Medicare dollars are highly coveted by HMOs these days, and many HMOs with Medicare programs are competing for your business. Deals offering "free" office visits, 100 percent coverage of medically necessary hospitalization, plus eye care, dental and prescription drug benefits seem too good to refuse.

But such packages usually mean very thin profit margins for HMOs. So what assurances do you have that a business with razor-thin margins won't cut corners with your care - or that of your loved ones? While studies show that most older adults in Medicare HMOs are highly satisfied, you'll want to shop carefully.U.S. Health and Human Services secretary Donna Shalala has played a key role in moving Medicare recipients into HMOs in an effort to hold down medical costs. But her efforts to regulate HMOs underscore issues related to quality of care.

HHS has moved to strike "gag" clauses that could restrict doctors from discussing certain options with patients, has limited incentives to control costs that could curtail needed care and has required HMOs to survey for patient satisfaction.

However, in the end, the patient often must be his or her own advocate. Here's a step-by-step process to winnow out the best:

CHOOSE A DOCTOR and medical group carefully. "If you have a great medical group behind you, your care is going to be great even in a lousy HMO," says Jon Friedman, M.D., an internist and geriatrician with Los Angeles-based HealthCare Partners. However, he says, the reverse isn't true. If your doctor won't advocate for you, Friedman warns, find a better doctor.

LOOK FOR A large medical group, years of elder care experience and an "at risk" Medicare setup. ("At risk" means the HMO has given the group a lump sum to care for all of its older adults, and allows the physicians to decide how to allocate the money.) Large groups operating under risk contracts have the resources for extras such as health screening programs, nurse case managers to coordinate care, home visit personnel and transportation.

ASK ALL PHYSICIANS involved in your care which HMO panels they are on and which ones they recommend. If your family doctor and specialist are not with the same HMO, you've got a tough choice to make. Most HMOs require a referral from a primary care physician before you see a specialist and will cover only bills from a member of their HMO. (You'll pay more to go "out of network" to the specialist of your choice.) To learn whether your physician or the HMO will have more control over your care, ask your doctor whether he is empowered to make referrals directly. You also want an HMO that's reasonable and flexible about resolving problems. Look for one with a combination of good doctors and organized, patient-friendly staff.

COMPARE ACCESS. Location of the plan's specialists and wellness programs will be even more important later when you no longer drive. If access seems comparable, find out which plan has geriatricians on board. Although very few Medicare HMOs do, this is an excellent sign that a health plan is committed to quality elder care, says Dr. Christine Cassel, chairman of the department of geriatric and adult development at Mount Sinai Medical Center in New York City.

CHOOSE AN HMO that is operating at a profit. Christy Bell, a senior vice president with Blue Cross and Blue Shield of New Jersey, says pressures from businesses to keep premiums low, competition for enrollees and internal management problems cause many HMOs to operate at a loss. The decisions of a health plan operating in the black are less likely to be unduly influenced by financial losses.

Bell recommends selecting a Medicare HMO with a minimum of 10,000 to 25,000 enrollees in its Medicare risk program rather than in the plan's Medicare and non-Medicare programs. This level of enrollment usually means the plan has the financial resources to systematize care.

LOOK TO OUTSIDE review organizations. The National Committee for Quality Assurance rates HMOs nationwide. Check its Web site (http://www.ncqa.org) to see whether the HMOs that interest you are reviewed. The NCQA rates plans on measures such as quality management, members' rights, physician qualifications and preventive health services. Consumer Reports magazine also evaluates large health plans.

There are many Medicare advocacy groups throughout the country, such as the Center for Medicare Rights in New York and the Center for Healthcare Rights in Los Angeles. You can also contact your local congressman and ask for the aide who specializes in health-care issues for the elderly.

FIND OUT WHAT the HMO has done to prove its commitment to quality senior care. Some plans are taking pains to provide high-quality, compassionate care tailored to the needs of older adults.

The time to experiment with HMOs is now, while you still have the flexibility to opt out of the Medicare HMO within a month if you don't like it. A July 17, 1997, New England Journal of Medicine study found that members of Medicare HMOs in Florida tended to join when they were healthy to take advantage of the benefits. When they got sick, they dropped out to have access to less-restricted hospital benefits. These same enrollees often rejoined HMOs after they recovered.

In the next few years, that flexibility could be gone. Congress is concerned about paying too much to HMOs if they're providing health-care services to only the healthiest senior citizens. This means that if you enroll in a Medicare HMO in 1998, you may have to wait until the open enrollment period in early 1999 to switch. So choose carefully.