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LTC Bullet: HMOs Get Dose of Medicaid Reality

Monday July 6, 1998


The New York Times reported today (7/6/98) that HMOs are getting out of Medicaid managed care due to sharp cuts in Medicaid reimbursement rates and resulting losses.

Several major HMOs including Aetna, U.S. Healthcare, Pacificare, Oxford Health Plans, Kaiser Permanente, and Blue Cross and Blue Shield Associations have terminated some of their Medicaid services in at least 12 states: Arizona, California, Connecticut, Florida, Massachusetts, Missouri, New Jersey, New York, North Carolina, Ohio, Oregon and Utah.

Why? States have cut payments by up to 20 percent since the mid-1990s, leaving HMOs--having enrolled nearly half of all Medicaid beneficiaries--looking to cut their losses.

According to one New York HMO executive, the state's decision to raise quality of care standards while cutting reimbursement rates at the same time amounted to "a setup for failure."

The article points out that affected seniors may be forced to seek care at Medicaid-only HMOs of suspect quality.

See the complete NYT story "H.M.O.'s Are Cutting Back Coverage of the Poor and Elderly" at