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Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
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2
Symposium Summary

Structuring Accountability for Medicare: Looking at a Continuum of Options1

One of the federal government's major reasons for encouraging growth in Medicare managed care is to give Medicare beneficiaries a choice of health plans that people in the private sector already enjoy. Widening choice for Medicare beneficiaries, however, involves oversight and protection trade-offs. The challenge is how to develop a structure for accountability and consumer choice in a changing health care market.

The health care market emerging today is significantly different from that of the fee-for-service system with which most Medicare beneficiaries are familiar. In the fee-for-service system, consumers have relied to an extent on the professionalism of providers and on government standards in making their choices. Premium costs generally have not played a key role in the elderly's health care purchasing decisions.

A new paradigm is forming, however, in which efforts are being made to restructure the Medicare program around mar-

1  

Unless otherwise noted, the material in this section is based on a presentation by Lynn Etheredge.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

TABLE 2-1 Health Plan Choices for Private Sector Employees, 1993

Number of Health Plans Offered per Establishment

Weighted by Number of Establishments (%)

Weighted by Number of Employees (%)

1

76

48

2

16

23

3

5

12

4

2

6

5 or more

1

11

 

SOURCE: Preliminary tabulations from the 1993 Robert Wood Johnson Foundation Employer Health Insurance Survey conducted by the RAND Corporation (courtesy of Stephen Long).

kets. In this new system, government attempts to structure the market by encouraging competition, consumers have an array of health care options to choose from, and health plans share responsibility for accountability with the government. This accountability is reinforced by the power of the consumer to choose and to change plans. In the Medicare-restructuring proposals developed by the 104th Congress and the Clinton Administration, elderly beneficiaries would have choices beyond the current fee-for-service, traditional Medigap, and risk-based HMO options. These choices will include preferred provider organizations (PPOs), unrestricted fee-for-service health plans, and high deductible plans combined with medical savings accounts. Under the new paradigm most Medicare beneficiaries would have more health plan choices than the majority of today's private sector employees (Table 2-1).

To ensure accountability and informed purchasing for beneficiaries in a restructured Medicare program, a continuum of structural and oversight options can be considered. These range from (1) a more active government role, to (2) strengthening the role of the consumers so that they are better equipped to exercise choice, to (3) strengthening professional influences and advancing the science base for clinical effectiveness and outcomes. Each of these directions involves trade-offs.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

More Active Government Role

Options for a more active government role in helping Medicare enrollees include raising the standards for entry into the Medicare health plan market. As the regulator of Medicare managed care, HCFA currently institutes fairly tight health plan entry requirements and other specific rules to ensure that "bad actors" do not enter the HMO risk market, such as the 5050 rule, which ensures that a plan already has experience providing services.2 Medicare also requires that for a risk-based contract, at least 5,000 of the plan's prepaid capitated members must be enrollees from the private sector. The minimum requirement drops to 1,500 for rural HMOs. Some Medicare reform proposals have sought to reduce these minimum requirements to increase the number of plans that would be available to enter the Medicare market.

As an alternative, under the Federal Employees Health Benefit Plan (FEHBP) the federal government contracts with all health care plans that meet participation requirements, and consumers make their own coverage decisions (Butler and Moffitt, 1995). This more inclusive purchaser approach may cause confusion among some beneficiaries, since they have had little experience with managed care plans and there is evidence that they may need assistance evaluating information. To alleviate some confusion and anxiety, the federal government could consider another option, that of assuming a more active purchasing role. As a large purchaser, the federal government could adopt some of the best practices of current large employers or purchasing alliances, which often negotiate actively with plans and require certain quality and service performance guarantees. In this capacity government could force competition among plans and then choose a subset of plans that offer the best choices for enrollees. This approach would afford Medicare

2  

The 50-50 rule requires that for all HMOs in which Medicare beneficiaries enroll, at least half of the members must consist of non-Medicare and non-Medicaid beneficiaries. This is meant to provide assurance that Medicare HMOs do not constitute a perhaps second class of care for the elderly and disabled populations. A number of analysts believe the HMO accreditation requirements developed by NCQA may make the 50-50 rule less essential.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

beneficiaries the greatest protections. The farther government moves along the continuum of tightening controls and acting as a purchasing agent, however, the greater the likelihood of loss of flexibility and competitiveness in the market, and thereby a reduction in the number and types of health plan choices.

In discussing the role of government in holding the system accountable, a fundamental question that arises is whether this is government purchasing or, in fact, purchasing by elderly beneficiaries. For example, is the government a patron allowing some choice on the part of its clients, or is the government effectively providing people with vouchers and providing beneficiaries with the freedom to decide how to use those vouchers?3

The unique leverage of a $180 billion program such as Medicare needs to be considered, however. By virtue of its sheer size and as a public purchaser, the federal government has the power to profoundly influence the market and to drive health plans from the market by setting conditions of participation extremely high and then deciding the plans with which it wants to do business. Historically, government has not acted in this capacity.

Strengthening the Role of Consumers

Strengthening the role of consumers would require providing them with sufficient relevant information about health plans to help them decide whether to join a managed care plan and, if so, how to choose a plan that meets their needs. To provide better information, one must understand what information consumers want, how they want to obtain that information, and what kinds of information they should know.

Here, opportunity may lie in strengthening ombudsperson-type organizations. Today, many employee benefits offices serve an ombudsperson function in which they assist employees with complaints or other health plan issues that may arise. Senior

3  

At the symposium, Mark Pauly indicated that the level of choice afforded Medicare beneficiaries is affected by whether or not Medicare beneficiaries are viewed as owning the benefits awarded to them.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

citizens' groups and counseling organizations could serve such a function.

In the case of Medicare, a network of ombudsperson offices operating in areas with significant Medicare health plan enrollments could provide assistance to Medicare beneficiaries trying to decide which health plan to enroll in and could also help those who have complaints about their health plans. The ombudsperson's duties could range from investigating patient complaints, to monitoring marketing presentations, to helping beneficiaries obtain needed services. HCFA currently supports health insurance counseling programs funded through federal grants to states. Although generally well-respected, these programs tend to be small and underfunded operations.

Strengthening Professional Influences

Along the professionalism continuum, further effectiveness and outcomes research could be encouraged and funded to bolster the scientific clinical basis for managing care and establishing guidelines that would narrow variations among procedures and practices. Other options that might be considered and reflected in proposed legislation are requirements that health plans meet high government standards in order to be accredited organizations for participation as a Medicare health plan. Another option would be for Medicare to develop best-practice benchmarks and other management purchasing techniques that promote high standards for competing health care plans.

Three Key Issues

Three areas will affect the debate on where to place accountability:

  1. What agencies do elderly citizens trust to protect their interests and to hold the system accountable?
  2. How strong is the information base and how adequate are consumer skills?
  3. In the new environment, can professionalism continue to be relied on to help the elderly exercise choice wisely and appropriately?
Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×
Trust

In recent times the public's trust in many institutions has plummeted (Washington Post, 1996). Americans have lost confidence in the federal government and virtually every other major national institution. The public does not appear to trust insurance companies, health plans, or businesses. So the following question can be asked: In an era of growing cynicism, what sector and what institutions can be relied on to maintain protections and to be accountable?

Patients as Consumers

Evidence indicates that many among the elderly and disabled populations have difficulty choosing among health plans. Questions regarding how well the elderly population is equipped to choose a health plan in today's market, as well as in the future, when the market will have been fine-tuned, will prove to be important in determining accountability. Although the next generation of elderly will be more familiar with managed care arrangements, the vast majority of current Medicare beneficiaries face a very steep learning curve.

