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Medicare inequities scare off HMOs

If you're 65 or older and like to feel wanted, move to South Florida. Miami health maintenance organizations (HMOs) are fighting over Medicare beneficiaries like hungry dogs over a T-bone. The competition is so fierce that six companies recently were investigated for stealing one another's members.

Then there's Tampa Bay.

Here, most HMOs won't touch Medicare beneficiaries because they say they can't care for them properly for the amount the government pays. They marvel that even one company, Humana, is willing to try.

Medicare pays HMOs far more money per member in South Florida than elsewhere, including Tampa Bay. In fact, the payment rates in Miami are the highest in the country, higher even than in New York or Los Angeles.

In response to a Freedom of Information request from the St. Petersburg Times, the Medicare program last week revealed that Humana HMO in Miami receives $440 per member each month, on the average. By contrast, the average Humana member in Clearwater or St. Petersburg brings in only $276 a month.

That means Medicare HMO patients are worth 60 percent more money in Miami than they are here.

To add insult to injury, HMO members in South Florida get their prescription drugs free without paying a premium. But in Tampa Bay, the same plan costs beneficiaries $25 a month.

Is Medicare paying too little in Tampa Bay? Is it paying too much in Miami? Or both?

Tampa Bay's payment rate is too low, say companies that enroll young people here but turn away the elderly.

"It's not nearly as high as it should be," said Doug Cueny, chief executive officer of Av-Med Health Plan. While his company wanted to include Medicare members, he said, "we didn't feel we could afford to."

On the other hand, a Miami health-system expert says the government is probably paying HMOs too much there.

The rates are pegged to the historical fees doctors charged, and Miami has for decades had too many doctors and too many hospitals providing unnecessary services at inflated rates, said Linda Quick, executive director of the Health Council of South Florida.

Medicare is paying for "a bloated system" in Miami, she said.

Tampa Bay's doctors have historically been conservative in their care and fees, so "the feds have stuck you with that price," Quick said.

Efforts to reach a Medicare official in Washington who would discuss the issue publicly failed all last week. The two who agreed to discuss the payment system refused to be named.

They said Medicare figures out the reimbursement rate for each individual based on 120 factors, so it's impossible to say exactly how much Medicare is paying for Joe Blow or Mary Smith without knowing how they stack up on all 120. But how much the HMO receives depends just as much on geography.

Each county has a "base rate" derived, in large part, from the amount Medicare spent there back in the free and easy days when doctors and hospitals could bill Medicare for as much as they wanted. If Medicare was being overcharged then, the way the payment system works, it is likely being overcharged now.

Asked whether the system is fair, one of the Medicare officials replied wryly, "One word you have to forget about (in government work) is the word fairness."

Last year, Congress passed a budget amendment ordering the Department of Health and Human Services (HHS) to fix the payment system. But HHS Secretary Louis Sullivan pleaded for more time, and the day of reckoning was put off until 1993.

However, in response to questions from the Times last week, Florida Rep. C.W. Bill Young called for a report by the U.S. General Accounting Office (GAO), the investigative arm of Congress. The Republican member of Congress, who represents St. Petersburg, is a member of the appropriations subcommittee that governs HHS spending levels. He said the language calling for the GAO report was included in a bill the subcommittee passed Thursday.

Meanwhile, Tampa Bay has only one Medicare HMO: Humana's Gold Plus Plan. In a recent survey by the federal government, the medicare HMOs in South Florida, including Humana, received higher patient satisfaction ratings than Humana-Tampa Bay. The unanswered question is whether there is a connection between reimbursement and patient satisfaction.

"Providing quality care under this reimbursement structure is a challenge," said Pat Driscoll-Kneeland, Humana spokeswoman for Tampa Bay. "But it's one we're meeting."

She said the company has a strict quality assurance program in place to make sure patients get the care they need without delays that could jeopardize their health. The company's surveys consistently show 90 percent are pleased with the service, she said.

One factor in Humana's favor is that it owns four bay area hospitals that give their sister HMO a big break on charges. Another is that it runs a clinic-style HMO, which is cheaper than an HMO that lets all the doctors stay in their own offices (an "independent-practice" model).

Humana is able to stay afloat in Tampa Bay "because we're a high-volume, low-margin operation," Driscoll-Kneeland said.

The company certainly has volume. Humana in Florida accounts for nearly one-fourth of all the Medicare HMO members in the nation. Of 450,000 Florida enrollees in Humana's health plans, 194,000 have their premiums paid by Medicare.

In the Tampa Bay service area, which encompasses Pinellas, Pasco and Hillsborough counties, the Gold Plus Plan has 63,000 members.

Humana's goal is to provide services in every county in Florida, said Charlene Brash-Sorensen, director of planning in Tampa Bay.

She said Humana will expand its health plans for the elderly and for younger members into Hernando and Manatee counties over the next few months. Polk County has been targeted as well, but Medicare members probably will not be enrolled there.

The Medicare payment rate in Polk is too low even for Humana, she said: "The numbers do not work."

HMO companies that enroll people under 65 say it's true that medical costs are slightly higher in South Florida than in Tampa Bay. But they say the difference is not anywhere near as great as Medicare is making it out to be.

For example, Av-Med finds that its South Florida HMO medical costs run about 13 percent higher than those in Tampa Bay, according to its chief executive.

Because the base rate used to calculate Medicare payments is the same for all HMOs in a given area, the only ways they can compete, beyond trying to sign up more members, are to offer better quality of care and customer service.

Av-Med, the state's only non-profit Medicare HMO and the one that received the highest patient satisfaction ratings in the survey, says it plans to make a pitch for bay area members when Medicare payment rates improve. Health Options, which is owned by Blue Cross-Blue Shield, is considering the same thing.

But Humana already has a five-year start, Driscoll-Kneeland noted. "If people are happy with us and the network we've set up," she said, "I don't think we're going to lose enough patients to make any one else successful."