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Early Implementation of Medicare+Choice in Four Sites: Cleveland, Los Angeles, New York, and Tampa-St. Petersburg


In their study of the Medicare+Choice experience in four large urban areas, Geraldine Dallek and Donald Jones of Georgetown University report that Medicare managed care is neither living up to the promise foreseen by its proponents nor plagued by the problems anticipated by its detractors.

Early Implementation of Medicare+Choice in Four Sites: Cleveland, Los Angeles, New York, and Tampa-St. Petersburg, newly published by The Commonwealth Fund, examines enrollment patterns in each metropolitan area, focusing on changes related to consumer education and disenrollment. According to the study, the evidence compiled at the four sites suggests that Medicare+Choice is resulting in less competition, not more.

Congress originally expected that new provider-sponsored organizations (PSOs) would compete with HMOs and traditional Medicare for Medicare business. But one year after implementation began, no new types of managed care organizations had entered any of the markets. The authors report that hospital and physician groups have been reluctant to take on the financial risk of contracting directly with Medicare. Moreover, they are wary of competing with HMOs for Medicare beneficiaries for fear that HMOs might respond to any encroachment on their business by refusing to contract with them to care for privately insured enrollees. As a result, the bulk of Medicare enrollment in each city is concentrated in just two or three large plans.

Although Dallek and Jones find that few health plans had pulled out of the four cities studied during this period, plan withdrawals did have a significant impact on the counties surrounding New York, Tampa-St. Petersburg and Cleveland. Interviews with plan representatives indicate that the pullouts stemmed as much from their organizations' failure to get favorable contracts from local hospitals and physicians as from reductions in Medicare's reimbursement levels.

The authors also find that Medicare+Choice's new lock-in provision, which will be phased in starting in 2002, may create significant problems. Current rules allow beneficiaries to disenroll from their Medicare+Choice plans at any time, and many do. In three of the four cities, the rate of rapid disenrollment (within three months) in 1999 was up substantially from 1998. When annual enrollment begins, beneficiaries will have to stay with their plans for one year.

Several of the Medicare+Choice plans studied provided beneficiaries with clearly written and presented marketing materials, although important information was sometimes missing from plan literature. While there was positive reaction to plans' educational efforts on Medicare+Choice, the authors find that plenty of room for improvement exists.

Facts and Figures


  • In 1999, seven plans in the study sites had disenrollment rates of 20 percent or more and rapid disenrollment rates (within three months) of at least 30 percent, compared with four plans in 1998.

  • Information on the appeals process was absent from 20 percent of the plan materials that were reviewed.

  • Despite repeated requests, only seven of 26 plans in New York, Los Angeles, and Tampa-St. Petersburg sent Spanish translations of marketing materials.

Publication Details



Early Implementation of Medicare+Choice in Four Sites: Cleveland, Los Angeles, New York, and Tampa-St. Petersburg, Geraldine Dallek and Donald Jones, Institute for Health Care Research and Policy, Georgetown University, The Commonwealth Fund, August 2002