Professionalism

Many health care analysts argue that professional judgments on medical care should be relied on to determine what care is necessary and appropriate. There is evidence, however, as suggested by Wennberg, 4 that wide variations in major medical procedures exist across the country. Given these variations and the lack of clinical evidence supporting the use of many procedures, can the public rely on members of the medical profession to tell them what a good plan is or who is practicing good

4  

The Dartmouth Atlas of Health Care in the United States, created by a team of researchers led by epidemiologist John E. Wennberg, is a comprehensive study detailing the geographic distribution of health care resources in the United States. Released in January 1995, the study indicates that wide variations in health care services, procedures, and cost reimbursements exist across the country.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

medicine? The role of professionalism is further challenged in today's health care marketplace by the increasing use of capitation payments, which creates incentives on the part of providers to limit the number or the cost of health care services being delivered.5

Ensuring That Traditional Medicare Remains a Viable Option

Since Medicare beneficiaries in general are apprehensive about change, steps need to be taken to ensure that the traditional Medicare fee-for-service system remains a viable option for them. The 30-year-old Medicare program could benefit from some changes so that it becomes as much a competitor as managed care organizations in the new health care system.

Symposium participants advised the committee that the Medicare fee-for-service system should be held up to the same standards as any new Medicare managed care option. In an environment where there is increasing pressure on managed care systems for accountability, there needs to be comparable accountability in fee-for-service plans. If the quality and service indicators in both fee-for-service and managed care plans are the same, then both types of plans will be comparable. This will also allow Medicare beneficiaries to make a better informed choice.

One symposium presenter expressed the view that in 10 or 20 years it is unlikely that both fee-for-service and managed care systems will be options at similar prices.6 The incentives for both of these systems are so diverse that it would be difficult to be a physician or hospital operating simultaneously in each environment. Furthermore, there is great potential for adverse risk selection. If health plans attract the healthier Medicare enrollees, the sicker, more costly population will remain in the traditional Medicare fee-for-service system. The costs within that system would escalate and beneficiaries may find themselves facing higher costs, as well as reduced numbers of physi-

5  

Material presented by Robert Berenson.

6  

Material presented by Robert Berenson.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

cians willing to provide services to them. In that environment physicians themselves are in a position to risk select since they can determine which patients may fit better in a risk arrangement or a traditional Medicare fee-for-service plan.

To avoid adverse risk selection, attention needs to be given to better risk adjusters, and an even greater focus must be placed on educating Medicare beneficiaries about their choices. HCFA currently has at least a dozen risk adjuster projects in development, including predictive and concurrent models.

Structuring Choice: a Look at Model Programs7

An assessment of the leading purchasers that currently offer their employees a choice of health plans shows that these organizations take a variety of approaches to how they structure choice for their workers and the processes that they put in place to facilitate choice. The thresholds of participation that they set for health plans also vary a great deal. In some instances many plans in the marketplace may meet the threshold criteria, and in other instances only a very few may be able to meet the criteria.

Purchasing coalitions or cooperatives help expand the limited choices that are typically available to workers employed in small businesses. These alliances generally provide their members with extensive, comparable information that enables them to make informed choices. Many purchasing coalitions go a step further, however, in that they negotiate with health plans for the best premiums and options and then select a number of plans on this competitive basis, in effect eliminating the need for their members to be as discriminating as they might otherwise have to be.

Often such organizations develop additional criteria to assist them in deciding which plans they will offer to their enrollees. The objective of some organizations is to offer plans with a variety of benefit structures, including fee-for-service plans in

7  

Unless otherwise noted, the material in this section is based on presentations by Elizabeth Hoy and Richard E. Curtis.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

addition to managed care alternatives. If an organization chooses only to offer managed care plans to its members, it may offer plans with different options and benefit levels. These organizations also differ greatly in the degree to which they negotiate price.

However, evidence from a variety of these leading purchasers and purchasing alliances—such as Xerox, Edison International, the Health Insurance Plan of California, the Connecticut Business and Industry Association, and the Cooperative for Health Insurance Purchasing in Denver, Colorado—demonstrates that they all place importance on the practice of creating a level field on which individuals can compare health plans. The comparable information provided by these organizations usually includes details on plans' benefit designs and features, the different types of plans that are being offered, the geographic areas they cover, and other specific information.

The information provided can be either extensive, as in the case of Xerox, in which the company provides a report card about participating plans, to minimal, as in the case of the Cooperative for Health Insurance Purchasing in Denver, which offers a single trifold brochure with comparative charts. Some organizations go as far as providing superdirectories that list and describe every provider in the community and the plans in which they participate, together with such information as the languages spoken in the office and board certification of a plan's physicians.

Even with the best information on price, plan performance, and benefits covered, however, consumers can still find it difficult to compare plans and coverage. This is why many purchasing organizations have adopted standardized benefit designs for plans.

Many purchasers set a basis for the comparison of plans' benefit design that can be either broad or specific. For example, some organizations define different copayment levels and detail the inclusions and exclusions in various health plans. On the other side of the spectrum, Xerox, for example, does not define, line for line, the covered services in their plans' benefit designs, but requires that participating plans cover all medically necessary services. The company provides criteria for the range of services, facilities, and treatments that should be available.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

These organizations also try to create a level playing field by providing enrollees with an objective source of information, such as a customer service center, structuring an open enrollment process, and providing comprehensive information on which people can base their choices. Finally, they hold health plans accountable for their performance, often by establishing certain standards or performance criteria during the contracting process. The plans must submit data and information to the purchasing organization or the employer, and that information is used to evaluate a plan's performance. Often, an independent party is hired to evaluate consumer satisfaction and to review grievances.

Case Study of CalPERS8

The California Public Employees' Retirement System (CalPERS) has close to 1 million members and offers an example of a government agency that has been able to take a strong purchasing role while ensuring quality. When CalPERS first began the process of negotiating with health plans, CalPERS considered restricting the number of plans that would be available to its members. The theory was that a multitude of health plans was not necessary if four or five could do the job. Upon further assessment, however, all legally licensed plans that met the standards set forth for quality and fiscal solvency were invited to participate.

CalPERS decided not to use its power in the marketplace to set tight controls on the market. Instead, CalPERS set high standards, focused on providing information to consumers, and let the health plans in the market compete. The agency uses a number of proactive procedures and checks and balances to ensure accountability by:

  • requiring all health plans to be licensed to do business by the California Department of Corporations;
  • gathering data from the plans on cost, performance and service, as well as externally driven data;

8  

Material provided by Tom J. Elkin.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×
  • verifying provider access, to ensure that there are adequate numbers of providers to serve members of specific geographic areas;
  • requiring a standard benefit design that uses a standard definition for each benefit;
  • collecting and publishing performance and cost data in quality report cards, incorporating Health Plan Employer Data and Information Set (HEDIS) data;
  • managing and monitoring customer service through an ombudsperson program; and
  • monitoring and tracking complaints and grievances and how they are resolved.

This information enabled CalPERS to provide comparisons among plans and to negotiate better premiums. It also put the agency in a position to determine which plans it wished to continue doing business with in the future.

Evidence from Minnesota and Edison International on Structuring Choice for Retirees9

Evidence from Minnesota and Edison International demonstrates that factors other than comparability of health plan benefits must be considered when structuring choice for retirees. Experience in these areas indicates that any entity dealing with this population must be prepared to devote considerably more time and resources to providing this group with information. For example, materials must be tailored to retirees to ensure that they can understand the information being conveyed. This includes printing materials in larger type and often targeting written materials to the appropriate reading level.

Multiple communications vehicles are necessary for this group, including open enrollment sessions, videotapes, toll-free telephone numbers, mailings, presentations, and one-on-one meetings. Other tools such as up-to-date directories listing the primary care physicians participating in a plan and plan options are also helpful.

