The Catholic Health System says it will pull out of its Medicare managed-care plan with Univera Healthcare on Dec. 31, a move with unclear consequences for the 12,000 members.
Officials criticized Congress for enacting tighter payment methods in 1997, leaving HMOs with less money to reimburse hospitals.
"The government is not funding this program at adequate levels," said Stephen W. Westlake, president and chief executive officer of the Catholic Independent Practice Association.
Univera reacted by saying it is willing to pay the hospitals higher rates next year comparable to what they receive for traditional Medicare. It also promised to maintain all the benefits members receive through the program, known as Senior Choice.
"If it costs us more money, it will cost us more. We will meet our obligations," said Dr. Arthur Goshin, president and chief executive officer of Univera.
Medicare is the federal health plan for individuals 65 and older, and the disabled. It insures about 39 million Americans, 5.6 million of them in managed-care plans.
Under traditional Medicare, the government pays each time an individual gets care, but beneficiaries are responsible for co-payments and deductibles.
In recent years, the federal government has turned to HMOs to offer a Medicare managed-care option in hopes of controlling the cost of Medicare, especially with the number of older Americans expected to rise. Generally, members can only use doctors and hospitals that are part of the HMO, but they may get some extra benefits, such as a prescription drug plan.
The programs were popular at first because many seniors pay less. But Congress in 1997 changed payment methods to HMOs, prompting insurers across the nation to drop out.
Those HMOs still offering Medicare plans, including those in the Buffalo area, have raised premiums and co-payments.
Health maintenance organizations had until Monday to decide whether to participate in 2002. In this instance, the Catholic Health System's hospitals and doctors withdrew even though Univera
had decided to continue offering Senior Choice.
"We've lost $18 million on these plans since 1998. We're bleeding," said Dale St. Arnold, president and chief executive officer of the Catholic Health System.
Univera offers the largest and oldest Medicare managed-care plan in the region, with 35,000 members. Of those, 12,000 use hospitals and doctors affiliated with the Catholic Health System.
Blue Cross and Blue Shield of Western New York has 7,000 members in its Medicare managed-care plan called Senior Blue, of which about 6,000 receive care at Catholic hospitals.
Catholic system officials said it's likely they will drop out of Senior Blue at the end of 2002, when that contract ends.
The system had a falling-out with Independent Health and ended participation in Encompass 65 in 1998. Encompass 65 insures 24,000 Medicare beneficiaries at other hospitals in the region.
Univera and the Catholic system had been negotiating a new contract for 2002, but were unable to come to terms over payments and such issues as policies that govern denials of admissions.
What does it mean for patients?
If Univera was unwilling to increase payments, members of Senior Choice would have to switch to traditional Medicare, seek treatment at non-Catholic hospitals or join another Medicare managed-care plan. With Univera saying it will pay the hospitals more, nothing in 2002 should change for patients, said Goshin.
Even though Univera says it will pay more, the Catholic system is still ending its contractual relationship with Senior Choice. Officials say they don't like the aggressive medical management policies associated with HMOs, such as how insurers deny admissions, and the appeals process that follows some decisions.
Westlake said such policies are an attempt to cut costs but can't make up for the health care system's primary problem -- not enough money to cover the cost of care.
He and others suggested that in the long term, patients should consider a switch to traditional Medicare, not as a result of anything Univera did wrong, but because the federal surplus is shrinking and there is little chance the government will boost Medicare reimbursements.
Goshin said patients can still get their care as usual next year because Univera will continue to provide the coverage they expected to receive in Senior Choice.