The situation is coming to a head this week as the state of Pennsylvania, to save $94 million annually, is set to change its medical retirement benefit for its 62,000 retirees.
It also came to a head as health advocates testified before Congress that one of the kinds of plans offered to Pennsylvania retirees, known as a private fee-for-service plan, is wasteful and expensive.
"Instead of efficiency-enhancing innovation, we are getting plans [private fee-for-service plans, for example] that are not well-designed to manage care or quality and have higher cost," Glenn M. Hackbarth, chairman of the Medicare Payment Advisory Commission, said Monday in testimony given to the House Ways and Means subcommittee on health.
Area hospitals are adamant. They say the main plan being pushed by the state will pay them less and provide less care for patients, allegations that both the state and the company offering the plan deny.
The move is stirring anxiety among the retirees affected.
"I think it is unnecessary," said Ron Smith, 74, of King of Prussia, a retired state psychiatric worker. "We are senior citizens. Everything should have been settled before."
The retirees have until Friday to choose among four plans - three of which will be accepted at all of the area hospitals. The plans that will be accepted are Aetna Golden Choice PPO, Aetna HMO and Keystone 65 HMO, the latter affiliated with Independence Blue Cross.
But if the retirees don't choose, they automatically will be shifted May 1 from the current traditional Medicare plan to Coventry's Advantra Freedom, the plan not accepted by many hospitals.
In Pennsylvania, Philadelphia's hospitals nearly stand alone. The only other hospital refusing to accept Advantra Freedom is the University of Pittsburgh's cancer hospital.
The two main unions representing state employees have written letters objecting to the new plan.
State officials are worried about the local situation.
They say they had no idea in January when they announced that Advantra Freedom would be the default plan that Philadelphia hospitals would not accept it.
"Of course, that's a huge concern to us," said Naomi Wyatt, secretary of administration in Gov. Rendell's cabinet. She also is chairwoman of the Pennsylvania Employee Benefit Trust Fund, which administers employee benefits.
But Wyatt is also concerned about the increasing cost for medical coverage and how that will affect taxpayers. She said costs rose 63 percent, from $336 million to $550 million, from 2003 through last year alone and will hit $717 million in the next fiscal year without these changes.
Pennsylvania's plan is generous, with most retirees paying little for their medical care at a time when more and more employers are limiting or dropping retiree coverage.
Wyatt said the commonwealth would save $94 million, or 15 percent, by raising drug co-pays and switching insurance plans.
Nearly all senior citizens get medical insurance directly through Medicare, a federally funded program that covers costs for hospitals and doctors and sets the rates at which they will be paid.
Retirees can also choose to get their Medicare through private insurance companies like Aetna, Independence Blue Cross, and Coventry, which act as agents for the government, offering plans that pay for doctors and hospitals and process claims.
All these plans must provide at least the same level of benefits that Medicare does and many provide more, such as vision or wellness programs. Costs vary according to what is provided, but retired Pennsylvania state employees only pay deductibles and co-pays for whichever plan they choose.
Nationally, most plans are run by managed-care organizations, or HMOs, which restrict patients to their own networks of doctors and hospitals.
Another type of plan, called a private fee-for-service plan, such as the Advantra Freedom plan being offered to the state's retirees, has no network. That means patients can visit any hospital or doctor accepting the plan, anywhere in the nation.
The snag can come if doctors or hospitals, like those in the Philadelphia area, do not accept the plan. Retirees must contact their doctors and hospitals to find out if the plan is accepted.
On average, all of these plans are paid 12 percent to 20 percent more per person by the federal government than would be spent in traditional Medicare. The highest extra payment over traditional Medicare goes to private fee-for-service plans, such as Coventry's Advantra Freedom plan.
Because the federal government pays more, programs such as Advantra Freedom can offer the state a discount.
Hospitals and other providers do not like the private fee-for-service plans because they cannot negotiate with the plans. That means hospitals and providers are unable to get a piece of the extra revenue that would come their way in a negotiated contract with an HMO.
