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SIJmmar~ America's health care system is being transformed at an unprecedented pace. As part of deficit reduction and the call for smaller government, public programs are being downsized, re- organized, and privatized. This call for smaller government comes in the wake of a dramatic revolution that continues to take place in the private health care sector, characterized by the move to managed care, increased vertical and horizonal integra- tion, and new partnerships and relationships among insurers, providers, and purchasers in an increasingly competitive mar- ketplace. All of these changes and new dynamics have placed a special focus on the need to reform the Medicare program to make it more efficient and to secure its future viability. As the govern- ment's second biggest social program, Medicare expenditures grew from $34 billion in 1980 to an estimated $~83.S billion in 1995, representing an annual growth rate of 11.7 percent (Phy- sician Payment Review Commission, 19961. With the inexo- rable upward trend in Medicare expenditures and the aging of the baby boom generation, deepening concern is being expressed about the future solvency of the program and its drain on the federal budget (Board of Trustees, 19961. The U.S. Congress is now intent on slowing Medicare growth and has become con 1
2 IMPROVING THE MEDICARE MARKET vinced that interventions that go beyond the traditional strate- gies of reducing provider payments or asking beneficiaries to pay more are needed. It is widely believed that more attention must be focused on controlling the volume of services used by the elderly to slow the growth in program expenditures. Strategies to reform and preserve Medicare focus on rede- signing elements of the 31-year-old program to reflect some of the major financing and organizational changes revolutionizing the provision of health care services in the private sector. Chief among these changes has been a major influx of the population under age 65 into managed care, viewed by many researchers and policy specialists as holding the potential for providing more appropriate, quality services at costs lower than those of fee-for- service plans. A number of studies and surveys attribute the slowing rate of spending on health benefits by large employers over the past 2 years to the growth of managed care programs. Until recently, enrollment of the Medicare population in managed care programs has lagged the enrollment in such pro- grams in the private sector: about 10 percent of all Medicare beneficiaries are enrolled in managed care, whereas more than 70 percent of the population under age 65 are enrolled in such programs.) After existing for nearly a decade, the current Medi- care risk contract program now appears to be attracting more beneficiaries. Enrollment more than doubled between 1987 and 1995, with the annual growth rate reaching about 25 percent between 1993 and 1994 (U.S. General Accounting Office, 19961. The pressing need to reduce Medicare's rate of growth and to create a more competitive, market-oriented environment for health delivery is resulting in a major emphasis on moving ben- eficiaries away from the current fee-for-service system, in which the vast majority of the Medicare population continues to re- ceive care, into a broad range of managed care and other deliv- ery options, including health maintenance organizations with a point-of-service option, preferred provider options, unrestricted private fee-for-service plans that have utilization review, a net- work of contracted providers, plans that combine insurance with iEnrollment in managed care is growing at approximately 2 percent per year.
SUMMARY 3 a high deductible with medical savings accounts, and plans of- fered by provider-sponsored organizations. In recent years the greatest growth in managed care arrangements for the popula- tion under age 65 has been in preferred provider organization and point-of-service-type networks. The existing fee-for-service Medicare program, which consists of a traditional indemnity insurance arrangement, would remain available. As major efforts move forward to shift Medicare patients into managed care plans, many experts and patient advocates are concerned whether the necessary information and protec- tions are in place to enable Medicare patients to select an appro- priate health care plan wisely and to ensure that this group continues to have access to high-quality care.2 The potentially daunting scope and speed of the transition by elderly Americans into what for most beneficiaries remains uncharted waters makes the need for high-quality and trustworthy information and accountability particularly critical. Only by laying a sound infrastructure in which individuals can make informed purchas- ing decisions and in which competition is based on quality per- formance can there be the public confidence needed to move Medicare beneficiaries safely and responsibly into a market- place for choice and managed care. Among the 37 million Medicare beneficiaries are those with limited financial resources, those with very serious disabling conditions, and those for whom catastrophic medical expenses are commonplace. Medicare spending averaged about $4,000 for beneficiaries in 1993. For the 10 percent of beneficiaries with the highest health care costs, Medicare spent an average of more than $2S,000 per beneficiary. Medicare paid no benefits on behalf of the healthiest 20 percent of beneficiaries (Henry d. Kaiser Family Foundation and Institute for Health Care Re- search and Policy, Georgetown Unviersity, 19951. Understand- ing this variation in expenditures is particularly important in any discussion of expanding capitated managed care coverage 2The Institute of Medicine's 1991 report, Medicare: New Directions in Qual- ity Assurance defines quality of care as, "the degree to which health services for individuals and populations increase the likelihood of desired health out- comes and are consistent with current professional knowledge."
