New York's Senator
CHARLES E. SCHUMER

FOR IMMEDIATE RELEASE August 9, 2001

SCHUMER, ISRAEL, GRUCCI ANNOUNCE MAJOR LEGISLATION TO STEM TIDE OF SENIORS LOSING HMO COVERAGE ON LONG ISLAND

Over 50,000 Long Island Seniors Lost HMO Coverage in 2000, Significant Cuts, Higher Premiums Possible Again Before End of Year

Senator, Congressmen Unveil New, Bipartisan Bill To Increase HMO Reimbursement Rates in Counties Failed by the Current System, Dramatically Increase Coverage for Seniors

Standing with Long Island residents who recently lost their health insurance, US Senator Charles E. Schumer and US Representatives Steven Israel and Felix J. Grucci, Jr. unveiled new, bipartisan legislation to stem the tide of seniors on Long Island and across the nation who have lost their health coverage due to HMO pullouts in counties with low federal reimbursement rates.

Since 1998, nearly 85,000 Long Island seniors have been affected by the exodus of HMOs. In 2000 alone, over 50,000 Long Island seniors lost their health care, making Suffolk and Nassau counties two of the nation's five most severely affected counties. In 1997, Suffolk County was served by 12 HMOs; today only two remain. Similarly, in Nassau county, seven HMOs have left in the last three years, leaving the county with just three existing plans. To make matters worse, higher premiums and even further reductions in coverage are possible again before the end of the year.

The legislation introduced by Schumer, Israel and Grucci would stabilize the Medicare +Choice program and protect the health care choices of Medicare beneficiaries by creating a new method of federal HMO reimbursement. The bill would provide counties like Nassau and Suffolk with reimbursement rates on par with rates in nearby counties, and allowing HMOs to provide coverage once again for tens of thousands of Long Island seniors.

"Counties across the nation are suffering from HMOs pull outs, but no one has suffered from this crisis worse than Long Island," said Schumer. "We cannot sit idly by as hundreds of thousands of people lose their health care and are forced to participate in health plans that typically don't cover prescription drugs, don't let them choose their own doctors, and don't give them anywhere near the type of coverage they need. We have to save Medicare+Choice, and although it's going to be a long, hard fight, this bill gives us a way to make that happen."

"Health care should be a right, not a privilege," said Israel. "Ensuring Long Island seniors receive quality care isn't a Democrat or Republican issue. It's just common sense. The Medicare+ Choice Equity and Access Act of 2001 will help ensure seniors the care they deserve."

"This legislation protects the health care choices of our seniors by bringing back the HMOs that have abandoned Long Island because of the pitifully low reimbursement rates," said Grucci. "After a lifetime of working and raising their families, our seniors deserve to have a strong health care and prescription drug plan that is affordable and accessible. By working together to save Medicare+Choice, we're fighting for the tens of thousands of Long Islanders who have had to endure the stress and uncertainty of how they would receive the medical attention they need, and how they would afford it."

Medicare +Choice was created when Congress passed the Balanced Budget Act of 1997. The Medicare+Choice program established a new payment structure in which HMOs are still reimbursed each month for each beneficiary, but instead of being reimbursed at a rate of 95 percent of the average monthly traditional fee-for-service costs per beneficiary in that county, rates are updated every year are set at the highest of three amounts:

1. A rate calculated as a blend of the local and national rate;
   
2. A minimum payment rate, or
   
3. A rate that provides a minimum increase from the previous year's rate, which has been 2% since the BBA in 1997, except for this year, when the rate increased to 3%.

BBRA and BIPA helped stabilize Medicare+Choice on a short-term basis for beneficiaries in some parts of the country, but most Medicare+Choice beneficiaries are enrolled in health plans whose payments will increase by only 3 percent this year and by only two percent next year. In contrast, spending in the Medicare fee-for-service program will increase by 9.6 percent this year.

The Schumer-Israel-Grucci bill adds a new element to the Medicare+Choice payment formula to allow plans to receive payments equal to 100 percent of the local fee-for-service rate -- a return to the reimbursement system in place before BBA. Instead of locking Medicare + Choice programs into the three above reimbursement plans that usually offer payments lower than the local fee-for- service rate, which make the cost of doing business in some counties prohibitively expensive, the bill allows HMOs to recover the actual cost of services rendered.

In the short term, the Schumer-Israel-Grucci bill will also benefit Suffolk and Nassau counties by allowing the "blend component" of the Medicare+Choice payment formula to be fully funded. The BBA established the "blend" in response to concerns that Medicare managed care payments varied unfairly across geographic regions under the old payment system. This bill will allow Medicare+Choice plans to receive the higher "blended" payments that Congress intended.

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