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Suggested Citation:"Front Matter." 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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Improving the Medicare Market

Adding Choice and Protections

Committee on Choice and Managed Care: Assuring Public Accountability and Information for Informed Purchasing by and on Behalf of Medicare Beneficiaries

Stanley B. Jones and Marion Ein Lewin, Editors

Office of Health Policy Programs and Fellowships

INSTITUTE OF MEDICINE

NATIONAL ACADEMY PRESS
Washington, D.C.
1996

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

NATIONAL ACADEMY PRESS 2101 Constitution Avenue, N.W. Washington, D.C. 20418

NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.

This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.

The Institute of Medicine was chartered in 1970 by the National Academy of Sciences to enlist distinguished members of the appropriate professions in the examination of policy matters pertaining to the health of the public. In this, the Institute acts under both the Academy's 1863 congressional charter responsibility to be an adviser to the federal government and its own initiative in identifying issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine.

Support for this project was provided by The Robert Wood Johnson Foundation, The Commonwealth Fund, the Kansas Health Foundation, and The Pew Charitable Trusts. The views presented are those of the Institute of Medicine Committee on Choice and Managed Care and are not necessarily those of the funding organizations.

Library of Congress Cataloging-in-Publication Data

Improving the medicare market : adding choice and protections / Committee on Choice and Managed Care : Assuring Public Accountability and Information for Informed Purchasing by and on Behalf of Medicare Beneficiaries, Office of Health Policy Programs and Fellowships, Institute of Medicine ; Stanley B. Jones and Marion Ein Lewin, editors.

p. cm.

Includes bibliographical references and index.

ISBN 0-309-05535-0

1. Medicare. 2. Aged—Medical care—United States—Finance. 3. Managed care plans (Medical care)—United States. I. Jones, Stanley B. II. Lewin, Marion Ein. III. Committee on Choice and Managed Care : Assuring Public Accountability and Information for Informed Purchasing by and on Behalf of Medicare Beneficiaries.

RA413.7.A4I47 1996

362.1′0425—dc20 96-42908

CIP

Additional copies of this report are available from the National Academy Press, 2101 Constitution Avenue, N.W., Box 285, Washington, D.C. 20055. Call 800-624-6242 or 202-334-3313 (in the Washington Metropolitan Area). http://www.nap.edu.

Copyright 1996 by the National Academy of Sciences. All rights reserved.

Printed in the United States of America

The serpent has been a symbol of long life, healing, and knowledge among almost all cultures and religions since the beginning of recorded history. The image adopted as a logotype by the Institute of Medicine is based on a relief carving from ancient Greece, now held by the Staatlichemuseen in Berlin.

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

COMMITTEE ON CHOICE AND MANAGED CARE: ASSURING PUBLIC ACCOUNTABILITY AND INFORMATION FOR INFORMED PURCHASING BY AND ON BEHALF OF MEDICARE BENEFICIARIES

STANLEY B. JONES* (Chair),

George Washington University Health Insurance Reform Project, Washington, D.C.

HARRY P. CAIN II,

Business Alliances, Blue Cross and Blue Shield Association, Chicago, Illinois

GERALDINE DALLEK,

Department of Health Policy, Families USA, Washington, D.C.

HELEN B. DARLING,

Healthcare Strategy and Programs, Xerox Corporation, Stamford, Connecticut

TOM J. ELKIN,

Independent Health Care Consultant, Sacramento, California

ALLEN FEEZOR,

Insurance and Managed Care Programs, East Carolina University Medical Center, Pitt County Memorial Hospital, Greenville, North Carolina

JAMES P. FIRMAN,

National Council on the Aging, Washington, D.C.

SANDRA HARMON-WEISS,

U.S. Healthcare, Blue Bell, Pennsylvania

RISA J. LAVIZZO-MOUREY,

Institute on Aging and Division of Geriatric Medicine, University of Pennsylvania, Philadelphia, Pennsylvania

MARK V. PAULY,*

Departments of Economics and Health Care Systems, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania

Study Staff

Marion Ein Lewin, Study Director

Valerie Tate Jopeck, Research Assistant

Richard Julian, Program Assistant

Ramona Brinegar, Financial Associate (July 1995-February 1996)

Nancy Diener, Financial Associate (March 1996-July 1996)

*  

Institute of Medicine Member.

Suggested Citation:"Front Matter." 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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Suggested Citation:"Front Matter." 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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Preface

As part of the ongoing transformation of the U.S. health care system, there is mounting pressure to reform the $180 billion Medicare program to make it more efficient and to secure its future viability. A centerpiece of current public- and private sector efforts to restructure the nation's biggest social program and to reduce Medicare expenditure growth focuses on expanding health plan options for beneficiaries, with an emphasis on managed care arrangements. A number of studies and surveys attribute the recent slowing rate of spending on health benefits by large employers to the growth of managed care programs.

Although only 10 percent of the Medicare population is currently enrolled in managed care plans, these risk contract programs now appear to be attracting more Medicare beneficiaries. Enrollment more than doubled between 1987 and 1995 and is now growing at more than 25 percent a year.