4 IMPROVING THE MEDICARE MARKET for Medicare. If capitation payments are not appropriately ad- justed for health status, over- or underpayments can be quite serious. The incentives to enroll only healthier enrollees or to encourage less healthy enrollees to disenroll may be formidable. Unlike many employed individuals, who have the help of their employers in screening and evaluating their health plan options, most Medicare beneficiaries must rely on their own information and judgment to select wisely. Yet, a recent study found a higher prevalence of inadequate functional health lit- eracy skills, skills needed to function in the health care environ- ment, among the elderly (Williams et al., 19951. For elderly individuals who have the skills required to select health plan options, they often are unable to make effective choices because the variation and array of coverage are confusing (McCall et al., 1986; Jost, 19941. Although the availability of useful and reli- able information is critical for consumer choice, such informa- tion is still in a stage of infancy. Whether or not current Medicare reform legislation eventu- ally becomes law, private industry and the Health Care Financ- ing Administration (HCFA) are poised to lend a big boost to the managed care market for the elderly, a market already showing signs of rapid expansion. In 1994 health maintenance organiza- tion enrollment by Medicare beneficiaries was one of the health care industry's three fastest-growing market lines, in addition to enrollment in the Medicaid program and open-ended prod- ucts. HCFA reports that 70,000 Medicare beneficiaries are en- rolling in managed care plans each month. The current national debate over "brining the market" to Medicare and offering choice in health plans with an emphasis on managed care arrangements stimulated the Institute of Medi- cine to appoint a committee that would provide guidance to policy makers and decision makers on ensuring public account- ability, promoting informed purchasing, and installing the nec- essary protections to help Medicare beneficiaries to operate ef- fectively, safely, and confidently in the new environment of greater health plan choice. Three tasks framed the committee's charge: · ~ · to commission background papers from experts and prac titioners in the field that review the literature and synthesize
SUMMARY 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 (~) 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 background papers, a summary of the symposium discussion, and recommendations on the major issues that need to be ad- dressed to ensure public accountability and the availability of information for informed purchasing by and on behalf of Medi- care beneficiaries in managed care and other health care deliv- ery options. The study was initiated in the fall of 1995 with the expecta- tion that Medicare legislation providing broader beneficiary choice would pass the U.S. Congress before the study was com- pleted. The committee used the Medicare reform provisions of the Balanced Budget Act of 1995 (H.R. 2491) as a template for its work agenda. Although, President Clinton vetoed the final bill, the committee believes that the bill's Medicare reform pro- visions still provide a useful and relevant framework for reform. In carrying out its charge, the committee recognized that the science-based and peer-reviewed literature on 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 arena resides primarily among a number of large private and public purchasers that currently define the field and various other organizations and agencies (i.e., the National Committee on Quality Assurance, HCFA, the Physi- cian Payment Review Commission, the Foundation for Account- ability, and the Agency for Health Care Policy and Research) that have a major interest in and programs directed to this area. With that in mind, the committee constructed a symposium
6 IMPROVING THE MEDICARE MARKET primarily around real-worId experts who could comment on and respond to the available research findings and to the current congressional Medicare reform proposals from their well-recog- nized experiences. The committee also was primarily interested in learning about current best practices in the public and pri- vate sectors as they relate to developing infrastructures for pub- lic accountability, informed purchasing, and competition based on performance. In considering its work and statement of task, the commit- tee had to be mindful of the relatively short time frame within which this report had to be completed and the limited resources available to support the commissioned papers/research synthe- ses and the symposium activity. Given the committee's broad charge and the many issues that potentially fall under the ru- bric of ensuring public accountability and informed purchasing in an environment of choice and managed care, the committee believed that it was important and essential to set some priori- ties, parameters, and caveats regarding its work agenda. They are as follows: 1. The task of the committee was not to judge the value of managed care as a vehicle for providing more appropriate, cost- effective care to Medicare beneficiaries or reducing the rate of escalation in the costs of the Medicare program over time. The committee operated under the assumption that managed care plans will continue to grow and develop and to be made avail- able to the Medicare population. Several members of the com- mittee, however, expressed concern that any balanced appraisal by the elderly population of the potential of managed care to provide better care may be made more difficult for two impor- tant reasons. One, current proposals to restructure Medicare are being viewed by many elderly as a means of financing deficit reduction and achieving other political objectives. Two, in the case of all areas of health in which fundamental change are being proposed, the media tends to focus on areas of discord and contention, contributing perhaps to additional anxieties among the already risk-averse elderly. 2. In looking at the issue of public accountability and the availability of information for informed purchasing, the committee's major focus was the consumer (Medicare benefi
