Future of ‘Social’ HMOs in doubt after nearly 20 years aiding the frail

Barbara Collins once was the epitome of an independent woman. During the 1950s, she was one of just a handful of cross-country female truck drivers plying the country’s roads.

These days, Collins needs more than a little help to get by. The 73-year-old widow has asthma, heart disease, a stress fracture in her back and has undergone foot surgery that has left her barely able to walk.

Her physical condition has made it hard for Collins to maintain her independence, but she has been able to avoid entering a nursing home.

Every weekday her Medicare HMO, SCAN Health Plan, sends a home care worker to her Long Beach apartment to help out with house work, food shopping and the like.

The worker “help keeps my house in shape. She does my laundry. If I have to go to Vons she will wheel me over,” said Collins. “SCAN has been very good to me.”

What kind of Medicare HMO – in an era where even the costs of pharmaceutical benefits have driven large insurers out of the ranks of Medicare managed care – can afford to provide such services?

They are the “social HMOs” and SCAN is one of just four nationwide. Formed as demonstration programs authorized by Congress in 1984, social HMOs are intended to relieve family members of some of the burden of providing such care while delaying entry into nursing homes.

The programs provide all the benefits of regular Medicare HMOs, such as paying the cost of prescription drugs, but they also assume a range of personal and household assistance. To do so, they receive higher reimbursements from the federal Medicare program, based on a formula that takes into account the number of frail elderly they serve.

But while the 50,000-memer Long Beach-based health plan boasts that it has kept thousands out of nursing homes through its services, SCAN is at a crossroads.

Future uncertain

The demonstration program, in California and several other states, has been extended several times since its original authorization, but the most recent extension, as part of the Balanced Budget Act of 1997, requires the Secretary of Health and Human Services to essentially make a decision on the plans” future.

Rep. Steve Horn, R-Long Beach, introduced legislation last month that would make the plans permanent and gradually extend them nationwide, but a report submitted to Congress by the Health and Human Services Department has questioned their cost effectiveness.

The report, written by Mathematica Policy Research Inc., a Washington think tank that studies Medicare, concluded that they generally enroll patients who are no more frail than those enrolled in regular Medicare HMOs. Yet, the report concluded, enrollees cost the government 15 percent to 27 percent more because of higher reimbursement rates. It recommends converting the programs into traditional Medicare+Choice HMOs.

The report raised a furor among the social HMOs, who said it was done without their input and used limited and old data. Moreover, they contend the report was too narrowly focused because it did not look at the substantial savings to the Medicaid program when the indigent frail elderly are kept out of nursing homes.

“I think they made errors in their methodology, but they did not tell us what kind of report they were going to write,” said Sam Ervin, SCAN’s chief executive. “Our services help keep (the frail elderly) living independently in their own home as long as possible.”

The HMO cites statistics showing that while 21 percent of its membership meets the state standard for being “frail,” and thereby eligible to live in nursing homes, 95 percent are able to live independently. It cited another report that found SCAN members have experienced 53 percent less long term nursing home care than comparable Los Angeles populations, resulting in savings of over $200 million.

Lobbying begins

A coalition of SCAN and the other social HMOs has asked Health and Human Services Secretary Tommy Thompson to consider their concerns about the accuracy of the report.

Horn, for one, is standing by the social HMOs, and plans to push his bill along with broader Medicare legislation Congress hopes to tackle.

“Making social HMOs a permanent part of Medicare+Choice is an important, fiscally responsible approach to helping seniors maintain a healthy lifestyle longer in their own homes,” Horn said in a statement issued to the Business Journal.

However, Randy Brown, an economist and the Mathematica researcher who conducted the study, defends his research. He said it showed members of social HMOs are by-and-large receiving benefits they could find elsewhere if they were not enrolled, such as from churches, family members and other community programs.

Indeed, Collins admits that her 62-year-old sister, who lives in San Pedro, used to help her out a lot more before she started receiving the SCAN services. But she said it was a strain on her sister, who has her own family.

Any changes that Health and Human Services may make in the report will be critical, since the report will be utilized by the Congressional Budget Office in its own report on the cost implications of keeping or expanding the social HMO program.

Tricia Neuman, director of the Medicare Policy Project for the Kaiser Family Foundation, said while it may be true that social HMOs provide “add-on” benefits that in effect cost the government money, that’s not the same thing as saying they are not needed – especially as the huge Baby Boomer generation reaches old age.

“Home care services are truly needed by many, many seniors who are frail and living on their own. The difficulty here is being forced into a paradigm where we have to day they save money,” she said. “Sometimes programs rovide services that people need and that simply costs more money.”