Most recently, members in Western Massachusetts were left scrambling for a new health insurance plan after Kaiser Permanente announced in June that it would no longer conduct business in the northeast. Kaiser had been the largest Medicare HMO in western Massachusetts, insuring over 1,200 state retirees alone.

Kaiser's announced withdrawal came on the heels of the decision of the state's largest HMO, Harvard Pilgrim Health Care, to no longer offer coverage to Western Massachusetts, citing low federal reimbursement rates for that region. As a result, the GIC Indemnity Plan's Optional Medicare Extension (OME) is fast becoming the plan of choice for many state retirees once insured through an HMO.

Compounding the situation, is the fact that Neighborhood Health Plan and Tufts have each reduced their area of Medicare coverage. What were once virtual "state-wide" plans have become regionally based over the past year further reducing the availability of HMOs to retired public employees.

"Members who feel abandoned by their insurance carrier are making the choice to move out of the HMO market and back into the traditional insurance plans," says Association Insurance Coordinator Cheryl Stillman. "To be dropped after having been a loyal customer for many years is very traumatic for many retirees. They find themselves faced with a very confusing situation. Thankfully, the GIC has been quick to respond to the problem."

Some area hospitals have further complicated matters by no longer accepting reimbursement from Harvard Pilgrim. This has left both retirees and active employees from accessing medical services at some facilities, unless they are willing to pay for treatment out of their own pocket.

GIC Ponders Action

Single Medicare Plan Considered

The last viable option being considered by GIC officials is to allow the HMOs to withdraw from the Medicare market and shift all Medicare retirees into a single plan. That plan would most likely be the current GIC Indemnity Plan OME, currently managed by UniCare.

As of July 1, the total Medicare HMO enrollment under the GIC was 5,517 or 13% of the Medicare population, as compared to 37,145 or 87% under the OME Plan. With the loss of Kaiser, the number of HMO enrollees is likely to drop by over 500 people.

Members typically enroll in the OME plan if they are eligible for Medicare, or the GIC Indemnity Plan if they are not Medicare eligible. Both plans allow for the freedom to choose your own doctors without the need for pre-approval on most procedures. Also, HMO plans do not provide for non-emergency coverage outside of Massachusetts.

"We have a very good OME plan and there is no question it is very popular with our retirees. As much as I would prefer to provide for some degree of choice amongst our plans, one viable option we need to consider is going to one Medicare plan for everyone," continued Mitchell. "Every aspect of the situation has to be carefully thought out with this decision. The consequences of our actions here are far-reaching."