About SCAN

Social HMO Survives Rough Patch

A Medicare-designated social HMO that took a financial tumble in its mission of providing enhanced healthcare benefits and in-home serv- ices to frail seniors in four Southern California counties has managed to seriously shape up.

In a two-year turnaround that involved some layoffs,a greater focus on service and renegotiation of provider contracts,SCAN Health Plan has turned a $21 million loss in 2001 into a $115.7 million profit for fiscal 2003 and is looking at a healthy future.

"We had gotten into some serious difficulty and had to make some tough decisions,"said CEO David Schmidt,who joined the Long Beach- based nonprofit HMO two years ago and helped guide it through the reor- ganization.

Since November of last year,finan- cial performance has improved dra- matically as the HMO began build- ing an adequte level of reserves.A boost also came from the Medicare Modernization Act,which raised reimbursement rates.

Membership grew from 53,000 in November 2003 to 64,000 as of Octo- ber 2004,and SCAN is preparing to file an application with Medicare and state insurance licensing officials to expand beyond the counties of Los Angeles,Orange,Riverside,and San Bernardino.

SCAN is only one of four social HMOs in the country that offer cer- tain in-home personal care benefits. Some 27 percent of SCAN 's members, or about 17,000,qualify for expanded support services designed to keep them living independently and out of nursing homes.Since the plan 's incep- tion in 1977,amenities such as light housekeeping,personal care,trans- portation,home-delivered meals and caregiver relief have helped more than 25,000 seniors stay in control of where they choose to live,said Schmidt.

Seniors qualifying for the Indepen- dent Living Power program get the full benefits of SCAN 's Medicare Advan- tage members,but are also assigned a case manager to rocure the extra per- sonal help needed for them to live independently.Some of SCAN 's mem- bers also receive their Medi-Cal bene- fits through the program.

"There is no other health plan in our market that offers the range of benefits that SCAN provides to its members,"said Schmidt."What sets SCAN apart is our unique mission to support seniors,living independently, through the combination of medical care coupled with home and commu- nity-based services."

Along with other Medicare Advan- tage plans in the state,SCAN used the increased federal reimbursements for 2004 to enhance member bene- fits.Changes taking effect mid-year included reducing generic drug copays from $10 to $7 for 30-day sup- plies in Los Angeles County and drop- ping $30 premiums to zero in River- side and San Bernardino counties. Reduced premiums of $20 in Orange County will go to zero Jan.1,2005, while Los Angeles County members pay no premiums.

Schmidt said the HMO also has comprehensive disease-management programs for diabetes and congestive heart failure,along with a range of wellness programs.In 2004,all health plan members were sent a book on senior health issues and a 24/7 SCAN on-call line was launched using nurs- es specially trained to deal with senior sensitivity and geriatric concerns.

While the health plan 's rogress looks bright,there is one cloud of uncertainty.Medicare plans to drop the social HMO status that currently provides special funds to SCAN and three other Medicare demonstration programs in January 2008.However, there will be a category of specialty plans that serve a disproportionate share of the frail elderly,and SCAN plans to work with the government to help define those plans.

"Providing services in addition to healthcare is highly valuable to indi- vidual senior members as well as being good public policy," said Schmidt.