9  

The material in this section is based on remarks by Kathleen P. Burek and Barbara L. Decker.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

Retirees are frequent users of health care. The status of their health and health care in general are major focuses in their lives. For many, medical care is part of a social experience. Given this, they require that a great deal of time explaining and reviewing these issues be devoted to them.

Issues of cost are a major factor in exercising choice for the Medicare population. A survey of retirees in Minnesota found that retirees were not willing to make any changes in their insurance coverage if it meant an increase in costs. At the same time they did not want any benefits reductions.

Are Medicare Beneficiaries Different?10

Medicare beneficiaries are extremely diverse. They include the ''young old," who are vibrant and healthy, and those who are in greater need of health care services, many of whom suffer from chronic diseases. Although the members of this population are diverse, in general they can be classified as "vulnerable" for a variety of reasons, including their greater need for health care services and the higher health care costs that they incur.11

The needs of the Medicare population are different from the needs of many of those already enrolled in managed care organizations. Although managed care organizations traditionally have focused on prevention and acute-care services—targeted to a relatively healthy membership—the elderly are more often in need of chronic care or services for the disabled. In 1989 the most prevalent chronic conditions for people over age 65 were arthritis, hypertension, hearing impairment, heart disease, cataracts, deformity or orthopedic impairment, chronic sinusitis, diabetes, visual impairment, and varicose veins (U.S. Senate Special Committee on Aging et al., 1991).

10  

Unless otherwise noted, the material in this section is based on presentations by Joyce Dubow, Peter Fox, and L. Gregory Pawlson.

11  

There are different interpretations of vulnerability in the Medicare population. The definition highlighted in the text is based on views by Joyce Dubow. The National Academy of Aging identifies vulnerable groups to include frail elders, older women, minorities, rural elders, and the growing numbers of oldest old individuals (National Academy on Aging, 1995).

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

The Medicare population is also diverse in terms of its experience with and expectations of managed care. Particularly for older beneficiaries (ages 75 to 85), in most markets managed care is a foreign concept, a system that they have never dealt with and may not understand. Medicare beneficiaries in their 60s, however, are more likely to have had experience with the managed care system through their workplace. That level of experience will continue to grow since managed care is now the dominant mode of delivery of health care services for the population age 65 and under.

How Medicare Enrollees Have Fared in HMOs

Given the different needs of the Medicare population, the question is: How have Medicare beneficiaries fared so far in the managed care delivery system? Since the incentives that exist in managed care differ from those in the fee-for-service system, there are concerns that managed care organizations may be more focused on efficiency and profits than on developing a system of care that meets the needs of the elderly. In general, HMOs save money by reducing the use and intensity of health care services. Some researchers note that the use of managed care systems may be the best way to ensure coordinated care for this population.

To date managed care organizations have had little experience providing services to the Medicare population or treating older and sicker patients: just 10 percent of Medicare beneficiaries are enrolled in managed care risk plans. That is beginning to change, however. From 1995 to 1996 the number of Medicare beneficiaries enrolled in managed care risk plans grew by 26 percent. Each month close to 70,000 new Medicare beneficiaries enroll in a managed care plan. It is a market in which HMOs are beginning to concentrate their resources. As of February 1996, 189 plans nationwide had Medicare risk contracts, and approvals for another 48 plans were pending before HCFA. Eliminating the 50-50 rule and the requirement that there be 5,000 commercial enrollees before a plan can get a Medicare risk contract would spur further growth. Most employers these days are not very interested in contracting with new HMOs, and when they do, they want to make sure that a broad market area

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

is covered. This makes new entry within the 50-50 requirement very difficult.12

HMOs with large numbers of Medicare beneficiaries are concentrated in a few geographic areas, a trend that is changing. Of the 10 percent of Medicare beneficiaries who have enrolled in managed care plans, more than 50 percent have been enrolled in risk-based HMOs in just two states, California and Florida. Another 11 percent are enrolled in HMOs in Arizona and New York. Within the total Medicare population, 16 percent reside in California and Florida combined and 8.5 percent live in New York and Arizona combined (unpublished data provided by the Office of the Actuary, Health Care Financing Administration, May 30, 1996).

The studies that have investigated how well vulnerable populations fare in managed care plans have produced mixed conclusions. Most of the discussion around this particular topic continues to take place in a "fact-free" environment.13

HMOs differ significantly in their ability to meet the needs of the elderly. Some do not differentiate between elderly and nonelderly enrollees in terms of service delivery. Others have implemented services specifically targeted toward seniors. These include screening for frailty, geriatric assessment, specialized case management, and enhanced primary care for long-term nursing home populations. Some managed care plans offer additional services and benefits not covered by traditional Medicare such as respite care, home inspections, physical adaptations for the home, relationships with community-based social service programs, support programs for people who are newly widowed, and group clinics for people with chronic illnesses.

Several studies have found that whereas overall satisfaction and outcomes for beneficiaries in fee-for-service plans and HMOs are similar, HMO enrollees appear to be relatively less satisfied with quality of care14 and physician-patient interactions and

12  

Point made by Peter D. Fox.

13  

Point made by Peter D. Fox.

14  

The Institute of Medicine's 1991 report Medicare: New Directions in Quality Assurance defines quality of care as, "the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge."

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

more satisfied with costs in managed care plans compared to indemnity plans (Miller and Luft, 1994). Take the following example of joint pain and chronic arthritis, which are common conditions for many Medicare beneficiaries. A study comparing Medicare beneficiaries with chest and joint pain in risk HMOs with their counterparts in fee-for-service plans found that those in the HMO were less likely to be referred to a specialist and less likely to receive follow-up care. Although the outcomes were similar, the HMO enrollees experienced less alleviation of joint pain (Clement et al., 1994).

Other studies indicate that HMOs are not as proficient in some areas. A study conducted by Shaughnessy et al. in 1994 found that most home health care outcomes for individuals in fee-for-service plans were better than those for individuals in HMOs. HMO costs for home health care were significantly lower than the home health care costs incurred by fee-for-service plans. The approach taken by many HMOs was one of maintenance as opposed to rehabilitation or restoration.

Several studies, however, indicate that HMOs do some things very well. For example, the Group Health Cooperative of Puget Sound practices population-based medicine, an approach to providing clinical care, especially for patients with chronic conditions. The plan identifies enrollees by such characteristics as age, sex, health status, health complaints, and disease diagnoses. Once the subgroups have been identified, specific services and programs are developed for them.

Most of the studies assessing how Medicare enrollees have fared in managed care plans have involved staff and group model HMOs, which are different from the current and emerging independent practice associations, PPOs, and provider service networks. Several key studies have looked at a variety of HMOs, however (Miller and Luft, 1994; Brown et al., 1993b). The managed care environment and health care delivery models will continue to change and evolve. Given this, the fact that managed care has had little experience with the elderly, and the fact that there is little conclusive evidence on how managed care organizations manage and coordinate care for the frail elderly, there may be a need for studies to determine areas in which managed care does result in real improvements for the elderly

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

population. There may be a need to identify and carve out populations with special needs within the larger Medicare managed care infrastructure. 15

Steep Learning Curve and Disenrollment

Despite a lack of clear evidence as to the effectiveness of managed care in dealing with the Medicare population, it is clear that enrollment in Medicare managed care plans is growing, and there is no evidence that this growth is going to subside. In this area, the Medicare program is on a steep learning curve. As experience with managed care grows and the learning curve begins to flatten out, current problems may be worked through. However, new problems may arise if the pressure to reduce overall Medicare program costs leads to rationing or significantly affects plan and provider behavior.16

Until there is more documented experience, the Medicare population needs to be assured that they can disenroll from a managed care plan if they are not satisfied. The freedom to disenroll is especially important for the members of this population since they are unfamiliar with managed care and do not have experience dealing with this system. In the long run, such assurances of easy and rapid disenrollment may not be necessary since many new Medicare enrollees will already have had experience with managed care.

