July/August 2000

St. Joseph in Albuquerque Discontinues Managed Medicare Plans

St. Joseph Healthcare, Albuquerque, N.M., will discontinue St. Joseph MedicarePlus, its managed health care plan for seniors and other Medicare-eligible individuals, as of December 31, 2000.

"Managed Medicare plans across the country are in crisis," said Art Dunn, interim chief executive officer of St. Joseph. "And, there is no sign that federal Medicare reimbursement rates will catch up to the actual cost of providing care. Like health plans across the country, St. Joseph came to the conclusion that we could not continue the plan."

Because St. Joseph MedicarePlus is a provider-sponsored organization (PSO), St. Joseph Healthcare receives a fixed monthly Medicare reimbursement to cover the cost of providing care to the PSO’s members. Although the reimbursement was adjusted by the Health Care Financing Administration in January, the increase was less than health care inflation and did not meet the cost of providing care. Federal government payments for this type of program in New Mexico currently average between $50 and $100 per member less than the cost of care each month.

The 5,100 members currently enrolled in St. Joseph MedicarePlus may choose to transfer to another managed Medicare or supplemental Medicare plan, or to traditional Medicare. "We are saddened by the necessity of this decision," said Janice Torrez, president of St. Joseph MedicarePlus. "But, we are committed to working with our members to ensure this transition is as smooth as possible."

As part of its decision to exit the managed Medicare market, St. Joseph will also cease to administer the QualMed Senior Security Medicare health plan on December 31, which will affect 2,100 members. "St. Joseph Healthcare’s decision is unfortunate, but understandable," said Jerry Landgraf, president of QualMed and Health Care Horizons. "Low Medicare reimbursement is a problem for every health plan in the country."