Company to Remain a Medicare+Choice Plan in Four States Serving Approximately 172,000 Medicare Beneficiaries

HARTFORD, Conn., Sep 21, 2001 /PRNewswire/ -- Aetna (NYSE: AET) announced today that it will continue to offer its Medicare+Choice plan in 2002 to 172,000 beneficiaries in four states, representing 62 percent of the company's current 277,000 Medicare beneficiaries. The company notified the Centers for Medicare & Medicaid Services (CMS) on Monday, in accordance with federal requirements.

Aetna's Medicare plan, called the Aetna U.S. Healthcare Golden Medicare Plan(TM), will continue operations in 26 counties in California, New Jersey, New York and Pennsylvania.(1)

"While our preference was to continue our current participation level in the Medicare+Choice program for 2002, the convergence of three factors continues to drive down the feasibility of participation," Aetna Chairman and CEO John W. Rowe, M.D., said. "Those factors are persistent double-digit medical cost inflation, a two percent cap (before risk adjustments) on federal Medicare reimbursement increases and limits on the supplemental premiums we can charge.

"As a result, medical costs for the first six months of 2001 have averaged approximately 100 percent of federal reimbursements plus member premiums in the markets we are exiting. When you consider the additional costs of administering the program, this means the program is operating at a loss in those markets.

"The same is true for many other health plans. Clearly, the current funding mechanism for Medicare+Choice needs to be revamped, and we are encouraged by some of the bills that have been introduced in Congress," Dr. Rowe said. "Unfortunately, it does not appear that any changes will occur in the current year."

Aetna will work cooperatively with participating physicians on continuity of care issues for members in active treatment, and will work closely with CMS to help provide a smooth transition for members, either back to Original Medicare or to other health plans that might be available in their market. The company will also work with CMS to provide information to members on how to access additional Medicare-related resources, such as the Medicare Choices Helpline, state insurance counseling programs and the Medicare website (www.medicare.gov).

Aetna is focusing on the process of notifying members affected by the non-renewals, with members receiving their materials by October 2, per CMS requirements.

Aetna is the nation's leading provider of health care and related group benefits, serving 18.1 million health care members, 13.9 million dental members and 11.7 million group insurance customers. Information about Aetna is available at www.aetna.com.

(1) Details of renewal and withdrawal counties are listed below.

Medicare+Choice Renewals by County:

California: 4 counties, Los Angeles, Orange, San Bernardino and Riverside

New Jersey: 9 counties, Bergen, Essex, Hudson, Passaic, Sussex, Union, Monmouth, Ocean and Camden

New York: 7 counties, Queens, Kings, Richmond, New York, Bronx, Rockland and Westchester

Pennsylvania: 6 counties, Philadelphia, Chester and Delaware in Southeastern Pennsylvania; and Allegheny, Fayette and Westmoreland in Western Pennsylvania

Medicare+Choice Withdrawals by County:

Arizona: 1 county, Maricopa

California: 2 counties, San Diego and Kern

New Jersey: 12 counties, Hunterdon, Middlesex, Morris, Somerset, Warren, Atlantic, Burlington, Cape May, Cumberland, Gloucester, Mercer and Salem

Pennsylvania: 8 counties, Bucks, Montgomery, Lehigh and Northampton in Southeastern Pennsylvania; Butler, Beaver, Washington and Lawrence in Western Pennsylvania.

SOURCE Aetna

CONTACT: Media: Jill Griffiths, +1-215-775-6890, or Jillgriffiths@aetna.com; or Investor: Dennis Oakes, +1-860-273-6184, or OakesD@aetna.com, both of Aetna