WHEN KATIE DOLAN and her husband, Duane, signed on to receive their Medicare benefits from a health maintenance organization several years ago, it seemed like a good deal. PacifiCare's Secure Horizons was one of many HMOs nationwide that leapt at the opportunities created by Medicare's push to use managed care to drive down spiraling costs. It offered the Dolans and their peers comprehensive coverage with no annual deductible and a mere $5 co-payment per office visit—versus the traditional Medicare plan, under which patients pay 20 percent of every medical service they receive on top of a $100 deductible.
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Now, however, the Dolans aren't sure they made the right choice. On March 23, they received a letter informing them that their doctor at the University of Washington Medical Center was no longer covered by their plan. Five hundred seniors who get their medical care through the university—at the medical center, Harborview Medical Center, or its clinics around King County—received similar letters.
What made things worse is that Duane is in the middle of treatment for a complicated neurological condition of unknown source. "Only at UW have we gotten the kind of attention we have needed," says Katie, who feels betrayed by the managed-care sales pitch. "None of us knew this could happen."
In fact, seniors who opted for managed care are frequently finding their medical choices limited as a result of increasingly fraught contract negotiations between HMOs and doctors, each trying to figure out a way to make money off Medicare. "These kinds of things happen all the time," says Barbara Clark-Elliott, a managed-care specialist at the Seattle office of the federal Health Care Financing Administration (HCFA), which governs Medicare. Secure Horizons, the largest Medicare-serving HMO in both the state and the nation, with almost 60,000 local patients, has in the past year severed its relationship with all individual doctors, and parted ways with some clinics. Chris Wing, Secure Horizon's regional vice president, estimates that at least 1,500 to 2,000 seniors have been affected apart from the UW's 500 patients.
MEANWHILE, DOCTORS ARE rebelling against what they claim are misdirected and onerous new Medicare regulations intended to further attack expenses by curbing fraud. With transgressions resulting in stiff fines and possible jail time, at least one local doctor has gone as far as to chuck the Medicare side of his practice—meaning that yet more seniors are losing their doctor.
For other medical providers, dropping Medicare patients is strictly a business decision. Marc Provence, director of managed care systems for UW Physicians, reckons that the university lost $750,000 last year on its Secure Horizons patients. He explains that as a teaching hospital noted for its expertise in cancer, heart disease, and transplants, the UW Medical Center attracts patients who tend to be sicker than average. It had hoped to get its average cost per Medicare patient down to $300 a month (about how much it received from Secure Horizons and 70 percent of what the HMO receives from the federal government) by attracting a broader base of patients. When the numbers never materialized, UW tried in vain to renegotiate with Secure Horizons.
"I wouldn't want this to be taken as a signal that we're getting out of the Medicare business," Provence says. He adds that as a public institution, the university feels conflicting responsibilities to stay financially healthy and to offer medical care without regard to a patient's ability to pay. He says he is trying hard to find a Medicare HMO that will make financial sense for the university.
While UW was trying to change its contract with Secure Horizons, the HMO was trying to do so with individual doctors. In fact, Secure Horizons last year decided not to do business with individual doctors at all, only large organizations of doctors to which it could pay a flat monthly fee—as in its arrangement with the university, except that it would pay much less to entities providing primary rather than comprehensive care. The HMO had been offering doctors a fee for each service performed. The reason was not financial, insists Secure Horizon's Wing, but "operational." He says the company couldn't process individual claims fast enough for HCFA. He also maintains that organizations of "physicians managing physicians" ensure "quality control."
Secure Horizons' decision meant Ballard internist Dr. Richard Fogerty and his partner were faced with the choice of joining a physicians' organization or saying goodbye to as many as 600 patients, 15 percent of their practice. They chose the latter, in part because they didn't see how Secure Horizons' fee would suffice. "Basically, we could see patients once a month and not order any lab [work]—which is very hard to do for that age group," says Fogerty.
Still, Fogerty points out that his patients, like those at UW, have options. They could stay with their doctor by leaving Secure Horizons for the traditional Medicare plan. "The way I look at it, there isn't a bad guy," he says, maintaining that everyone, including himself, had a choice to make.
But Joan Lewis, director of Statewide Health Insurance Benefits Advisors, a consumer service run by the state insurance commissioner, argues that seniors should not have to choose between shelling out significantly more money for a traditional plan or leaving a doctor that they may have been with for 10 or 15 years. She describes HMOs like Secure Horizons as luring patients and doctors with attractive terms in order to build market share. "Now that the dust is settled, they say it's time to renegotiate contracts, let's squeeze the docs." And she complains that the Health Care Financing Administration "is not willing to push its weight around to encourage Secure Horizons to do something different."
"It's not something we have any legal ability not to allow," says Clark-Elliott.
HCFA IS TAKING a much more aggressive stance toward rooting out Medicare fraud, which together with Medicaid fraud costs the federal government an estimated $40 billion a year, according to local HCFA spokesperson Pam Negrie. One piece of the battle plan revolves around the forms that doctors submit for reimbursement. To prevent overbilling, new guidelines to go into effect July 1 require extensive documentation justifying each service performed. And congressional legislation passed last year allows HCFA to fine doctors $10,000 for each instance of incorrect coding. HCFA may also press criminal charges for fraud, though Negrie points out that the agency would have to prove intent: A simple mistake would not land a doctor in jail.
But that's exactly what doctors are worried about. "Nobody should be considered a criminal if they make a mistake in coding," says family practitioner Dr. Joel Konikow, who, like many of his peers, considers the new documentation oppressively cumbersome. "I really didn't feel like I could sleep at night with this hanging over my head." As a result, he told his Medicare patients he could no longer treat them.
After an outpouring of protests like Konikow's, HCFA agreed late last month to revise its requirements. But until it does, doctors must follow the current guidelines, and HCFA offers no specifics of the new terms.
Even if the revisions mollify doctors, they'll come too late for 69-year-old Ruth Swanson, one of the patients dropped by Konikow. "It was very upsetting," she says, though she blames Medicare rather than her doctor of 13 years. She recounts how he saw her through bronchitis and tendinitis and kept a close watch on her hypertension and fibroids. "It takes a long time to find a doctor you're comfortable with," she says, "and he knows me. He can tell just by looking at me sometimes what's wrong with me."
Unfortunately, it's more difficult for experts to divine what's wrong with Medicare—and unclear whether cost-cutting overhauls help or hurt the seniors they are supposed to serve.
The Health Care Financing Administration's site with links to Medicare and Medicaid info
PacifiCare's Secure Horizons site
The Medicare Rights Center site
The Council for Citizens Against Government Waste's Medicare site