Originally created 07/01/00

Aetna to eliminate Medicare HMO coverage in 11 states



JACKSONVILLE, Fla. - Aetna U.S. Healthcare is eliminating its Medicare HMO in 11 states, including Florida and Georgia, at the end of the year.

The withdrawals will affect about 355,000 Medicare members, according to the company.

Thursday's announcement was another blow to the federal government's Medicare + Choice program, started in 1997 to give beneficiaries options.

The HMOs are attractive because they provide prescription drug coverage. Traditional Medicare does not.

The plan has 47,000 members in Florida, including 6,566 in Duval County, 1,583 in Nassau, 701 in Clay and 457 in St. Johns, spokeswoman Marlene Baltar said. There are 6,088 members in Georgia. Aetna will start notifying members July 17 of the plan's elimination.

"The decision to exit certain Medicare markets was reached with great reluctance, but was made after an exhaustive review of alternatives, such as significant benefit and premium modifications," Aetna Chairman and Chief Executive Officer William H. Donaldson said in a prepared statement Friday.

"Unfortunately, inadequate government reimbursements have made operating a number of our Medicare HMOs no longer viable."

None of the changes in Aetna's Medicare HMO affects the insurer's other health plans.

Insurance companies have been dropping Medicare HMOs during the past few years, claiming the federal government does not pay enough to administer them.

In 1998 and 1999, more than 700,000 people in Medicare HMOs had to change plans because their plans were eliminated, the American Association of Health Plans noted.

Several plans in Northeast Florida and nationwide last year also started charging premiums and higher co-payments to help cover costs.

The association surveyed 37 companies that offer a Medicare HMO. It found 18 will leave part or all of the counties they serve at year-end, requiring more than 700,000 people to find a different plan for 2001.

Inadequate payment, too much regulation and problems getting contracts with doctors are fueling the pull-out.

"If the Medicare HMO program is going to survive and continue to provide beneficiaries with comprehensive benefits, as well as additional preventive programs and pharmacy coverage, Congress will have to make fundamental changes," Aetna's Mr. Donaldson said.

Private-sector Medicare HMOs are paid more than enough to cover basic Medicare benefits, but the government doesn't always pay enough for extra benefits the HMOs use to draw members, said Nancy-Ann DeParle, administrator for the U.S. Health Care Financing Administration, which runs the Medicare program, in a statement earlier this month.

About 27 million of the 39 million Medicare beneficiaries now have an option of a Medicare HMO in addition to traditional Medicare, she said.