The private fee-for-service plans are also not subject to quality and continuity-of-care reporting requirements.
"At this time, we do not accept these plans except in emergencies because there is no negotiated agreement between the hospitals, our doctors, and the insurers specifying terms, conditions and payments," wrote Crozer-Keystone spokesman Grant Gegwich in an e-mail.
Also, "these plans do not have a committed network of physicians and hospitals, making it impossible to refer for needed specialty care and follow-up," he wrote.
Pennsylvania's Wyatt said the state would help the elderly research whether their favorite doctors or hospitals will accept Advantra Freedom. She and Coventry spokeswoman Catherine Campbell said that Advantra Freedom would pay all providers exactly what they would have received directly from Medicare.
Jefferson had informed Coventry as early as December 2006 that it would not accept the plans and that it criticized "Coventry's failure to adequately communicate with its members regarding access to JHS facilities and physician practices," its vice president of payer contracting, Debra W. Taylor, wrote in a letter to a local affiliate of Coventry Health Care Inc. Coventry is based in Maryland.
At one of 15 benefits seminars held in the area last week, Tara Long, a state retiree-benefits specialist, told retirees, "When we made the decision and started marketing, the hospitals changed their minds."
That was not welcome news for retirees like Mary Maiden, 73, a retired health inspector from Roxborough who unwillingly switched her coverage to Aetna.
"I'm devastated," she said.
When she had breast cancer, she went to Jefferson University Hospital. Her husband's diabetes is being treated at Lankenau Hospital, a Jefferson affiliate.
"If something happens to me, I want to be local," she said. "If something is really wrong and they transfer you, where am I then?"
What has your hospital decided about accepting insurance?
The hospitals in Southeastern Pennsylvania, as of Friday, that have indicated whether they will accept Advantra Freedom's terms and conditions of payment. They may elect to modify this determination at any time.
HOSPITAL SYSTEM/NAME YES NO
Abington Memorial Hospital X
Catholic Health East
St. Mary's Medical Center X
Nazareth Hospital X
Mercy Suburban Hospital X
Mercy Philadelphia Hospital X
Mercy Fitzgerald Hospital X
St. Agnes Medical Center X
Central Montgomery Medical Center X
Chester County Hospital X
Crozer-Keystone Health System
Crozer-Chester Medical Center X
Taylor Hospital X
Springfield Hospital X
Delaware County Memorial Hospital X
Community Health System
Jennersville Regional Medical Center X
Brandywine Hospital X
Chestnut Hill Hospital X
Pottstown Memorial Medical Center X
Phoenixville Hospital X
Doylestown Hospital X
Fox Chase Cancer Center X
Grand View Hospital X
Holy Redeemer Hospital
and Medical Center X
Jefferson Health System
Thomas Jefferson University Hospital X
Methodist Hospital X
Magee Rehabilitation Hospital X
Moss Rehabilitation Hospital X
Moss Rehabilitation at Elkins Park X
Frankford Hospital - Torresdale X
Frankford Hospital - Frankford X
Frankford Hospital - Bucks X
Albert Einstein Medical Center X
Paoli Memorial Hospital X
Bryn Mawr Hospital X
Bryn Mawr Rehabilitation Hospital X
Lankenau Hospital X
Riddle Hospital X
Lower Bucks Hospital X
Montgomery Hospital X
Roxborough Memorial Hospital X
St. Luke's - Quakertown X
Temple University Health System
Temple University Hospital X
Northeastern Hospital X
Jeanes Hospital X
Hahnemann University Hospital X
University of Pennsylvania Health System
University of Pennsylvania Hospital X
Pennsylvania Hospital X
Presbyterian Hospital X
SOURCE: Pennsylvania Employees Benefit Trust Fund
Contact staff writer Jane M. Von Bergen at 215-854-2769 or firstname.lastname@example.org.
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