By Patricia Barry
November 2001

More than 536,000 Medicare beneficiaries have been dropped by their health plans for 2002. Most others still enrolled in the Medicare+Choice (M+C) program face steeper premiums and/or reduced benefits next year. And many thousands will lose their prescription drug coverage.

The number of beneficiaries hit by this year's round of M+C plans pulling out of Medicare or reducing service areas is not as high as last year, when nearly a million people were affected.

But the shrinkage still disappoints Thomas Scully, head of the Centers for Medicare and Medicaid Services (CMS), which runs Medicare.

	If You've Been Dropped by Your Medicare Health Plan Keep the notification letter as proof of what happened: It will give certain rights if you decide to buy medigap supplementary insurance. The letter should say if any other M+C choices exist in your area. The annual election period for deciding what to do—join another plan or return to traditional Medicare—is Nov. 1 through Dec. 31. For help on your options, call the Medicare hotline at (800) 633-4227, or go to http://www.medicare.gov/ and click on "Medicare Health Plan Compare," which gives details of any plans in your area. Call (800) 424-3410 for the AARP booklet "What to Do if Your Medicare+Choice Plan Leaves Medicare for 2002" (order no. D17564) or go to http://www.aarp.org/confacts/health/hmopullout.html#info

This year the CMS had given the health plans (mainly HMOs) more time to decide whether they would stay in Medicare and had cut a lot of red tape to keep them from leaving the M+C program, which can offer more benefits than traditional fee-for-service Medicare.

"It could have been a lot worse" without those efforts, Scully said. "I've done everything I could."

The plans say their payments from Medicare have not kept pace with rising costs, particularly for prescription drugs and hospital care.

"With health care inflation running at 12 percent and Medicare reimbursement capped at an increase of 2 percent, you have a mathematical formula that does not work," says Karen Ignagni, president of the American Association of Health Plans.

Of the 536,000 M+C enrollees who will lose their present plan's coverage after Dec. 31, more than 92,000 will have no other Medicare HMO in their area to fall back on.

All of them will still receive health care from traditional Medicare, but this gives no coverage for prescription drugs—one of the main reasons, surveys show, why some beneficiaries choose a managed care option.

The other 444,000 beneficiaries have at least one other HMO in their area. This may give them remaining choices as long as those local HMOs accept new enrollees.