As major efforts to shift Medicare patients into managed care plans move forward, many experts and patient advocates are concerned whether the necessary information and protections are in place to enable Medicare patients to select an appropriate health plan wisely and to ensure that this group continues to have access to high-quality health care. The potentially daunting scope and speed of the transition by elderly Americans

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

into what for most beneficiaries remains uncharted waters makes the need for high-quality, trustworthy information and accountability particularly critical. Only by laying a sound infrastructure in which individuals can make informed purchasing decisions and in which competition is based on quality performance can the public confidence needed to move Medicare beneficiaries safely and responsibly into a marketplace for choice and managed care be ensured.

Within this context of historical change and major legislative proposals by the 104th Congress to restructure the Medicare program, the Institute of Medicine was asked to appoint a committee that would provide guidance to policy makers and decision makers on ensuring public accountability, promoting informed purchasing, and installing the necessary protections to help Medicare beneficiaries to operate effectively, safely, and confidently in the new environment of greater health plan choice. The Robert Wood Johnson Foundation generously took the lead in funding this project, and was joined by The Commonwealth Fund, the Kansas Health Foundation, and The Pew Charitable Trusts, which also provided funding.

In the fall of 1995, a committee of 10 individuals was appointed to conduct a 12-month study on ensuring public accountability and informed purchasing for Medicare beneficiaries, performing the following tasks:

  • to commission background papers from experts and practitioners in the field that review the literature and synthesize aspects of the leading issues and current policy proposals as they pertain to ensuring public accountability and informed purchasing in a system of broadened choice;
  • to guide, develop, and convene an invitational symposium to (1) examine what is known (or not known) about ensuring public accountability and informed purchasing in the current Medicare program and other health plans, (2) recommend how public accountability and informed purchasing can be ensured for Medicare beneficiaries in managed care and other health plan choices, and (3) discuss options and strategies that can be used to help government and the private sector achieve the desired goals in this arena; and
  • to produce a report that will include the commissioned
Suggested Citation:"Front Matter." Institute of Medicine. 1996. Improving the Medicare Market: Adding Choice and Protections. Washington, DC: The National Academies Press. doi: 10.17226/5299.
×
  • background papers, a summary of the symposium discussion, and recommendations on the major issues that need to be addressed to ensure public accountability and the availability of information for informed purchasing by and on behalf of Medicare beneficiaries in managed care and other health care delivery options.

The committee met twice during the course of this study. In carrying out its charge, the committee recognized that the science-based and peer-reviewed literature in the major areas of the committee's scrutiny is sparse since the field is young and continues to evolve at an unprecedented pace. The state-of-the-art information in this area resides primarily among a large number of private and public purchasers and various other organizations and agencies. With that in mind, the committee constructed a 2-day symposium primarily around real-world experts who could comment on and respond to the available research findings and to current Medicare reform proposals from their well-recognized experiences. Given the committee's broad charge and the many issues that potentially fall under the rubric of ensuring public accountability and informed purchasing in an environment of choice and managed care, the committee had to set some priorities and parameters and provide some caveats regarding its work agenda. These are detailed in the body of the report.

The report is divided into three chapters and 12 appendixes. Chapter 1, an overview, provides the background, context, and parameters of the study. Chapter 1 also outlines how the committee defined and approached its charge and work agenda. Chapter 2 presents highlights from testimony heard at the invitational symposium held on February 1 and 2, 1996, and summarizes the major points made by the authors of the commissioned papers, by the invited respondents, and at the discussion that followed the panel presentations. As a summary, however, this section cannot do adequate justice to the rich and valuable data and information included in the eight commissioned papers found in Appendixes E to L. The information found in the papers contributed significantly to the committee's findings and recommendations.

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Acknowledgments

This study could not have succeeded without the help, guidance, and generosity of a number of organizations and many individuals. This is especially true for a study such as Improving the Medicare Market: Adding Choice and Protections, where new research findings, information, and assessments continue to be developed on almost a weekly basis as part of the ongoing transformation of the U.S. health care system. Whereas it is not possible to mention by name all of those who contributed to the study as it moved from conception to completion, the committee wants to express its gratitude to a number of groups and individuals for their special contributions.

Deep appreciation is extended to The Robert Wood Johnson Foundation for major funding of this activity and to The Commonwealth Fund, the Kansas Health Foundation, and The Pew Charitable Trusts for generous additional support. The committee thanks these sponsors, not only for the support that enabled the Institute of Medicine to undertake this timely and important assignment, but also for their encouragement and interest.

Getting "up to speed" for a new study is always a challenging exercise, particularly when a study is focused on a dynamic and evolving field and has to be completed within a relatively short

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

time frame. A number of organizations and individuals with special interest, recognized expertise, and key responsibilities pertinent to the committee's charge provided invaluable background information and important perspectives.