Although Medicare enrollees can now disenroll from any plan on a monthly basis, there is still concern on the part of some beneficiaries that they cannot see another doctor at all (or only with an additional charge) or leave a plan immediately if they are dissatisfied. Furthermore, there is now discussion of changing the provision to call for an annual lock-in period.

One way to curb disenrollments is to focus on providing enrollees with as much information as possible up front so that enrollees understand how the plan works, what their expected costs will be, the benefit structure, how out-of-plan care is handled, and what situations constitute an emergency. The

15  

Point made by L. Gregory Pawlson.

16  

Point made by L. Gregory Pawlson.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

plan's responsibilities and the members' rights need to be fully outlined in terms that are easily understood. For example, it has been proven that any written information is most effective if it is at a sixth-grade reading level.17 This education process needs to occur before an enrollee joins a specific health plan. Studies indicate that the plans with the lowest rates of rapid disenrollment spend a great deal of time educating potential new enrollees up front. 18

According to analysts, high disenrollment rates indicate a likely misunderstanding of a plan's features (Rossiter et al., 1989). If a misunderstanding has occurred, HCFA now permits retroactive disenrollment for people who misunderstood the HMO lock-in requirements and received needed care from an out-of-plan provider. Retroactive disenrollment, especially in cases involving beneficiaries with cognitive impairments, can be an especially important feature. In this case HCFA will pay the charges for services provided during the unintentional HMO enrollment. HCFA is also in the process of creating a system that would allow Medicare beneficiaries to disenroll through an on-line HCFA computer service instead of having to go through the HMO.19 There have been reports that consumers have into difficulty or delays when trying to process their disenrollment with the plans themselves (U.S. Senate Special Committee on Aging, 1995).

According to a speaker at the symposium, health plans have strong incentives to educate new enrollees as much as possible. The cost of marketing is so high that plans cannot afford a high rate of disenrollment. The average cost of acquiring one new member can be in excess of $500.20 HMOs are also keenly aware of the fact that the best advertising is word of mouth and personal recommendations, so they would want to avoid any negative impressions caused by too many disenrollments. Consumer choice and competition are meaningless if the consumer is confused.21

17  

Point made by Elizabeth Hoy.

18  

Point made by Helen Darling.

19  

Material presented by Kathleen M. King.

20  

Point made by Peter D. Fox.

21  

Point made by Shoshanna Sofaer.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

What Information Do Medicare Beneficiaries Want and Need?22

Before Medicare beneficiaries can make an educated decision regarding managed care, they first must understand the Medicare fee-for-service program. Then they need to know how managed care works. Without a clear understanding of how both of these delivery systems operate, Medicare beneficiaries will be ill-equipped to make informed decisions about their own health care. Once they understand the various benefits or characteristics of each program, they can move to the task of choosing among the myriad plans and benefit packages available to them.

Numerous studies indicate that adults of all ages have a poor understanding of their health insurance coverage until the time that they become ill and need services (Mechanic, 1989; Pemberton, 1990). Many elderly beneficiaries do not know that Medicare is a program run by the federal government, and many are not aware that managed care is an option. HCFA currently mails each Medicare beneficiary a brochure approximately 3 months before the new enrollee's 65th birthday. The brochure explains the Medicare program, Medigap insurance, managed care options, and other private insurance coverage that might be available to the beneficiary. Anyone interested in more information on managed care can also request a copy of the Medicare Handbook and another HCFA brochure entitled "Medicare Managed Care Plans," which discusses how managed care works, enrollment issues, how to select doctors and hospitals, the advantages and disadvantages of HMOs, and disenrollment and appeals procedures (Cronin, 1996). Beneficiaries can also call a toll-free telephone number to see if an HMO exists in their area.

Despite these sources of information, many people still are not clear on how the program operates. Several studies indicate that Medicare beneficiaries have a limited understanding of their benefits. They are more aware of the services most often used, such as physician care and prescription drug coverage, but

22  

Unless otherwise noted, the material in this section is based on presentations by Susan Edgman-Levitan, Shoshanna Sofaer, and Lucy Johns.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

are less aware of infrequently used services like hospital and nursing home care.

In addition to not fully understanding Medicare, most people—not just Medicare beneficiaries—do not understand the concept of managed care and all of its variations. It is difficult to make decisions about managed care when consumers do not know the difference between their managed care options and their fee-for-service options.

Comparisons between the two systems are even more difficult given that little information about care in the fee-for-service system is available to consumers. Under the fee-for-service system, the consumer (patient) selects a physician or service. If that consumer is not happy with the choice or if the physician provides less than satisfactory care, it falls to the consumer to take appropriate action. In the case of a growing number of HMOs, there are concerted efforts to assess quality and to help enrollees understand the meaning of quality by presenting report cards on measures particularly relevant to elderly beneficiaries. This information and other indicators that consumers find useful in evaluating health plans would be just as helpful to them in evaluating physicians in the fee-for-service system. 23

The Importance of Comparability

Without a clear picture of how managed care works there is great potential for dissatisfaction with managed care.24 Managed care represents a new paradigm for doing business, and consumers need to be educated about the potential benefits of this new system. It has to be made clear that managed care should not be regarded as the current fee-for-service system but with a richer benefit package and the same freedoms. The simplified paperwork, added benefits including prescription drug coverage, and reduced out-of-pocket costs come at a price. In exchange for these benefits, enrollees may be limited as to the physicians whom they can see or the services that will be covered.

23  

Point made by Marcia A. Laleman.

24  

Point made by Marcia A. Laleman.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

Understanding how this new paradigm works will also help Medicare enrollees understand that their current fee-for-service primary care physician may operate differently in a managed care network. They may not get the same degree of individual attention from their customary physician working in a network. The incentives for the physician under a fee-for-service system are different from those for the physician under an HMO, in which the goal of the HMO is to make certain not only that coordinated, appropriate care is given but also that costs are controlled.25

Information That Interests Medicare Enrollees: Specific Plan Information 26

In general, Medicare beneficiaries are most interested in information about how their plan works, how much it will cost them, if their physician is in the plan, and what benefits are covered. As shown in Table 2-2, the types of information in which Medicare enrollees are interested range from information on quality, to service, to accessibility and choice. In terms of hospital care, they want to know if their preferences will be respected, how much information they will be given, how well their care will be coordinated, if they will receive emotional support, how their physical comfort needs will be met, and what will happen to them when they leave the hospital and return home.

In terms of ambulatory care, their concerns are centered around issues of access. Will they have access to the physician whom they choose or to specialists when needed? Will they be able to afford that physician's services? How long does it take someone to answer the phone, and how long does it take to get an appointment? They also want to know what will happen when they get to the doctor's office. How much information will they receive? What will the testing procedure be? And what follow-up activity can be expected?

Medicare beneficiaries are also interested in the overall quality of care and how satisfied they will be with the services pro-

25  

Point made by Diane Archer.

