In July, HPHC announced that beginning in January, the company would no longer insure retirees enrolled in their Medicare HMO products in the four counties. This means that some 600 retirees insured through the state's Group Insurance Commission, as well as several thousand municipal retirees will no longer be covered under Harvard Pilgrim.

"This decision really should come as no surprise to our members. We have been chronicling this trend for the past several years," said Association Legislative Liaison Shawn Duhamel. "Due to many factors, the HMOs have overextended themselves and now need to divest of the products that lose money. The low Medicare reimbursement rates have only made matters worse."

The decision was made to end the coverage just weeks after HPHC was released from state receivership. Members will recall that the state placed HPHC under its control after the giant HMO registered a $197 million dollar loss in 1999 and was on the verge of fiscal collapse. Part of the company's fiscal woes have been blamed on the low reimbursement rates paid by Medicare.

Open Enrollment Offered

GIC and local officials plan to offer a special open enrollment period for those retirees who need to chose a new health plan due to the changes with HPHC. Tentative plans are to officially notify all affected retirees by September. During open enrollment these retirees will be able to chose a new plan to enter into when the change occurs on January 1, 2001.

Early indications are that the GIC may restrict enrollment to just the Optional Medicare Extension Plan (OME), not allowing retirees to enter into another HMO. The OME plan is a premium Medicare supplement plan, that resembles the coverage offered throughout the full scale GIC Indemnity Plan.

With the recent instability and rapid price escalation within a majority of HMOs, the GIC is reluctant to allow more retirees to enter into the Medicare HMOs. For example, Tufts Health Care recently announced large increases in their premium for the coming year. In 1999, Kaiser Perminante, withdrew from the North East leaving thousands of retirees without coverage.

"The Association would like to see the GIC take a very close look at whether or not it is in the best interest of the retirees to continue Medicare HMO coverage. It makes no sense to continue to do business with companies that decide to change the rules midway through the contract year," says Duhamel. "It may be more expensive, but the OME plan run by UniCare is a great plan. Members need to realize that they will get what they pay for."