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More HMOs Withdraw From Medicare An estimated 934,000 Medicare recipients had to find a new health care plan in 2001. For the third consecutive year, Health Maintenance Organizations (HMOs) pulled out of Medicare. Although payments to HMOs are increasing, health plans say costs, particularly prescription drug coverage, are rising much faster. Under Medicare, an HMO gets a fixed amount of money for each beneficiary. Payments are set according to a complex formula and vary by county within a state. Urban areas generally get more than rural areas. For example, in 2000 Medicare paid $747 a month for a person living in Philadelphia, but only $422 for a resident of York, Pennsylvania. That disparity is far greater than medical costs, forcing HMOs to pull out of York County. A total of 737,000 Medicare recipients were affected in 1998 and 1999 when their HMOs withdrew from Medicare. Although they did not lose health coverage, a 1999 study of those who were involuntarily disenrolled from their HMO found that about 20% had no other HMO available in their area, 33% experienced a decline in benefits, and 39% reported higher monthly premiums. One in six lost prescription drug coverage. Medicare patient enrollment in HMOs, which had been increasing by 100,000 a month in 1997, has almost stopped. Sources: "Clinton Proposes $1 Billion, 5-Year Medicare Raise For HMOs," Bloomberg News, June 20, 2000. "Rate That HMOs Quit Medicare Is Rising," Robert Pear, The New York Times, June 2, 2000. "More HMOs Seen Cutting Medicare Participation in 2001," Bloomberg News, May 9, 2000. "Medicare HMO Withdrawals: What Happens To Beneficiaries?" Mary A Laschober, Patricia Neuman, Michelle S. Kitchman, Laura Meyer, and Kathryn M. Langwell, Health Affairs, Volume 18, Number 6, December 1999.
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