SUMMARY 7 ciary) rather than plans, clinicians, or group purchasers. Much of the current information relating to performance and quality has been developed for these groups and may not be useful or relevant to the Medicare population. 3. The committee was asked to focus its attention on the issue of choice and the number and range of health plans, not the inherent merit or value of individual types or forms of plans to be offered (i.e., preferred provider organizations versus medi- cal savings accounts versus unrestricted fee-for-service indem- nity coverage). 4. Although the committee recognizes the great diversity of the Medicare population, this report focuses primarily on the "mainstream" Medicare beneficiary. The committee realizes that severely disabled individuals and dually-eligible beneficia- ries (Medicare and Medicaid recipients) may need additional protections with regard to public accountability and informed purchasing. It was not possible within the scope of this particu- lar study to reflect adequately on the special and additional information and accountability requirements that may be needed by these groups as they enter a more market-oriented delivery environment. 5. Many of today's elderly are particularly apprehensive about managed care and are concerned about their ability to make informed choices among health plan options. The commit- tee heard evidence that the move to a choice paradigm with an emphasis on managed care represents greater challenges and problems for the current generation of Medicare beneficiaries, particularly the older cohort. With the increasing role of man- aged care, there is every expectation that future Medicare ben- eficiaries will have had considerable experience with this new delivery structure and therefore will be better informed and more comfortable consumers of managed care. 6. The committee did not focus on the issue of risk selection, although it acknowledges that it is a major problem that must be addressed. 7. Although the issues of fraud and abuse, estimated by the U.S. General Accounting Office to be in the range of 10 percent of Medicare health care costs, are a significant problem in the
8 IMPROVING THE MEDICARE MARKET Medicare program, they were outside the mandate of the present study. S. The committee focused much of its work on learning from mode] programs and major purchasers in the private sector, with the full realization that Medicare as a government social insurance program requires, in many important respects, a dif- ferent response. The committee also heard considerable testi- mony from public purchasers including state-based organiza- tions and the Health Care Financing Administration. 9. In defining the parameters and vehicles that can be used to promote public accountability and informed purchasing, the committee recognizes the importance of maintaining the neces- sary flexibility to respond in a timely, appropriate fashion to a dynamic and evolving marketplace. The committee's major charge and responsibility was to pro- vide direction and guidance on how to promote public account- ability and informed purchasing by and on behalf of Medicare beneficiaries in a new market-oriented environment character- ized by choice and managed care. The committee was cognizant that in the new health care marketplace, Medicare beneficiaries as consumers or customers will be given both greater freedom and more responsibility for choosing their health plans and for making many of the important decisions associated with pur- chasing their health care and judging its value, adequacy, and responsiveness. Given the breadth and scope of its charge, the committee recognizes that many of the issues and topics that it addressed will benefit from additional review and analysis as better data and research findings become available. It should also be noted that the committee was carefully formulated to reflect a balance of expertise particularly relevant to its charge. It included two experts from health plans, two individuals from the world of large purchasers one public and one private, two consumer advocates with special expertise in elderly consumers in the health care marketplace, an expert on state insurance laws and regulations, a geriatrician, and an economist who has written extensively on the issue of opening choice and the structure of choice under market conditions. The report is divided into three chapters and 12 appendixes. Chapter i, an overview, provides the background, context, and
SUMMARY 9 parameters of the study. Chapter ~ also outlines how the com- mittee defined and approached its charge and work agenda. Chapter 2 presents highlights from testimony heard at the invi- tational symposium held on February ~ and 2, 1996, and sum- marizes the major points made by the authors of the commis- sioned papers, by the invited respondents, and at the discussion that followed the pane] presentations. As a summary, however, this section cannot do adequate justice to the rich and valuable data and information included in the eight commissioned pa- pers found in Appendixes E to L. The information found in the papers contributed significantly to the committee's findings and recommendations. With these caveats and ruminations, the committee formu- lated its recommendations. RECOMMENDATION 1 All Medicare choicest that meet the standard conditions of participation and that are available in a local market should be offered to Medicare beneficiaries to increase the likeli- hood that beneficiaries can find a plan of value. Traditional Medicare should be maintained as an option and as an ac- ceptable "safe harbor" for beneficiaries, especially those who are physically or mentally frail. Number and Type of Health Plans to Be Offered Su brecommert~atiorts The committee recommends that all Medicare choices that meet the benchmark conditions of participation be offered to beneficiaries. Conditions of participation should be carefully constructed to bear the burden of assuring informed choice by beneficiaries and accountability by health plans for access to 3For the purpose of this report, the term Medicare choices is an umbrella term for traditional Medicare, Medigap insurance, and alternative health plans (including managed care).
