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Office of the Press Secretary

For Immediate Release October 8, 1998
             Takes Steps To Prevent It From Happening Again

                     Roosevelt Room, The White House
                            October 8, 1998

Today, the President unveiled an initiative to respond to decisions by some Health Maintenance Organizations (HMOs) to drop out of selected markets in the Medicare program. The Department of Health and Human Services' preliminary analysis indicates that because of these withdrawals a relatively small number of Medicare beneficiaries currently in HMOs (less than one percent of the 6.5 million beneficiaries in managed care plans -- 50,000 beneficiaries) will have no managed care alternative in their area. (There are a total of 38 million medicare beneficiaries including the 6.5 million in managed care.) In response, the President:

Criticized health plans for demanding the ability to raise costs and reduce benefits as a precondition for staying in the Medicare program. The President underscored that Medicare should not -- and will not -- be held hostage to HMO threats to leave the program unless HMO's can control benefits to Medicare beneficiaries.

Announced a new policy to expedite the approval of health plans applying to enter markets without HMOs. HHS will expedite its review and approval of HMOs seeking to enter markets that have been left without a managed care option. HHS will give these applications first priority for review and will expedite their entrance into the market so long as they meet the solvency, quality, and other standards necessary to protect beneficiaries.

Initiated a new campaign to help Medicare beneficiaries understand their rights and options. To inform Medicare beneficiaries affected by HMO withdrawals of all of their rights and options -- including the fact that they are automatically eligible for traditional fee-for-service Medicare and that they have guaranteed access to Medigap policies that help fill coverage gaps -- HHS will enlist public and private partners representing tens of millions of older Americans to provide their members with needed information through newsletters, conferences, and targeted information campaigns. These partners include the Leadership Council of Aging Organizations, the American Association of Health Plans, the American Association of Retired Persons, the National Council of Senior Citizens, the National Rural Health Association, the National Committee to Preserve Social Security, the National Council on Aging, the National Council of Senior Citizens, the National Hispanic Council on Aging, the National Caucus and Center on Black Aged, and the Older Women's League, as well as the Social Security Administration, Health Care Financing Administration regional offices, and State Health Insurance Assistance Programs. In addition, HHS will post new information about plan withdrawals on the Medicare Internet site (, so that beneficiaries in every local area have the most up-to-date information on available coverage options.

Directed Secretary Shalala to develop new legislation to protect Medicare beneficiaries from HMO withdrawals. The President stated his determination to work with Congress, health plans, and advocates for older Americans to ensure an adequate range of health plan options for beneficiaries and reduce the likelihood that beneficiaries will face this kind of turmoil in the future. To that end, he asked the Secretary to recommend specific legislation, to be included in his next budget, to enhance HMO participation in the Medicare program and protect beneficiaries from precipitous plan withdrawals.

Highlighted the need for Congress to reauthorize the Older Americans Act. One of the most important ways for older Americans to get critical information and counseling about health-care options is through the programs provided by the Older Americans Act. Today, the President sent a letter to Senator Lott and Speaker Gingrich urging them to pass, before Congress adjourns, legislation to reauthorize the Older Americans Act. That legislation has broad bipartisan support. The President emphasized that failure to do so would call into question our nation's commitment to the vital services this act provides to millions of older Americans.