Local analysts expect a rapid conversion of the Medicare population to managed care, because many employers are expressing interest in adding HMOs to the list of choices they offer former employees under their retiree health benefits programs. Pending legislative changes also could make Medicare more expensive for seniors, forcing those without corporate retiree benefits also to join HMOs.
Clearly the plans can save retirees money. Medigap plans, which many seniors buy to augment Medicare coverage, typically cost upwards of $100 a month and in many cases don't provide as many benefits. By comparison, all of this region's Medicare HMOs offer a zero premium plan. All of the plans also offer limited dental and eye-care benefits that are not provided under traditional Medicare or via Medigap supplemental coverage. Co-payments for doctor's visits and prescriptions vary among the plans.
Among its other terms, Health America's new zero-premium plan requires subscribers to pay a $6 co-payment for each doctor's visit and an $8 co-payment for each prescription. Prescription benefits are capped at $900 annually.
By comparison, the Health America plan that carries a $13 monthly premium requires no co-payments for doctors' visits and a $5 co-payment for each prescription. The annual ceiling on prescriptions under that plan is set at $1,200.
While Medicare HMOs are relatively new here, they have become competitive. Blue Cross began its Medicare program without a zero premium plan, but has since introduced one to compete with U.S. Healthcare, which has lowered prices and expanded benefits several times here.
Compared with what is offered in most regions of the country, all of the plans are relative bargains, health benefits consultants said.
'I've been very hard-pressed in other areas of the country to find Medicare-risk plans (the government's term for the HMOs) with premiums and benefits as attractive as (those offered) in Western Pennsylvania,' said Ed Pudlowski, a benefits consultant with William Mercer & Co.
That's because Medicare HMOs here are operating in one of the richest Medicare markets. Allegheny County not only has the second-largest elderly population in the nation, but the region also has the 13th-highest per-beneficiary Medicare costs in the country. Health care for a Medicare beneficiary here costs the government $5,096 annually vs. less than $3,000 in some of the lowest-cost regions.
HMOs, which try to reduce costs by weeding out unnecessary hospital admissions and other costly medical practices, hope to profit by bringing this region's costs closer to those where managed care has been more prevalent. The more successful they are, the more revenues hospitals are likely to lose, possibly increasing the kinds of staff cuts, mergers and other cost-cutting measures that they've turned to in the past two years.
'Behind the scenes, the specter of Medicare-risk plans (HMOs) coming to town, more than anything...got the providers to respond' with cost-cutting campaigns and other survival strategies, said David Lagnese, a benefits consultant with Towers Perrin's Downtown office.
Thus far, Blue Cross and U.S. Healthcare are running ahead of their own enrollment projections for their Medicare HMO plans. Blue Cross, which launched its plans last March, has signed up 23,259 members and expects its tally to grow to 60,000 by year end. U.S. Healthcare has signed up 21,000.
Corporations will help accelerate the shift of seniors into managed care this year, Lagnese said.'I think that in 1996, many companies have plans to make these programs available to their retirees.' USHC