10 IMPROVING THE MEDICARE MARKET quality systems of care. All Medicare choices should have to meet common conditions of participation. This policy may result in the marketing of plans with lim- ited appeal and small numbers of Medicare beneficiary enroll- ees over time. The committee recommends that these kinds of plans be tracked over time and evaluated for their potential impacts on risk selections and administrative costs and the ex- tent to which they cause confusion among beneficiaries. The Traditional Medicare Program Su brecommert~atiorts The committee recommends that HCFA, under its demon- stration authorities, accelerate its efforts to identify private- sector purchasing and management techniques that can be adopted appropriately for use by the traditional Medicare pro- gram as an alternative to price reductions and, when possible, to offer additional benefits to maintain the program's value. HCFA's current development of "centers of excellence" for high- technology procedures seems an example of such an adaptation. As indicated elsewhere, it is also critical that risk selection measurement and adjustment technologies be improved for use by traditional Medicare and health plans. As improved technol- ogy for measuring risk selection is developed, HCFA should study the traditional Medicare program's risk pool relative to those of other health plans and assess whether program funding fairly reflects Medicare's risk profile to enable it to offer a prod- uct of competitive value to beneficiaries. The federal govern- ment should also study and pilot test ways to pay health plans more fairly for chronically ill beneficiaries to encourage health plans to invest in and market to those beneficiaries. 4As in other sections of the report, the committee understands the inad- equacy and limitations of current risk adjustment methods and recommends that further research be supported in this critical area. In the meantime, however, practical requirements necessitate that available techniques be used to make bestjudgment decisions.
SUMMARY 11 RECOMMENDATION 2 Enrollment and disenrolIment guidelines, appeals and griev- ance procedures, and marketing rules should reflect Medi- care beneficiaries' vulnerability and lack of understanding of traditional Medicare and Medigap insurance and their current lack of trust in important aspects of alternative health plans. Beneficiary Enrollment and Disenroliment Su brecommert~atiorts The committee recommends a transition period of 2 years from the time that legislation is implemented during which the federal government would continue the current option of per- mitting monthly changes of enrollment by Medicare beneficia- ries. After this transition period, enrollees should be locked into the plan that they have selected for ~ year, with the following exceptions. All enrollees will have 90 days from the time of enrollment in a health plan to disenroll and enroll in traditional Medicare, and newly entitled beneficiaries and beneficiaries who have never before chosen a health plan (i.e., those who have been enrolled in the traditional Medicare program) should have the prerogative of changing plans or rejoining the traditional Medicare program within 90 days. Beneficiaries should be al- lowed to return to their previous Medigap policy with no addi- tional premium costs and with no restrictions placed on preex- isting conditions if they disenroll from a health plan within 90 days and return to the traditional Medicare program. The committee would like to see the federal government encourage plans to offer adequate out-of-area coverage for their enrollees who reside out of the plan's service area for more than 3 months. This can be achieved through interplan reciprocity or point-of-service options.
12 Su brecommert~atiorts IMPROVING THE MEDICARE MARKET Grievance and Appeals Procedures The committee recommends that the existing appeals pro- cess be strengthened, streamlined, and better publicized. Furthermore, the committee recommends that the federal government make available an expedited review and resolution process for Medicare choices (by an agency independent of the health plan and the traditional Medicare program) to review emergency conditions, such as the following: (~) when a situa- tion is life-threatening, (2) when the time involved to review the appeal under the usual process would result in a loss of function or a significant worsening of a condition or would render the treatment ineffective, or (3) when advanced directives or end-of- life preferences are involved. The federal government should carry out this expedited re- view through an independent private nonprofit agency in each area of the country. The agency should review any negative findings with the health plan involved and report to the federal government any recommended changes to improve the plan's performance. The cost of this independent, expedited review process should be covered by the informed Choice Fund (for a more detailed description of this fund, see below). The federal government should be able to assess the costs of these reviews on the health plans when the number of such reviews and nega- tive findings becomes excessive. Health Plan, Medigap Insurance, and Traditional Medicare Marketing Practices Su brecommerldatiorls To promote comparable levels of accountability, the commit- tee recommends that serious consideration be given to having a new entity approve in advance the public information and mar- keting materials used by health plans and by the traditional Medicare program (see p. 241. Additionally, the federal govern- ment should work with state governments to oversee the mar- keting of Medigap policies to individuals in the framework of