26  

Material presented by Susan Edgman-Levitan.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

TABLE 2-2 Typology of Information Likely to Be of Interest to Medicare Beneficiaries

Structural Information

 

  • Premiums and copayments
  • Ratings of the hassle factor associated with paperwork
  • Brief summary of contractual arrangements with providers: incentives to reduce utilization
  • Medical/loss ratio of plan
  • Comparable information for fee-for-service plans
  • Description of grievance and disenrollment process Benefit Package
  • Description of standard benefit package
  • Coverage for special concerns of the elderly: prescriptions, foot care, home care, long-term care, other supplemental coverage Quality
  • Accreditation status
  • Percentage of board-certified physicians
  • Patient reports and ratings of care for all members and for members over age 65

 

  • Member services, including member support, choice of doctor and hospital, prior approval process, restrictions on referrals for specialty care
  • Access: appointment waiting times, visit waiting times
  • Access to and choice of primary care physicians and specialists
  • Communication/interpersonal skills
  • Coordination of care
  • Information and education
  • Respect for patient preferences
  • Emotional support

 

  • HEDIS and other technical measures appropriate for a Medicare population: mammography rates, cholesterol screening

 

SOURCE: Susan Edgman-Levitan and Paul D. Cleary. "What Information Do Consumers Want and Need: What Do We Know About How They Judge Quality and Accountability." Paper prepared for the IOM study Choice and Managed Care: Assuring Public Accountability and Information for Informed Purchasing by and on Behalf of Medicare Beneficiaries.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

vided. Several areas of specific concern include prescription drug coverage, foot care, home care, and long-term-care issues and what happens to their coverage when they, for example, move to Florida for the winter.

More importantly, however, the Medicare population wants to know how others like themselves—with the same conditions and of the same socioeconomic status—fare within a given health plan. For example, they want to know the quality of care that someone with arthritis can expect within a certain plan and will likely not be as concerned with that plan's outcomes in obstetrics.

Full Disclosure27

Although Medicare beneficiaries may express interest only in the specific information that they deem relevant to their current health conditions or service preferences, there is a great deal of information that they may not know exists and that could have an impact on their decisions when choosing between fee-for-service and managed care plans or when choosing a particular managed care plan.

To ensure informed choice there is a certain level of information that should be made available to all consumers, whether or not they have expressed an interest in obtaining such information. This information runs the spectrum from quality-of-care

27  

Point made by Lucy Johns.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

"report cards," to the incentives driving doctors within health plans, to financial solvency information involving a plan, to disenrollment rates in a given area. Beneficiaries need to understand a plan's responsibilities and their rights as members—not only their rights to appeal decisions but also their rights to access to quality care in a timely manner.

Furthermore, although plans may provide a wide range of information, they may not be providing comprehensive information. In other words, they may not elaborate on areas that are often open for interpretation by the consumer. For example, in the California marketplace, officials are concerned that plans are not providing enough information to members regarding what exactly constitutes emergency care, how much coverage enrollees can expect when they seek care outside of an area covered by their plan (if they need care when traveling), and under what circumstances enrollees can negotiate referrals to specialists. 28

There are questions regarding just how much information consumers need. Some consumer advocates argue for the provision of data on the satisfaction of people who have been involved in a grievance process or the satisfaction rates for those who suffered major medical illnesses. Others argue for consumer information on profits or compensation for chief executive officers. Although some say that this level of information could be irrelevant and overwhelming for the consumer, others argue that interested consumers are capable of processing this kind of information (Rodwin, 1996). Medicare consumers want, need, and have a right to a variety of information. If consumers do not understand some of the information provided, insurance counseling groups, such as the ones operated by United Seniors Health Cooperative, can help them understand and interpret it.29

Other areas of disclosure involve the performance of a health plan in terms of both quality and service. Although plans generally provide extensive information on covered benefits, costs, and required copayments, little information is available to con-

28  

Comment by Lucy Johns.

29  

Comment by Priscilla Itzcoitz.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

sumers regarding quality. Without information regarding quality it is difficult for consumers to determine the value of their benefits. Several participants observed, however, that quality may be assessed differently by consumers than by clinicians and purchasers and that more work needs to be done to develop indicators that are particularly relevant and useful to individual elderly consumers.

Information regarding disenrollment rates, appeals and reversal rates, board certification, the training and experience of a plan's doctors, and a detailed participating provider list are also important. Provider lists can be misleading, however. Often, lists include physicians whose panel of patients may be closed or who can accommodate only a few new patients. Some providers are dropped from plans after open enrollment periods end. Some plans may list certain centers as participating providers, but they may only cover such services as open heart surgery at one of these centers and nothing else. This is referred to as the marquee effect.

Beneficiaries and advocates for the elderly express concern that physicians in managed care plans may be in a conflict-of-interest situation in which they are wearing two hats: patient adviser and manager of care and costs. Given the increasing numbers of physicians taking on this dual role and the fact that many Medicare beneficiaries rely on their physicians for advice and protection, Medicare beneficiaries may need to know of noncriticism clauses or "gag rules" between plans and providers. So-called gag rules prevent physicians from criticizing or questioning a plan's rulings. There is concern that physicians may not advise their patients about procedures if those procedures or treatments are not covered by the plan.30

30  

U.S. Healthcare as well as a number of other health plans recently have dropped provisions in their physician contracts that relate to limitations to speak freely with patients. At least six states have enacted legislation preventing health plans from utilizing "gag rules," or anticriticism provisions, which prevent a physician from disclosing financial incentives that may affect patient care. In addition, a bill has been introduced in Congress, H.R. 2976, the "Patient Right to Know Act" that bars restrictions on physician-patient communication in HMO contracts. As of the third week of July, 1996, the bill had nearly 100 cosponsors.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

How Do You Get the Information Out Effectively?31

A thorough review of the literature indicates that Medicare beneficiaries use all types of media and do so often. Television is the most widely used medium among adults age 55 and older. Eighty-four percent of adults over age 50 read a newspaper daily, and 70 percent are magazine readers. Perhaps one of the least-used media is radio, with just 20 to 25 percent of the adult radio-listening audience consisting of those over age 55.

The Medicare population is not homogeneous, however, and should not be stereotyped. Education, age, income, and living arrangements all affect the types of media that people use. Someone with more education is more likely to use a variety of media than someone who did not complete high school.

In marketing, focus groups have determined the value of segmenting messages according to groups of people who demonstrate consistent attitudes, values, and behaviors. Among Medicare enrollees, focus groups have identified four different groups: proactive adults who seek information, faithful patients who do what the doctor tells them, optimists who think they will never get sick, and the disillusioned who do not trust anyone.

In addition to media, there are myriad other sources of information: handbooks and guides produced by public agencies such as HCFA; libraries; information kiosks; videotapes; on-line computer services such as SeniorNet or Retirement Living Forum; community meetings; information, counseling, and assistance (ICA) programs; nonprofit organizations such as AARP; one-on-one counselors; private organizations; employers; and physicians.

It has been found that forums in which Medicare beneficiaries can have one-on-one personal contact carry the most weight and influence with this group. A series of 15 focus groups conducted in the fall of 1993 for the Kaiser Family Foundation found that the biggest problems with Medicare had to do with communication and coverage (Frederick/Schneiders, 1995). In

31  

Unless otherwise noted, the material in this section is based on a presentation by Carol Cronin.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

another series of focus groups, participants indicated that they would like to be able to call a toll-free telephone number to obtain answers to their questions by a knowledgeable operator (Mellman, Lazarus & Lake, 1994). Although Medicare beneficiaries trust and turn to family and friends for information, this group wants unbiased information from all other sources. Studies have found that seniors overwhelmingly express interest in obtaining information about health plans through one-on-one counseling, personal presentations, or group presentations where they would have the opportunity to ask questions afterward (Research Triangle Institute, 1995).

Given that health plans often are the source for much of the information that beneficiaries receive regarding these plans, a distinction needs to be made between marketing and education. There needs to be a place where a Medicare beneficiary can go for unbiased, objective information, preferably where a beneficiary can talk to someone in person or via the telephone.

Role for Information Facilitating Organizations

Since Medicare beneficiaries expressed a preference for receiving unbiased information through sources other than the health plans themselves or even through employers or government, symposium participants indicated the usefulness of third-party organizations. These third-party organizations could include organizations that focus solely on education or groups that combine an education function with their selected purchasing power, such as voluntary purchasing cooperatives.

