Humana will offer Medicare HMO plans in area again

Humana, which dropped 10,000 seniors when it significantly scaled back its Medicare HMO operation in the Chicago area two years ago, will return to most of the suburbs it left, and others may re-enter the market.



Citing improved federal government reimbursements, Humana said it will offer its Medicare Advantage HMO plan, Humana Gold Plus, in 20 suburban Cook County cities north of Chicago, starting April 1. The expanded service territory includes Evanston, Glencoe, Glenview, Mount Prospect, Northbrook, Skokie, Wheeling, Wilmette and Winnetka, the insurer said.



Humana's return is good news for seniors, said Terri Gendel, advocacy and benefits director at the Suburban Area Agency on Aging. "It's good to have another option for people to look at," she said.



Humana pulled its HMO plan out of 23 Chicago area ZIP codes and seven ZIP codes in northwest Indiana in January 2003. The health insurer said it had to take the action because its network of doctors, hospitals and specialists had shrunk. Physicians and hospitals pulled out of the Medicare HMO program, blaming insufficient reimbursements from the federal government, which didn't cover their costs.



With Humana's departure, enrollees in affected suburbs were left with no other Medicare HMO alternative at that time. HMO plans had become popular because they typically provide more extensive and affordable health coverage than original fee-for-service Medicare plans, including prescription drug benefits, preventive care, routine physicals and vision plans.



In pulling out, Humana joined Aetna and United Healthcare of Illinois, which had dropped their Medicare HMO plans because of reimbursement issues.



At that time, Humana complained that annual increases from the federal government had been averaging roughly 2 percent, while medical inflation had ranged from the high single digits to double-digit rates. Due to the Medicare reform law in January 2004, reimbursements to the plans were increased 10.6 percent, and this year they rose 6 percent, according to the Centers for Medicare & Medicaid Services.



"We are pleased that reimbursements have stabilized to the point where they provide enough funding to allow Humana to build a strong, directly contracted network of physicians and health care providers that ensures a wide range of health care options for members of our plans," said Rob Hitchcock, Chicago-based Humana regional president for senior products.



Humana has about 36,000 Medicare HMO members in Cook, DuPage, Kane and Kendall counties, and 2,000 enrolled in Medicare private fee-for-service plans.



Two years ago, Humana said its network of primary care physicians in the Chicago area had fallen to 357 from 648 and the number of hospitals from 37 to 23. Its network of physicians has since recovered to 577, and 30 hospitals are now in its network, Hitchcock said Tuesday.



But Humana will no longer be the only kid on the block providing a Medicare HMO plan in the Chicago area. HealthSpring of Illinois, a subsidiary of Tennessee-based NewQuest Health Solutions, began offering a Medicare HMO plan here in January.



The Medicare reform act, which played a role in Humana's decision to expand its service territory here, may induce others to enter the market.



Besides prescription drug benefits, the Medicare reform law will next year expand the Medicare Advantage program, of which Medicare HMO plans are a part, to allow insurers to offer regional preferred provider organization plans. The PPO plans will let consumers choose from doctors and providers on a plan's preferred list, but they typically won't have to get referrals.



"Seniors have a lot more choices and plans have a lot more flexibility," Hitchcock said.



Gendel said she expects to see a few more companies enter the market.



Aetna said in the wake of changes under the Medicare reform law, it's "looking at additional markets" and may opt to re-enter Chicago with a Medicare HMO plan.



"We're looking at it, but haven't made any decisions," said Aetna spokeswoman Wendy Morphew.