'Zero cost' HMO wants rate hike

December 11, 1997


Staff Writer

It was a deal Ellis Duffey couldn't pass up - a managed care plan for Medicare-eligible people that would offer him medical, dental, vision and prescription benefits without a monthly premium.

Duffey, 67, said he switched from the "Medigap" plan he was buying from Blue Cross and Blue Shield of Maryland at roughly $85 per month to the company's new "zero-premium" Medi-CareFirst HMO, which replaces Medicare benefits.

Under a contract with the federal government, Blue Cross would be paid a monthly premium from Medicare for each member and, in turn, be responsible for providing the member's health care benefits.


That was in 1995, said the Hagerstown resident, who added that he urged others on Medicare, including his mother-in-law, Edith Kight, 82, of Hagerstown, to follow suit and sign up for the private insurance alternative to seeking reimbursement directly from Medicare.

Now, the Owings Mills, Md.-based company plans to impose a $75 monthly premium starting Jan. 1, 1998, said Duffey. He says people on a fixed income, like Kight, will be hard hit by the big jump in expenses.

But worse than that is the fact that the premium would be imposed in certain counties, including Washington County, while people in other counties stay at a zero premium, he said.

"Why shouldn't they pay? Everyone should pay their fair share," said Duffey, who reasons that spreading the burden statewide would lessen the bite.

Duffey isn't the only one upset by the change.

Rita Downs, of U.S. Rep. Roscoe Bartlett's office in Hagerstown, said she received at least a half dozen telephone and walk-in complaints following informational meetings about the proposed change in Western Maryland the first week in December.

The change will affect about 2,450 Western Maryland residents, including about 925 in Washington County, according to Blue Cross and Blue Shield of Maryland spokeswoman Karen Barrow.

About 22,800 people statewide are enrolled in the Medi-CareFirst plan, Barrow said.

The company has asked the federal Health Care Financing Administration for permission to impose a premium of up to $75 a month in Eastern Shore and Western and Southern Maryland counties because the plan is costing the company millions of dollars in those areas, said Blue Cross spokesman Jeff Valentine.

The state's rural areas are hit with lower government reimbursement rates to Medicare-funded managed care plans and higher health care costs, Valentine said.

"We don't do this because we want to. We did it very reluctantly. But it was essentially our cost of providing care in these areas. We needed to do something to stop the bleeding," he said.

From January to September, the managed care plan cost the company more than $1 million in Western Maryland, Valentine said.

Blue Cross didn't use the zero premium to lure people from its Medigap plans to Medi-CareFirst with the intention of imposing a premium down the line, he said.

It just made two mistakes, Valentine said.

One was thinking that other insurance companies would share the pool of people interested in the program. Few have, he said.

The other was thinking that the higher reimbursement levels of Central Maryland would offset lower levels elsewhere in the state, he said.

The company's options to imposing a premium would be to cut the plan's benefits or to withdraw from rural areas of the state, neither of which it wants to do, Valentine said.

The company can't start charging people for the plan in the areas where the Medicare premium is covering costs, he said.

The Blue Cross request is pending, said David Sayen, of the Health Care Financing Administration's Philadelphia office.

Rate proposals that substantiate a need for a premium hike usually go through, Sayen said.

The situation isn't isolated to Blue Cross, he said. Other companies in the region have submitted requests to either diminish benefits or increase the cost to members in less populated areas because of the cost disparity.

There's a $162.57 difference between the premium the Health Care Financing Administration would pay Blue Cross each month for a Medi-CareFirst member in Baltimore County and what it would pay for a member in Washington County, according to HCFA's 1998 chart.

Blue Cross would get only $388.92 for a Washington County member compared to $551.49 for a Baltimore County member, according to the chart.

At the same time, Blue Cross could probably get a discount on care in Baltimore County, where there's an abundance of health care providers, Sayen said.

Medi-CareFirst members don't have to stay with the plan if they're unhappy, Valentine said.

The company is offering members the chance to switch to one of its Medigap plans to supplement their basic Medicare coverage without paying a penalty or underwriting costs, he said.

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