Information, Counseling, and Assistance Programs32

Since 1992 HCFA has funded ICA programs to help Medicare beneficiaries obtain unbiased information about public and private health insurance alternatives. Through individual counseling, group seminars, and written materials, the programs provide information about Medicare, supplemental insurance products, long-term-care insurance, managed care plans, and

32  

Material provided by Diane Archer.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

eligibility for Medicaid and other public programs. Program staff are also trained to help participants complete claims forms and file appeals. Currently, all states have ICA programs, which are staffed through a combination of paid staff and volunteers.

Funding for these organizations, however, has always been limited and is an area of concern. Communications programs require substantial resources. One potential source of funding for these centers or similar counseling programs would be the Medicare program itself, in which consumer education funds could be deemed a priority.

Nonprofit Counseling Organizations

Other organizations, such as the United Seniors Health Cooperative, operate counseling programs to educate seniors about their health care options. The health insurance counseling program for United Seniors receives calls and letters from seniors all over the country. 33

Enrollee Satisfaction and Consumer Protections34

National surveys on consumer satisfaction in Medicare HMOs have been conducted, but the information they offer is limited, and there are concerns that they are not useful indicators of the quality of care that an HMO provides.

An early study comparing the satisfaction of Medicare beneficiaries in HMOs with that of beneficiaries in traditional fee-for-service plans showed that a high percentage—about 80 percent—of both groups were "very satisfied" with their health care overall (Rossiter et al., 1989). In general, satisfaction surveys of HMO members indicate that they are more satisfied than their counterparts in fee-for-service plans with the out-of-pocket expenses and the reduced paperwork in managed care plans. They are less satisfied with access to care, referrals to specialists, and physician choice.

33  

Material presented by Priscilla Itzcoitz.

34  

Unless otherwise noted, the material in this section is based on a presentation by Patricia Butler.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

Approximately 20 percent of those who participate in satisfaction surveys report being dissatisfied.35 A number of separate studies not focused specifically on the Medicare population indicate that people who are chronically ill or who have poor health status are more likely to report dissatisfaction with their HMOs, indicating that they have trouble obtaining services and getting referrals to specialists (The Robert Wood Johnson Foundation, 1995). People who were disabled or who have end-stage renal disease have also reported being much less satisfied with their ability to obtain access to needed services and specialists (Office of Inspector General, U.S. Department of Health and Human Services, 1995a). They also reported that they waited longer for appointments than they did when they were in fee-for-service plans and that their physicians were less likely than physicians in fee-for-service plans to explain what they were doing. Enrollees in managed care plans have expressed a variety of concerns about obtaining access on the telephone, long waiting times for appointments, and physicians who do not spend enough time with patients and who do not appear to be sympathetic.

Surveys of managed care plan enrollees indicate that dissatisfaction with plans often arises from a lack of understanding about how the plan operates or the services that it covers. The most common areas for confusion involve the limits of the network, such as restrictions on out-of-plan use, requirements for obtaining referrals, and payment for services from nonplan providers as well as emergency care that is obtained out-of-plan.

Satisfaction ratings are subjective, however, and are of limited value. Focus group studies conducted by the Picker Institute indicate that many consumers are not interested in overall satisfaction information, because they do not know how to interpret it or what biases it reflects. Ratings would be more useful if they were combined with reports on care, in which the person describes the actual care received or notes exactly how much

35  

According to Medicare data for 1994, 90 percent of those who chose an HMO remained enrolled in HMOs. Six percent left for reasons not related to quality or satisfaction (e.g., moving outside the plan's service areas). Only 4 percent changed to fee-for-service coverage.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

time he or she had to spend in a waiting room. This detailed information allows for greater comparisons rather than simply providing information on whether one person's personal expectations were met.36

The Agency for Health Care Policy and Research through its Consumer Assessment of Health Plans Study is working to identify the different types of consumer satisfaction information that should be made available and how that information should be distributed. The project's goal is to develop appropriate consumer satisfaction instruments and then to make certain that the information collected is comparable across health plans. The project will consider what literacy level the information should be targeted to and the level of cognitive skills people need to process the comparative information.

From another perspective, in 1994 the PPRC undertook a survey using data from the Medicare Current Beneficiary Survey to look at Medicare beneficiaries' general perceptions of access to and satisfaction with care. The study and its supplements address beneficiary perceptions of access to care and include information on utilization of services, health insurance coverage, access to health care services, satisfaction with care, expenditures, and demographic data, among other issues (Physician Payment Review Commission, 1996). As a follow-up to the study, PPRC has contracted with Mathematica Policy Research, Inc. to develop and conduct a survey to monitor beneficiary access to and satisfaction with services in the Medicare managed care program.

Disenrollment

Current evidence indicates that the disenrollment rate among Medicare beneficiaries in Medicare risk contracts is about 5 percent. A 1993 survey conducted by the Office of the Inspector General of the U.S. Department of Health and Human Services showed that Medicare beneficiaries most often cited the following four reasons for leaving an HMO:

36  

Material presented by Susan Edgman-Levitan.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×
  • not liking the choice of primary HMO doctors,
  • premiums and copayments were too expensive,
  • dislike of going through the preliminary HMO doctor to get medical services, and
  • desire to use the doctor that the beneficiary had before joining the HMO (Office of the Inspector General, U.S. Department of Health and Human Services, 1995b).

According to the report of the Office of the Inspector General, beneficiaries who are more likely to disenroll perceive that an HMO is more interested in containing costs than providing the best possible care. Those more likely to disenroll also reported problems obtaining access to care.

A 1989 study comparing Medicare HMO enrollees with enrollees in fee-for-service plans found that about 18 percent of the Medicare HMO enrollees disenrolled within a year and a half. More than a quarter of those who disenrolled within 3 months misunderstood the nature and limitations of the HMO. About half of those disenrolling expressed dissatisfaction with the care and the lack of physician continuity (Rossiter et al., 1989).

There is evidence that some dissatisfied enrollees do not leave HMOs simply because they cannot afford to. A recent Office of the Inspector General report found that although 84 percent of enrollees had no plans to leave their HMOs, 16 percent (an estimated 150,000 beneficiaries) either planned to leave or wanted to leave but felt that they could not. They cited the following reasons: the HMO was the only way to afford the health care that they needed, medicine was too expensive outside the HMO, they could not afford non-HMO doctors, they could not afford private health insurance, and they were not eligible for Medicaid (Office of the Inspector General, U.S. Department of Health and Human Services, 1995b).

Consumer Protections

The potential for quality coordinated care for the Medicare population is good if a variety of safeguards can be established for consumer protection. A critical safeguard is supplying consumers with trustworthy information that enables them to make

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

informed choices about managed care. There is also evidence that information does make a difference.37

Beyond that, safeguards can be established in several areas, including the setting of standards that address marketing, grievance and appeals procedures, disenrollment allowances, definitions of emergency care, geographic access, and referral processes. Standards such as the 50-50 rule already incorporated in the Medicare program are one form of protection.

Standards

Many states already apply licensure and standards requirements, yet licensure requirements have not necessarily been found to guarantee quality or afford consumers protection. HCFA officials, however, point to the effectiveness of standards at helping to improve quality of care, citing the standards that are now applied to nursing homes. Symposium participants indicated that standards and regulations, such as those applied to the nursing home industry, might be necessary in the Medicare managed care market to avoid abuses. If standards are set too low or if oversight and enforcement actions are weak, abuses and scandals such as those in Florida with Medicare managed care could arise.38

Standardization may help consumers to make better choices in a complex and increasingly competitive health care market. As an example, the federal government overhauled the Medigap

37  

At the symposium, Shoshanna Sofaer referred to a study that she conducted in 1986, the Health Insurance Decision Project. The project provided Medicare beneficiaries with information to help them compare traditional Medicare, a variety of Medigap policies, and Medicare HMOs. The information provided in the study led those participating to drop duplicative coverage—which was a large problem in the Medigap market at that time—to spend less on premiums and led more of them to join managed care organizations. The project demonstrated that information can make a difference in behavior.

