FIGHT BACK : AARP'S RISKY FORAY INTO THE WORLD OF HMOS.

Byline: David Horowitz 

The American Association of Retired Persons announced recently that it plans to endorse health maintenance organizations (HMOs) that meet its standards for quality health care, cost and member satisfaction. AARP has tremendous credibility with its 33 million members, and its seal of approval would be a rich marketing prize for any HMO that carries it.

Health care is not a new field for AARP. Guaranteeing seniors health coverage was one of the organization's founding goals. AARP already endorses auto, homeowners and Medicare supplemental insurance carriers. Endorsing HMOs is a logical next step. But it's also a risky one for AARP.

In a very real sense, AARP is putting its own reputation on the line. If an approved HMO misbehaves or denies care to a policy holder, even for good cause, that could reflect back on AARP. Will AARP be liable for the actions of the HMOs it endorses? We don't know.

There's also the question of AARP's own financial interests in approving health-care providers. The organization now receives about 38 percent of its annual income from royalties paid by approved insurance carriers. That amounted to $146 million in 1994. Some people in the industry question whether AARP can remain an ``honest broker'' in disputes where its own income is at stake.

This may turn out to be a nonissue. Careful screening should weed out all but the most reliable HMOs. AARP's consulting firm, Health Benefits America, is already doing that, using standards developed by the nonprofit National Committee on Quality Assurance. The threat of losing AARP approval will be a powerful incentive for health maintenance organizations to abide by those standards. AARP can also rely on its own experience dealing with insurance companies. Over the years, AARP has shown that its primary concern is still its members, and not its royalty income.

What moved AARP to go beyond endorsing so-called ``Medi-gap'' insurance policies? In the first place, half of its members are under the age of 65, and thus do not qualify for Medicare and supplemental insurance. Most of its younger members are still working, and seven out of 10 Americans who work for large corporations are now enrolled in HMOs. Helping them choose the right plan would be an invaluable service.

Medicare itself offers HMO care as an alternative to its regular coverage. These plans offer seniors a wide range of additional services not available under Medicare A and B and include most of the benefits of supplemental policies at no additional cost. Here again, sorting through all the advertising claims, comparing HMOs, and choosing the right one can be a daunting task, especially for new Medicare enrollees. AARP's endorsement could make that much easier.

Final plans for endorsing HMOs are still being developed. AARP will accept formal bids from corporations in June or July, and may begin granting endorsements some time next year or the year after. AARP will then promote those plans through its magazine, Modern Maturity, as well as direct mailings to its members. With hundreds of millions of dollars riding on each endorsement, we can expect competing HMOs to put their best plans forward.