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.



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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.

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--> 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.

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--> 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.

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--> 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.

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--> 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: What agencies do elderly citizens trust to protect their interests and to hold the system accountable? How strong is the information base and how adequate are consumer skills? In the new environment, can professionalism continue to be relied on to help the elderly exercise choice wisely and appropriately?

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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).

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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.

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--> 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

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--> 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.

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--> 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

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--> 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.