38  

In 1992 and 1993, the General Accounting Office found serious quality problems (i.e., delay in treatment, treatment not competent or timely, denial of access) in many of the risk contract HMOs in the Florida Medicare market. The Florida market contains 19 percent of all Medicare HMO enrollees (U.S. General Accounting Office, 1995b).

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

insurance program in 1990 by creating a system of standardizing plans, labeled A through J, approved for marketing to Medicare beneficiaries. This reduced major disreputable marketing practices but brought about a hodgepodge of clumsily written plans whose features were virtually impossible for Medicare beneficiaries to comprehend (Kramer et al., 1992). Since the managed care market for Medicare beneficiaries is growing rapidly, there is potential for confusion, especially since managed care itself is also changing and more plans are offering variations, such as point-of-service options. One symposium participant suggested that national standards for Medicare—whether fee-for-service or managed care plans—would ensure that the care that Medicare beneficiaries receive from state to state does not vary. This would also ensure that they receive the same standard of care as they enter Medicare from a private system and if they move from a fee-for-service system to a managed care system.39

Marketing

Marketing and education should be viewed as two separate functions. The purpose of marketing is to get people to enroll in a plan, and the purpose of consumer education is to give consumers the information they need to make a choice. Although marketing may provide some useful information, the fundamental intent of marketing is different from that of unbiased education. Since Medicare beneficiaries lack knowledge about Medicare and the choices available to them, it is important to safeguard Medicare beneficiaries against potential marketing abuses.

Although Medigap insurance currently allows door-to-door marketing, symposium participants expressed concern that door-to-door marketing by Medicare managed care plans should not be allowed since the elderly, more than any other group, rely on personal, one-on-one interactions for most of their information. The potential for providing misleading information can be great in a private setting, as indicated by past door-to-door marketing experiences with the Medicaid program.

39  

Point made by Ellen R. Shaffer.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

Banning all undesirable marketing practices might not be feasible because of First Amendment issues. There are ways to mitigate potential problems, however. Some voluntary purchasing cooperatives use agents and brokers to address the small group and individual markets. They train and certify the agents and brokers who are licensed to sell their product before they are permitted to sell the product. The purchasing cooperative provides the information that the agents and the brokers use, and the information is bound together so that agents or brokers cannot pull out only the information that they would like the consumer to see. This packet of information outlines all the health plan options that a consumer has.40

The purchasing cooperatives also review and approve any marketing materials that participating plans wish to distribute. Furthermore, the compensation for agents is structured so that an agent's commission does not vary according to which plan a consumer chooses. The amount of the commission also is disclosed to the payer.

To ensure that Medicare beneficiaries are not dependent on the information provided through marketing, it is important that they have access to other sources of unbiased information. Competing against the marketing resources of commercial companies, however, may prove to be an issue. Although HCFA may spend $10 million on consumer education and all of the states combined may spend the same amount, health plans devote far greater amounts to marketing activities.

Grievance and Appeals Procedures

The majority of appeals filed with HCFA by Medicare beneficiaries are over disputes over payment for services provided by nonplan providers and emergency care (Network Design Group, 1995). Studies have documented problems with access to rehabilitative services, especially following hospitalization. HMOs may deny authorization for short-term skilled nursing facility services, home health care, and physical, speech, or occupational therapy, even though these services are covered un-

40  

Material presented by Richard E. Curtis.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

der Medicare when they are deemed medically necessary or will improve a person's functional status. Disputes may arise if an HMO has a more narrow definition of medical necessity.

In the case of managed care, expedited grievance and appeals procedures are important. Under the fee-for-service system, grievances and disputes generally occur after a service has been rendered and the health plan is refusing to cover the service. Under the managed care system, the dispute generally occurs before a service or specialty referral is rendered. In some instances a denial of care could prove to be life-threatening. In some cases by the time that an appeal is decided in favor of an enrollee, a service such as short-term rehabilitation may no longer be of benefit to the patient.

Medicare beneficiaries need to be informed about their appeal and grievance options before they enroll in a health plan. They should understand the different classifications of and processes for (1) an information request, (2) registering a complaint, (3) filing a grievance, and (4) making an appeal. A 1994 survey of Medicare risk plans showed that 25 percent of beneficiaries did not know that they had the right to appeal their HMO's denial to provide or pay for services (Office of the Inspector General, U.S. Department of Health and Human Services, 1995b).

The Changing Role of HCFA41

Medicare has traditionally acted more as a bill payer than a private sector purchaser. In the past HCFA has made little effort to inform Medicare enrollees of their choices regarding health care providers, treatment options, or competing private health plans. There have been several exceptions, including the disclosure of nursing home inspections, public listing of high-mortality hospitals, mailings containing preventive care information, and some use of centers of excellence arrangements. HCFA is taking a more active role in trying to expand consumer choice by focusing on information needs and treating

41  

Unless otherwise noted, this section is based on a presentation by Judith D. Moore.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

beneficiaries as their primary customers. The agency is in the process of revising its Medicare handbook and establishing an on-line help service for beneficiaries. The Office of Managed Care is also working on charts comparing both managed care and fee-for-service Medicare. The charts, which have been tested with focus groups, will be issued in three phases, with the first phase comparing benefits.42

Symposium participants indicated that HCFA could take a number of steps to help safeguard the interests of Medicare beneficiaries, including the establishment of uniform, national standards for plans, in addition to requiring external reviews of quality. HCFA could also take on greater quality assurance responsibilities.

HCFA currently conducts primarily paper reviews of the organizations with which it has contracts, in addition to biannual, on-site reviews of every managed care organization. As part of this process HCFA reviews the operational areas of a plan, including enrollment and disenrollment, information systems, quality assurance, appeals, and provider payments. This review process has not been able to stop problems. Often, what is written on paper is not necessarily accurate. For example, in the 1980s abuses occurred when plans signed enrollees, yet no providers were available to provide care.

HCFA is also paying greater attention to quality indicators and is working with NCQA to modify HEDIS to incorporate measures more germane to the Medicare population. As part of that project, HCFA plans to provide side-by-side comparisons using basic administrative data, consumer satisfaction data, and eventually, quality data. The information will be published and available on the Internet.

In another major initiative to improve the accountability of HMOs, HCFA, along with the U.S. Department of Defense and FEHBP, has joined a group of large employers through the Foundation for Accountability to develop performance measures that will assist purchasers and consumers in choosing health plans.

Historically, HCFA has been successful at obtaining and analyzing volumes of data, but it has been less successful at

42  

Material presented by Kathleen M. King.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

making those data available to consumers and has also been reluctant to use those data to sanction plans that were not performing satisfactorily (U.S. General Accounting Office, 1995b). Although HCFA does have the authority to freeze enrollment or to discontinue a contract, it is difficult to take action when a plan may be serving thousands of enrollees. Nevertheless, HCFA could benefit from transitioning to a more efficient administrative model.43

The collection of information on quality, such as HEDIS and performance measures, is one way to hold plans accountable. In negotiating contracts, purchasing organizations are able to build certain quality and performance measures standards into the contracts. Measuring quality is a new science, however, and there are questions as to whether the current quality measurements are the most appropriate ones. How such measures will need to be translated and modified to be truly useful to consumers in exercising choice is also an issue. For example, low-birth-weight measurements on report cards can be affected by socioeconomics, education, and nutrition, not just the care that is received through a health plan. But in the absence of any other measurements, symposium participants agreed that HEDIS and the quality measurements offered by NCQA represent a promising start.

