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Most elderly Western New Yorkers with Medicare have avoided the frustrations of managed care -- until now.

A big change came Tuesday when Independent Health announced it had picked the CGF Health System as its exclusive hospital network for the HMO's Medicare patients in Erie County.

The decision means those Independent Health members older than 65 will no longer be able to use the area's Catholic hospitals and Bry-Lin Hospitals, except for emergencies. In addition, their use of Erie County Medical Center and Roswell Park Cancer Institute will be restricted.

Independent Health is not the first health insurer in the Buffalo area to impose restrictions. And health-care experts here say such restrictions may become more common.

"The big concern people have is where health care is headed, especially when it comes to personal choice of doctor or hospital," said Mary Ellen Walsh, executive director of Amherst's Senior Services Department.

Nevertheless, representatives of the HMO and CGF Health System described the deal as a way the organizations could control costs and provide members with better-coordinated medical treatment.

They said the agreement will emphasize what managed care promises but often fails to provide: monitor all stages of care, watch for trends in treatment and disease, and focus on therapies with the best outcomes.

Independent Health has 25,000 members in its Medicare HMO known as Encompass 65, a program that has been losing money.

Half the members currently obtain health care from the Catholic hospitals -- Kenmore Mercy, Mercy, Our Lady of Victory, St. Joseph and Sisters. The other half use CGF -- formed from the mergers of Buffalo General, Millard Fillmore, Children's and DeGraff Memorial hospitals.

Medicare is the government health program for the elderly. Unlike the traditional program that most seniors back up with insurance to pick up some of the bills that Medicare doesn't, HMOs combine Medicare and Medigap in a
single plan but usually restrict members to the medical services the HMOs approve.

Reaction to and more details of the change to Encompass 65, which takes effect Jan. 1, filtered out Wednesday:

Many people voiced concern and anger.

"I'm mad. I don't want to change to fit into their new plan," said a 67-year-old Encompass 65 member from the City of Tonawanda.

The woman, who asked that her name not be used, said she has gone to Kenmore Mercy since the birth of her first child 35 years ago and didn't want to stop.

County Legislature Chairman Charles M. Swanick, D-Kenmore, vowed to introduce a resolution critical of the deal after being "swamped" by negative calls.

"This is taking away people's choice in health care," he said.

Many county employees obtain their health insurance through Independent Health, and it's likely such a resolution would in some way threaten to pull county business away from the HMO unless it reconsiders the arrangement.

The Catholic Health System also bid for Independent Health's Medicare business. Now, after losing out, it may seek a similar contract with a different health insurance company.

"Out of necessity, you will see us try to develop a closer relationship with one of the other health plans. If this is going to be a market with limited networks, we're going to be a player," said James Corrigan, senior vice president and chief financial officer.

Nearly 20 percent of the area's 225,000 seniors belong to HMOs. There are 18,000 in Senior Choice at Health Care Plan and 1,100 in the Senior Blue plan offered by Blue Cross and Blue Shield of Western New York.

The 12,000 Encompass patients who use Catholic hospitals can switch to another Medicare plan or use the CGF hospitals. Although the loss of all or some of them would not represent a severe financial blow to the Catholic hospitals, Corrigan and others said, Independent Health and CGF have the potential to enroll tens of thousands more patients as the federal government prepares a broad effort to push senior citizens into HMOs.

"What we're seeing is new here but not elsewhere in the country," said Corrigan. "What's quite bold, is to do this in a community that is more than 60 percent Catholic."

Independent Health offered more details about the change.

For Encompass 65 patients outside Erie County, CGF and Independent Health will work with a host of smaller hospitals aligned with CGF to provide services including those in Niagara County.

Officials said use of the county medical center would be restricted to such services as the trauma and burn units, and treatment for HIV infection and chemical dependency.

Roswell Park would be used for specialized services not provided by CGF, which already provides a large bulk of cancer care in the community.

Most of Independent Health's affiliated physicians already have privileges at one or more of the CGF hospitals.

Efforts are under way to obtain privileges for those that don't, officials said.

The deal with CGF includes financial incentives based on such performance measurements as return cases to the operating room and number of days patients spend in the hospital.

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