SUMMARY 13 the new requirement for a single open season and conditions of participation. The committee recommends that the agents and marketers of health plans and Medigap policies be required to inform Medi- care beneficiaries up front of their commission for the sale of the policy. Unsolicited door-to-door marketing and outbound tele- phone marketing should be prohibited. Rigorous marketing rules of conduct should be required to protect beneficiaries. For example, · retroactive disenrolIment should be permitted if enroll- ment takes place as a result of misleading marketing, · compensation to marketing agents should be tied to re- tention of the enrollee in the health plan, and · retention rates should be reported to potential enrollees by the health plan and by agents. The committee recommends that the federal government define the basic requirements of any marketing presentation by a health plan or Medigap insurance provider, including such items as providing a copy of a brochure or pamphlet that clearly compared standard health plans, a description of the lock-in provision and a discussion of the availability of the beneficia- ries' providers under the plan, and marketing materials in the primary language of the buyer. The federal government should also collaborate with states to ensure consistency in these re- quirements and should be able to effectively sanction health plans and Medigap insurance providers that break the market- ing rules. RECOMMENDATION 3 The committee recommends that special and major efforts be directed to building the needed consumer-oriented infor- mation infrastructure for Medicare beneficiaries. This re- source should be developed at the national, state, and local levels, with an emphasis on coordination and partnerships. Information and customer service techniques and protocols developed in the private sector should be used to guide this
14 IMPROVING THE MEDICARE MARKET effort, and the best technologies currently available or pro jected to be available in the near term should be used. Beneficiary Information Needs for Informed Choice Su brecommert~atiorts In efforts to communicate the information in Box S-l, "Medi- care Choices: Information for Beneficiaries," to Medicare benefi- ciaries, a broad range of mass media and other forms of commu- nication should be used. Emphasis should be placed on providing beneficiaries with easy telephone access to individu- als who can guide them on the use of the materials providing comparisons of health plans and who can provide additional clarification and information on plans and providers. To the degree possible, health plans will be asked to submit informa- tion in a format that will allow beneficiaries or their families to access the information via the Tnternet. To establish trust, a private, nonprofit organization should validate and publish summaries of performance data and make more technical backup data available to beneficiaries and oth- ers who have a reasonable right to know. Beneficiary surveys should be standardized across plans, they should be audited, they should include a representative sample of those who are covered (including by ethnicity), and they should oversample beneficiaries with chronic or disabling conditions. Materials should be adapted for use by those with special physical limita- tions, such as poor vision and hearing. To keep its information as complete and current as possible, this organization should obtain expert advice from national qual- ity and service accreditation organizations in the continuing development of data needs, comparative reports, and surveys for the purposes described above. Medicare Customer Service and Enrollment Center Su brecommert~atiorts The committee recommends that the federal government contract with and oversee a private, nonprofit agency to develop
SUMMARY 15 a state-of-the-art Medicare Customer Service arid Ertrolimer~t Center that would (~) administer a Medicare customer services answer center; (2) develop, collect, and distribute open enroll- ment materials and enrollment data; (3) reconcile enrollment data and payments to plans, including monthly changes and related transactions; (4) provide an evaluation component for the purpose of continual improvement and plan feedback; and (5) contract for regular customer service satisfaction surveys. The Center would strive to offer Medicare beneficiaries na- tional and regional or local access to the types of services pro- vided by the benefits departments of the nation's large employ- ers, building on the re~onal-area work of organizations such as TCA programs. The Center will provide education, counseling, and legal as- sistance and will process complaints, grievances, and appeals from plan members through regional and local agents such as TCA programs. Tt will install a tracking system to report all complaints, grievances, and appeals, and will report this infor- mation to beneficiaries annually and to health plan chief execu- tive officers monthly. Tn carrying out this effort, the Center will take advantage of the most effective and efficient methods of electronic communi- cation, including toll-free telephone communication, on-line com- munications, town meetings, newsletters, and multimedia tech- niques, to provide information about plans and the process of choice that is as detailed as possible. The Center's national, regional, and area activities would be funded by the federal government through the informed Choice Fund (see below). Choice Facilitating Organizations Su brecommert~atiorts The committee recommends that nothing in law or regula- tion should inhibit the development of private organizations whose major purpose is to facilitate choice for Medicare benefi- ciaries, including groups that offer preselected panels of health plans. Although the committee believes that such organizations should be limited to groups that do not have a vested financial
