Medicare HMOs Neglect Rural Seniors HMOs Not The Answer for Millions of Rural Beneficiaries

Nine out of ten Medicare beneficiaries in rural areas have no choices when it comes to Medicare HMOs, according to a new report by the consumer watchdog group Families USA.

Rural Neglect: Medicare HMOs Ignore Rural Communities, a state-by-state and county-by-county analysis of Medicare HMOs in rural America, found that out of the 9.2 million rural Medicare beneficiaries in the United States, 6.7 million (73%) live in counties served by no Medicare HMOs, 1.6 million (17%) have access to only one Medicare HMO, and only 0.9 million (10%) have a choice of two or more HMOs.

"The managed care industry has virtually ignored Medicare beneficiaries in rural communities," said Ron Pollack, Executive Director of Families USA. "At this point in time, HMOs are not a viable alternative for millions of Medicare beneficiaries. Any Medicare reform proposal that relies on competition among HMOs will leave many seniors out in the cold."

Among the study's findings:

• There are no HMOs available at all to rural beneficiaries in 13 states: Alaska, Idaho, Iowa, Kansas, Kentucky, Mississippi, Nebraska, North Dakota, South Carolina, South Dakota, Utah, Vermont and Wyoming.
• In 14 states, some rural beneficiaries have access to only one HMO while all others in the state have no access to any HMOs. These states are: Alabama, Colorado, Delaware, Florida, Indiana, Maine, Maryland, Michigan, Missouri, Montana, Nevada, New Hampshire, Virginia and West Virginia. In all but two of these states (Delaware and Maryland), the majority of rural beneficiaries do not have access to any Medicare HMOs.
• In 22 states, some rural beneficiaries have a choice of two or more HMOs, but in only five states, Connecticut, Hawaii, Massachusetts, Pennsylvania, and Rhode Island, do the majority of rural beneficiaries have a choice of two or more HMOs.

The study estimates that even fewer rural beneficiaries will have access to HMOs in the year 2000. Based on currently available data on HMOs intentions to withdraw from certain areas, only 23% of rural beneficiaries will have access to an HMO in the year 2000, compared to 27% in 1999.

Families USA cites many reasons for HMOs not serving rural areas, including:

• the number of potential HMO enrollees in rural areas is small and spread over a broad area;
• HMOs have difficulty recruiting rural providers;
• rural beneficiaries are somewhat less healthy than urban beneficiaries; and,
• HMOs cannot make much money by reducing services because such services are already lower in rural areas.

Reimbursement rates, however, are not a major deterrent for rural penetration according to Families USA.

"While the HMO industry claims they do not get enough money to serve these beneficiaries, quite the opposite is true. Several independent agencies have concluded that Medicare HMOs are overpaid by the government," added Pollack. "The fact of the matter is that the industry has said 'we can't make enough profit here' and has chosen not to enter these markets."

Some Medicare reform proposals rely on competition among HMOs to help keep program costs down. The Families USA analysis highlights the fact that competition among HMOs is unrealistic in rural areas.

"Because HMOs have chosen not to serve rural Medicare beneficiaries, these beneficiaries need a strong and viable traditional Medicare program," added Pollack. "Any restructuring of the Medicare program that relies on competition among HMOs at the expense of traditional Medicare would cause harm to the vast majority of rural Medicare beneficiaries."

The analysis used data from the Health Care Financing Administration and the Census Bureau to determine the number of HMOs available to Medicare beneficiaries in rural counties. New Jersey has no rural counties and is not included in the analysis.

###

Families USA is the national organization for health care consumers. It is nonprofit and nonpartisan and advocates for high-quality, affordable health care for all Americans.

1201 New York Avenue NW, Suite 1100 · Washington, DC 20005
202-628-3030 · Email: info@familiesusa.org · www.familiesusa.org