Question: Several years ago, in an effort to save money, my wife and I decided to sign up for a Medicare HMO when neither of us had health problems. Although we never got used to seeing different doctors and although we were never satisfied with the service when we did, we continued to stick with the program. Today, we both have chronic health problems, and we just received notice from our HMO that it will be pulling out of the Medicare program in our area. How will this affect us, and what can we do to make sure we are covered? Should we join another HMO?

Answer: Health Maintenance Organizations (HMO's) are the most common type of "Managed Care" health plans that deliver your health care through various networks of participating providers. Although the theory behind "managed care" was to deliver health care less expensively, increased HMO premiums, poor service, and HMO's pulling out of high claims areas call into question the wisdom of this theory.

"Medicare HMO's" (such as the one that is now pulling the rug out from under you and your wife) are HMO's which have entered into contracts with the United States Government under what is called the "Medicare+ Choice program". Through these contracts, HMO's furnish health benefits to those Medicare-eligible individuals who choose to enroll rather than receiving care and benefits under the traditional fee for service Medicare program.

These HMO's were required to let the government know by July 3, 2000 if they would renew their current contracts for 2001.

Initially, Medicare HMO's were only too happy to "cherry pick" healthy seniors who, like you, wanted to save money and were healthy; however, now that the claims are coming in, some Medicare HMO's are running for cover to avoid losses. Others will be increasing their premiums or reducing benefits, or both.

Of the more than 6 million Americans who were covered under Medicare HMO's, you and hundreds of thousands of other senior citizens will have to find new coverage by January 1st, 2001 because Medicare HMO's like yours will not renew their government contracts to serve certain areas of the country.

Basically, your choices are to find another Medicare HMO or go back to being covered under the traditional Medicare program by January 1st of next year.

If you are considering moving to another Medicare HMO to save money, you should first find out 1) whether that plan will be increasing premiums or reducing benefits as of January 1st, 2000 and 2) whether that plan is committed to continuing to stay in your area in the future.

To find out more about your coverage options, you can call 1-800-MEDICARE (1-800-633-4227) or look at information about plan withdrawals at the Medicare website which is located at www.medicare.gov.