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SUMMARY 17 :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: '''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''~'VP:r~:~ A: :Tl: m PC: :T~: :n ITS In- - -lo- n - ................................................................................................................................ -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:----------------- ~-~:-:-~: -:-: it: Al: it- :-:-- I::: t .: ~:r: : ':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':':' ' 'arm. :':': ':': it: ':'1: . :':1' ':':' :': -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- .-: ap-p-ea-l-s~a-n~g-rl-ev.ance~l-nTorm ~l-o-n~l-n-cl-uu-l-ng -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- -:-:-: -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::: :::::::::::::::::::: :::::::::::::::::: -T~-n-E-~-n-E-c---T-r~m---~l-l^~=`'O---E-n E - l-~-~-lE n=-E -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- E- E-E:-:E-~- E-E:-:E-_-~-:-:-:-E:-E:-~:E-:-~:-I:-:-:-:~:~:~-:-:~-:-~-:~-: :-: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :::::::::::::: ::::::::::::::::::: :::::::::::::::::::::::::1::: :::::::i::::::: -:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- T^:-^T~-~. - -:-:-T ~ 1:- t -~-~-:-:-T~-:-:-~-~:-:-: I :~:~-~:~T.-:-:-T~:-:-:~-~-~-~T l-~-l:~:-r l --. :-:-:-:-:-:-:-:-: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::I:~\VI:~:::I:V"I::I=:::IV::~:::I:I:I:I:"VI:: "1: t :::LV:::~1::1~1 1~1~1 :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~:::::::I:n :::~:nE: l:::E i::E:I::-:E 1: In - :I:~~E :r~:::-~-~:-:-:-~-n-/-:l :::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::!::!:::~::::::::::~:!:::~: E:::::~.:~:- :: ~ E:: :~: E ~ %:. E :~': :-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- s:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:~-:-:-:-:-:-:-:-:-:-:-:-:-: n-o~ Eem-rra-ls~a-re~ ma leg (-em ~ n-o~ E -ales ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: 1 1 1 as-, a-n-u~ wne-T-~-e-r~ ant l-n~-lVl- E-E -all p-rovl- Ear list acce-~-l-n-g- ............................................................................................................................. £. ~ 1 :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~:::::::::::::::E:l:n: E:~^l: E:l::::: E:n:r:l:::: rmnl ram E:l::igl:::g~ ra-n^~-^n'-~ ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~:~:!:::~:~::':~!:~!:::::~!:::~: ':::::~:~:~:::!:~:!::~:~ regal:: :~ E: E: :-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-'-:':-:-:-:-:-:-:-'-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:.-:-:-:-:-:':.-:-:-:-:-:-: th~ a I t I tn ... ... .. ...... ..... .... ...................................................................... - - - - - ............. f ~ I l t -1;-- ; i . ~ I ~i r :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::~|::|::~:~"U=~-:-::~:ll:wl== El "l wtV~Vl ~E:|:::~VV:~:I:|:|::|~:: :-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:- 1 -:-:-:-:-:-:-:-:-:-:-:-:-:-:-~-:-:-1:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:-:
18 IMPROVING THE MEDICARE MARKET interest in the choices that are made, at a minimum, these organizations should be required to fully disclose their sources of funding and potential biases that might result from these financial arrangements. One committee member raised some additional concerns about these organizations which are out- lined in Appendix A. To help make the Choice Facilitating Organizations as use- fu] to beneficiaries as possible, the federal government should require health plans and the traditional Medicare program to make available appropriate information to such organizations that have a legitimate interest in that information, such as the data behind quality or accreditation scores. The committee advocates that public and private entities experiment with such organizations, including providing fund- ing from the Informed Choice Fund (see below) to those that meet the criteria of independence and objectivity to augment the work of the Medicare Customer Service and Enrollment Center. Choice Facilitating Organizations may be particularly useful during the early phase of Medicare choice development. The Informed Choice Fund Su brecommert~atiorts The committee recommends that an 7rlformed Choice Furld be developed for use by the federal government for the purpose of strengthening the infrastructure used to inform Medicare beneficiaries of their health plan choices. The Informed Choice Fund would be used to fund the operations of the Medicare Customer Service and Enrollment Center. Demonstration grants to Choice Facilitating Organizations could be made from this Fund, as desired by the federal government, after the op- erations of the Medicare Customer Service and Enrollment Cen- ter are funded. The Informed Choice Fund would derive its income from a predictable revenue source, such as a fixed amount from each Medicare beneficiary or a flat amount or a percentage of the monthly Medicare premiums.
SUMMARY 19 RECOMMENDATION 4 The federal government should require all Medicare choices to be marketed during the same open season to promote comparability and to enable beneficiaries to adequately as- sess and compare the benefits and prices of the various op- tions. Coordination of Traditional Medicare, Medigap Insurance and Health Plans: Medicare Choices Su brecommert~atiorts The committee recommends that the selection of Medicare choices be coordinated. All three types of plans should be of- fered during open enrollment periods and under the same condi- tions of participation (see page 231.5 The federal government should work with state governments to coordinate the federal requirements surrounding Medicare choices with existing state regulations for Medigap insurance and private insurance. The U.S. Congress should consider what policy-making and enforcement activities are most appropriately and effectively conducted by the federal government and which can be delegated to state governments to ensure consistency and economy. Standardized Packaging, Pricing, and Marketing of Benefits Su brecommert~atiorts The committee wants to preserve the general approach taken by the law governing Medigap insurance without restricting choice to the same extent. it believes that health plans should be moved toward standardized packaging, pricing, and market- ing of selected benefit packages to allow beneficiaries to more 5The Physician Payment Review Commission's 1996 Annual Report to Con- gress provides a worthwhile discussion of the pros and cons of annual versus continuous open enrollment seasons.