At the Health Care Financing Administration, thanks go to Bruce C. Vladeck, Kathleen M. King, Jeffrey Kang, Judy Sangle, Deborah Ball, Debbie Thomas, Celeste Newcomb, and several staffers in the Office of Managed Care. Helen Smits did an outstanding job of briefing the committee at its first meeting. Harvey Brook also served as a very helpful resource expert in the early stages of the committee's deliberations.

Janet L. Shikles, Carlotta Joiner, and Sarah F. Jaggar of the U.S. General Accounting Office were enormously helpful in keeping the committee informed about GAO activities related to the themes of this report. Margaret O'Kane and Cary Sennett from the National Committee on Quality Assurance gave generously of their time and expertise to inform the committee on NCQA's activities related to quality and accountability.

The committee greatly appreciated the help and contributions of Lauren B. LeRoy, John F. Hoadley, and Anne L. Schwartz of the Physician Payment Review Commission. Laura A. Dummitt from the Prospective Payment Assessment Commission deserves our sincere thanks as well. Irene Fraser of the Agency for Health Care Policy and Research (AHCPR) was very helpful in sharing with study staff current projects at AHCPR that could inform the committee's task and work agenda.

Shoshanna Sofaer of the George Washington University Medical Center not only played an important role in the study's major symposium, but also provided the committee with invaluable additional guidance and key readings. Catherine M. Dunham from The Robert Wood Johnson Foundation offered important information about the special needs of vulnerable populations in an environment of managed care and enhanced choice. Bettina Experton of Humetrix shared with the committee a number of important study findings on the special needs of the frail elderly in managed care arrangements. Herbert Nickens and Lois Bergeisen of the Association of American Medical Colleges contributed to the committee's understanding of the role of minority physicians in improving care for the underserved.

Suggested Citation:"Front Matter." 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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Michael Hash from Health Policy Alternatives contributed to the success of this project in important ways, given his well-respected knowledge of government programs and the workings of the Congress and executive branch. The committee also acknowledges with gratitude Kenneth Cohen of the U.S. Senate Special Committee on the Aging who, throughout the process, helped keep the committee and study staff current on the ongoing changes to the Medicare reform provisions of the Balanced Budget Act of 1995.

The committee is thankful for the guidance and contributions of Simeon Rubenstein of the Group Health Cooperative of Puget Sound, Deborah Lipson of the Alpha Center, Trish Newman from the Kaiser Family Foundation, Robert B. Friedland of the National Academy on Aging, Michael E. Gluck of the National Academy of Social Insurance, and Louis F. Rossiter from the Medical College of Virginia.

The committee also extends many thanks to Judy Miller Jones and Larry Lewin, not only for the support they gave to their spouses during the duration of this project, but also for lending their own valuable expertise and insights.

Sincere thanks go to all of the participants in the February 1 and 2, 1996 symposium who gave so generously of their time and expertise to help inform and guide this study (Appendix C). An added note of thanks go to Marc A. Rodwin and Lucy Johns for their contributions not only during the workshop but before and after as well. In addition, the committee wishes to express heartfelt appreciation to the authors of the eight commissioned papers (Appendix D). The well-researched and highly informative background papers not only enhanced the committee's understanding of the many dimensions of this complex issue but also represent notable additionals to the literature in this field.

Linda Loranger deserves many thanks for contributing to the write-up of the February symposium and we are indebted to Michael Hayes for his careful editing of the report.

The committee wants to give special thanks to the dedicated and hard-working staff at the Institute of Medicine. Study director Marion Ein Lewin's professionalism and expertise in health policy coupled with her excellent writing skills advanced the progress of the report through its several reviews and revisions. Valerie Tate Jopeck, who served as research assistant,

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

worked closely with the study director on various aspects of the study. She took primary responsibility for coordinating the committee's briefing materials and ably orchestrated the operation of the February 1996 symposium. Program assistant Richard Julian is also to be commended for his diligent administrative support. We are especially grateful to them.

Other IOM staff provided very valuable guidance, both in the areas of substance and process, particularly Kathleen N. Lohr, former director of the Division of Health Care Services, and deputy director Marilyn J. Field. They were always available to answer questions and to offer excellent advice. The committee extends its appreciation as well to Karen Hein for her ongoing interest in, and enthusiastic support of, this study effort. Mona Brinegar and Nancy Diener ably kept us on budget. At a difficult time Claudia Carl graciously and competently helped us to negotiate the complex logistics of the IOM/NAS report review process. Michael Edington guided the report through the editing and production process with skill and aplomb. Sally Stanfield, Francesca Moghari, and Estelle Miller of the National Academy Press were generous with their creativity and expertise.

Finally, the committee would like to thank the chair, Stanley B. Jones, for his outstanding work and deep commitment to the purposes of this project. His tireless dedication to the development of an "un-vanilla" IOM report made participating in this activity both more meaningful and enjoyable. He, in turn, wishes to thank the hardworking, and particularly cooperative and dedicated committee members.

IOM COMMITTEE ON CHOICE AND MANAGED CARE

Suggested Citation:"Front Matter." 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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