NCPA - National Center for Policy Analysis

HMOs Reject Accusations of Federal Officials

June 11, 1999

Representatives of health maintenance organization are bristling at accusations that they market only to the healthiest seniors. Federal officials say they have heard reports HMOs recruit healthy elderly people by marketing insurance at sports clubs, dance halls or on the upper floors of buildings without elevators.

  • In a just-issued compliance manual, the government said it was "very concerned about the practice known as cherry- picking, or selective marketing" -- by which HMOs try to sign up healthy persons while discouraging enrollment of the sick and disabled.
  • "We welcome the guidance from the inspector general," said Karen M. Ignagni, president of the American Association of Health Plans, but "we completely reject the characterization of HMOs as marketing only to healthy individuals."
  • Federal officials also accused some HMOs of delaying reporting of patients' deaths in order to continue receiving Medicare payments
  • An HMO can be fined up to $100,000 if it is found to discourage the enrollment of Medicare beneficiaries because of their anticipated need for medical services -- or $25,000 if it fails to provide medically necessary services covered by Medicare.

HMOs contend they have many patients with serious illnesses and Medicare payments are so inadequate that many HMOs are pulling out of the government program.

The inspector general for the Department of Health and Human Services says that just as doctors and hospitals can violate the law by performing too many tests and procedures, HMOs can violate it by withholding or delaying care they promised to provide to Medicare beneficiaries.

Source: Robert Pear, "HMOs Warned on Recruiting Only Fit Medicare Clients," New York Times, June 11, 1999.


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