20 IMPROVING THE MEDICARE MARKET easily compare the benefits offered by different plans. The com- mittee recommends all plans be required to offer and price a basic benefit package (current Medicare Part A and Part B ser- vices) and have the option of offering and pricing two other popular benefit packages defined by the federal government and included in basic comparisons promulgated by the federal gov- ernment. These popular benefit packages should include added benefits shown by market sales and surveys to be of special interest to the elderly (services such as pharmacy, eye care, and foot care) and ones that are popular given the cost. Health plans would be free to offer and price benefit packages other than these two that add to the basic benefit, but these other packages must be clearly identified as nonstandard, must offer substantial differences from the basic benefit package, and would not be included in the Medicare Customer Service and Enrollment Center's standard published comparisons. The fed- eral government should commission the Medicare Customer Service and Enrollment Center to develop and use formats that allow beneficiaries to make easy and clear comparisons of ben- efits and other information on Medicare choices, drawing on the best practices used by employers and private and public organi- zations. The federal government should also suggest questions that Medicare beneficiaries should ask about nonstandard pack- ages. To make this process even easier, the federal government should promulgate common terminology related to benefits. All Medicare choices should use this terminology to describe the benefits of each of their offerings. The federal government should coordinate its activities with those of state governments to ensure consistency between these benefit packages and those of Medigap insurance. RECOMMENDATION 5 The committee is concerned about the increasing restric- lions on physicians (and the potential conflict of interest of physicians) when they act in their professional role as advo- cates for their patients and carry out their contractual re- sponsibilities and receive economic incentives as health plan providers. The committee favors the abolition of payment
SUMMARY 21 incentives or other practices that may motivate providers to evade their ethical responsibility to provide complete infor- mation to their patients about their illness, treatment op- tions, and plan coverages. So-called anticriticism clauses or gag rules should be prohibited as a condition of plan partici- pation. Physicians and Professionalism Su brecommert~atiorts The committee recommends that neither the Medicare choices' payment incentives nor their coverage and treatment protocol policies motivate providers to evade their ethical re- sponsibility to provide patients with complete information about their illness and treatment options (such as referrals to a spe- cialist), what to the best of the provider's knowledge the patient's plan covers, and which health plans in the provider's experience provide the broadest range of services to the patient in question. Competition among Medicare choices is likely to restrict the definitions of inappropriate services by refining the definitions of medical necessity and appropriate services to contain costs and ensure quality. The committee finds that it is important for beneficiaries to have access to the unbiased judgments of their practicing physicians regarding their health needs in the con- text of plan procedures and protocols so that they, as patients, can make informed choices and thereby shape this new under- standing of "appropriate." Within the scope of its responsibilities, the federal govern- ment should identify practices that inhibit open communication between a provider and a patient in any setting and either pro- hibit them as conditions of participation of plans or require the plan to disclose such practices to potential enrollees. The com- mittee recommends that the federal government require plans to disclose to plan enrollees how physicians get paid, whether they are rewarded for withholding referrals, and any other re- strictions affecting how physicians can inform or treat plan en- rollees. Similarly, educational materials should make clear the incentives in traditional Medicare and Medigap insurance to provide unnecessary care and the risks of these incentives.