State-Federal Partnerships

The entire oversight role, however, does not need to fall to HCFA. Although the federal government sets standards for federally qualified HMOs, competitive medical plans, Medicare risk contracts, and Medicaid HMOs, states also have as part of their insurance regulations laws that require minimum operating standards for managed care firms.

However, one symposium presenter challenged the notion of federal-state partnerships in this arena, preferring to use the analogy of two different train tracks that sometimes run in parallel lines but that often cross each other.44 The original HMO act was directed to the general population, and now new laws

43  

Comment by Garry Carneal.

44  

Comment by Lynn Shapiro Snyder.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

and protections must be put into place to ensure accountability for different groups with different requirements-elderly, chronically ill, and poor individuals-not to mention rules and regulations for the new managed care entities that continue to evolve. Efforts must be made to ensure that all of these new regulations achieve the desired result and do not become duplicative, too complex, and too burdensome.

Another presenter reminded the symposium that one size does not fit all when it comes to regulations.45 For example, Utah's population, infrastructure, and political culture are very different from those of Florida. In many parts of the country the federal government is viewed as ''Mean Joe Green, where you gather up the whole back field and throw them out until you find the guy with the ball." Another way this approach has been described relates to the old grandmother who yells out to her grandchildren, "Put on your coat, I'm cold." In defining the role of government, one needs to assess who should be protected and what they need to be protected against.

Proposed Legislative Changes to the Medicare Risk Program: A "Report Card"

From the perspective of Medicare beneficiaries and with a focus on issues of accountability and informed purchasing, the committee asked David Kendall to reflect on the various themes and findings that had been highlighted during the symposium and how those related to the Medicare reform provisions introduced as part of the Balanced Budget Act of 1995 and the Clinton administration's proposal. How much of what had been said and suggested during the symposium was reflected in the various provisions? What were the areas of concordance, and where were there substantial differences? What areas or issues, if any, were highlighted at the symposium but not addressed in the various proposals?

To fulfill his assignment, David Kendall presented a report card on eight major aspects of the Congressional Medicare reform provisions of the Balanced Budget Act of 1995 and the

45  

Material presented by Dixon F. Larkin.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

Clinton administration's proposal for reform: (1) benefits/plan types, (2) licensing (regulatory oversight), (3) enrollment, (4) consumer information, (5) purchasing style, (6) plan payments, (7) communications/education strategy, and (8) chronic care/disclosure. Kendall assessed each of these areas from the perspective of whether the legislation had adopted one of three approaches: government knows best, leave it to the market, or government policy is to correct market deficiencies. In the process of developing the report card Kendall used prior focus groups (with other audiences), together with the commissioned papers and conference presentations to identify the eight key issues required for informed policy making. The results are listed in Tables 2-3 and 2-4.

According to the report cards, the U.S. Congress and the Clinton administration have taken a regulatory (government knows best) approach to setting the conditions of participation. This approach requires plans to comply with a hefty range of rules and regulations regarding access, provide adequate ser-

TABLE 2-3 Medicare Legislation Report Card: Medicare Reform Provisions of the Balanced Budget Act of 1995 (H.R. 2491)

Issue

Government Knows Best

Leave It to the Market

Government Policy Is to Correct Market Deficiencies

Benefits/plan type

 

X

 

Licensing

X

 

 

Enrollment

 

 

X

Consumer

 

 

 

Information

 

 

X

Purchasing style

X

 

 

Plan payments

X

 

 

Communications/ education strategy

 

X

 

Chronic care/ disclosure

 

X

 

Total (%)

37

37

25

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

TABLE 2-4 Medicare Legislation Report Card: The Clinton Administration's Proposal

Issue

Government Knows Best

Leave It to the Market

Government Policy Is to Correct Market Deficiencies

Benefits/plan type

X

 

 

Licensing

X

 

 

Enrollment

 

 

X

Consumer

 

 

 

Information

X

 

 

Purchasing style

X

 

 

Plan payments

X

 

 

Communications/ education strategy

 

X

 

Chronic care/ disclosure

 

X

 

Total (%)

50

25

25

vice, be fiscally solvent, and adhere to internal as well as external quality assurance requirements. Similarly, payments to plans are not based on competitive bidding or contracting, but continue to use government-set payments, based on modifications to the current AAPCC system and, in the case of the congressional legislation, based on further national per capita growth limits.46

With regard to purchasing style, both proposals support the FEHBP approach in which the federal government offers all plans that meet the conditions of participation and do not permit more selective and active purchasing based on performance, a strategy used by many employers to ensure accountability and value.

Both proposals would generally let the market prevail in the range of plan choices to be offered to beneficiaries. The Clinton administration's proposal, however, would not allow medical

46  

HCFA is currently testing a number of competitive pricing approaches under its demonstration authority.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

savings accounts or private fee-for-service plans to be offered. In addition, both proposals rely on the market, not the government, to develop a public education strategy to familiarize beneficiaries with the opportunity and responsibility for informed decision making. The proposals rely on the plans to disclose financial incentives to providers and methods for making coverage and utilization decisions, issues that may be of special relevance for those with major or chronic illnesses.

Both proposals use government policy to correct market deficiencies in the enrollment process. They would structure enrollment to discourage beneficiaries from switching between levels of coverage based on anticipated health costs, a problem known as adverse selection. Congress would phase in over 2 years an annual open enrollment period with a 12-month lock-in to prevent continuous enrollment and disenrollment. (New enrollees in managed care plans would have a 90-day grace period for disenrollment.) The Clinton administration's proposal would shift the responsibility for enrollment from the health plans to the Office of the Secretary of the U.S. Department of Health and Human Services to discourage adverse selection and "cherry-picking" caused by direct selling. Both proposals would correct market deficiencies as well in the area of consumer information. They both contain a number of rules and requirements regarding information on benefits, premiums, and quality indicators that would allow Medicare beneficiaries to make comparisons.

The overall "scores" from the report cards on each proposal's philosophical approach (as indicated in Tables 2-3 and 2-4) are remarkably similar despite the sharp rhetoric from each side on their differences. The difference in scores is attributable only to the inclusion of medical savings accounts and private fee-for-service plans in the legislation passed by Congress and vetoed by the President. Although much rhetoric has been sounded regarding letting the market prevail, the legislation preserves a significant role for government in most aspects of the Medicare reform provisions.

In keeping with the "report card" theme, three areas of the Congressional legislation were identified as "needing improvement." First, the Balance Budget Act's provisions provide little enlightened thinking about getting consumers more actively

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×

engaged in decision making with an emphasis on reliable, comparable, and objective information. The "communications" and "education" provisions of the bill rely heavily on marketing as a vehicle for getting information to beneficiaries and not enough on building an infrastructure for helping consumers to make informed, responsible choices. Second, the bill does not demand sufficient requirements for disclosure on how financial and coverage decisions are made by individual health plans. This issue has particular importance for beneficiaries, many of whom suffer from chronic conditions. Third, the legislation falls short in setting standards for competition based on quality and performance rather than on costs.

Suggested Citation:"2 Symposium Summary." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
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Medicare beneficiaries are rapidly moving into managed care, as attempts to restrain the growth of this costly entitlement program progress.

However, advocates for patients question whether the necessary information and structures are in place to enable Medicare consumers to select wisely among private-sector managed care options. Improving the Medicare Market examines how to give Medicare beneficiaries the same choice of health plan options enjoyed in the private sector—yet protect them as consumers and patients.

This book recommends approaches to ensuring accountability and informed purchasing for Medicare beneficiaries in an environment of broader choice and managed care—how the government should evaluate and approve plans, what role the traditional Medicare program should play, how to help to elderly understand their options, and many other practical matters.

The committee discusses the information requirements of Medicare beneficiaries and explores in detail how best to respond to their special needs. And it examines the procedures that should be developed to provide the necessary protections for the elderly in a managed care system.

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