22 IMPROVING THE MEDICARE MARKET RECOMMENDATION 6 The federal government should hold Medicare choices ac- countable by requiring them to meet comparable conditions of participation as a Medicare option and by monitoring and reporting on their compliance with these conditions. Conditions of Participation for Medicare Choices Su brecommert~atiorts The committee recommends that the federal government be given the flexibility to adjust the conditions of participation to take into account the evolution of higher standards and new systems and structures for ensuring informed choice and public accountability of Medicare choices. (See Box S-2.) Quality Assurance and Outcomes Su brecommert~atiorts To best ensure quality, all Medicare choices should be sub- jected to comparable state-of-the-art standards and monitoring for quality. The federal government should use the best of the currently available technology to set standards and monitor the quality of health plans. When the standards and processes of private credentialing agencies meet or exceed those of the fed- eral government, private organizations should be used to reduce duplication in the market. The federal government might well foster competition and innovation among private credentialing agencies for different aspects of this function. Communication with beneficiaries about the quality of a health plan and traditional Medicare plans should be done by the Medicare Customer Service and Enrollment Center by us- ing the latest information available from credentialing processes and the latest techniques for communicating plan performance. in this vein the federal government should give priority to re- search and demonstrations on communicating quality perfor- mance information to beneficiaries. The committee recommends the development of common
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24 IMPROVING THE MEDICARE MARKET definitions for reporting quality for use by individual plans and for auditing plans against their own published reports to the federal government. Managed Care and Underserved Populations Su brecommert~atiorts Broad access for Medicare beneficiaries is key. The commit- tee recommends that the federal government ensure that there is adequate access and choice of plans for individuals in all socioeconomic, cultural, and language groups and for under- served areas and populations. Elderly beneficiaries particularly value care that is respectful, personalized, and culturally sensi- tive. When warranted and documented (i.e., when access is demonstrably inadequate), the federal government should re- quire the plans in an area to improve their contracting with community-based providers who meet quality-of-care standards as a condition of participation. RECOMMENDATION 7 Serious consideration should be Even and a study should be commissioned for establishing a new function along the lines of a Medicare Market Board, Commission, or Council to ad- minister the Medicare choices process and hold all Medicare choices accountable. The proposed entity would include an advisory committee composed of key stakeholders, including purchasers, providers, and consumers. Medicare Market Board and HCFA Su brecommert~atiorts The committee believes that growing choice management functions would benefit from an organizational identity with the stature to facilitate recruitment of the needed leadership and staff and to build public trust. For that reason the committee recommends that serious consideration be given to establishing a new function along the lines of a Medicare Market Board,
SUMMARY 25 Commission, or Council that would include an advisory commit- tee with key stakeholders (i.e., purchasers, providers, and con- sumers). The committee was not able to research adequately the ques- tion of where this function should be located in government. The committee is aware of current initiatives to simplify and streamline government regulations as well as the efforts being made by HCFA to address some of the committee's concerns. The committee's discussions included the option of incorporat- ing the new Medicare Market Board entity within HCFA, but with dedicated management and resources; establishing a Fed- eral Reserve Board type of agency that has greater flexibility in rule making; establishing a PPRC- or ProPAC-type entity re- porting to the Congress; as well as other possibilities. With that in mind and given the potential impact of the proposed new entity on the health care economy and the well- being of 37 million beneficiaries, the committee recommends that the U.S. Congress commission a study on what functions should be included in any new entity and what functions should stay with the present organizational structure, the roles and experience of federal agencies with a comparable mix of func- tions, the rationale for their structure, their organizational placement (including their relationship to the U.S. Congress and the executive branch) to better assess the advantages and potential shortcomings of moving in this direction. In recommending the consideration of a new function such as a Medicare Market Board, the committee was cognizant of the fact that even a new entity will be limited or circumscribed by the realities of the political and fiscal environments in which it must operate and be accountable. The committee envisions any proposed entity to have gen- eral responsibilities in the following areas: · Data collection', data publication', consumer education', arid support Contract with a Customer Service and Enrollment Center for these functions and augment the Center's services by using Choice Facilitating Organizations.
26 IMPROVING THE MEDICARE MARKET . Health plar' starboards Consult experts and conduct research and demonstrations to refine the conditions of participation by health plans on an ongoing basis to reflect the service and quality that the govern- ment expects for Medicare beneficiaries, regardless of the plan that they choose. The conditions would be set on a national basis and would be measurable and subject to an annual evalu- ation of compliance. To the greatest extent possible they would be consistent with standards used by the private sector to mini- mize duplication. invoke specific sanctions in the event that the standards of a plan fall below the set standards. · Berlefits, quality, arid fair payment to health plarls Continually review clinical developments and services per- taining to what constitutes quality or appropriate care and refine the definitions of benefits under Medicare Part A and Part B. Review developments in the health insurance marketplace and refine the standard benefit description, pricing, and mar- keting requirements. Review risk selection in the traditional Medicare program and health plans and develop procedures or recommendations to the U.S. Congress for controlling or adjusting for adverse and favorable selection. care Evaluatior' arid improvement of multiple choice ir' Medi Review the workings of the multiple choice market for Medicare beneficiaries and report to the U.S. Congress on the extent to which beneficiaries are able to make informed choices, the extent to which government and beneficiaries are succeed- ing in holding plans accountable for ensuring quality of care and containing costs, and ways to improve the system's performance. Review traditional Medicare and health plan costs and performance to determine whether the amount and form of the federal government's contribution to costs (e.g., premium pay- ment) yields the government and its beneficiaries both contain- ment of costs and assurance of quality. Report and recommend changes to the U.S. Congress to better hold plans accountable to these ends. In conducting each of its responsibilities, it would adhere to rigorous conflict-of-interest standards.
