1
Introduction

Congress created the Medicare program in 1965 to provide health insurance for Americans age 65 or over. It later extended coverage to some individuals with disabilities or permanent kidney failure. From the outset, the program has focused on coverage for hospital, physician, and certain other services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member” (section 1862 of the Social Security Act). With certain exceptions, Congress explicitly excluded coverage for preventive services, outpatient prescription drugs, dental care, and long-term nursing home care and other supportive services for people with chronic disabling conditions.

Most sessions of Congress see proposals to expand Medicare coverage for one or more of the services that are currently excluded. For example, while this report was being drafted, Congress was debating the addition of outpatient drug benefits, which even under the most limited proposals would add substantially to the program’s costs. With growth in Medicare spending and health care costs having far exceeded 1960s’ estimates, the increased cost of additional services has generally discouraged coverage expansions. Moreover, Congress has set budget rules for itself requiring that decisions to increase most types of federal spending must be accompanied by explicit decisions to reduce spending elsewhere or to raise taxes. These rules underscore the reality that expanding Medicare coverage involves making trade-offs in the face of resource constraints.

In the Balanced Budget Act of 1997 (Public Law 105–33), Congress called for the Department of Health and Human Services to arrange for the National



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Extending Medicare Coverage for Preventive and Other Services 1 Introduction Congress created the Medicare program in 1965 to provide health insurance for Americans age 65 or over. It later extended coverage to some individuals with disabilities or permanent kidney failure. From the outset, the program has focused on coverage for hospital, physician, and certain other services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member” (section 1862 of the Social Security Act). With certain exceptions, Congress explicitly excluded coverage for preventive services, outpatient prescription drugs, dental care, and long-term nursing home care and other supportive services for people with chronic disabling conditions. Most sessions of Congress see proposals to expand Medicare coverage for one or more of the services that are currently excluded. For example, while this report was being drafted, Congress was debating the addition of outpatient drug benefits, which even under the most limited proposals would add substantially to the program’s costs. With growth in Medicare spending and health care costs having far exceeded 1960s’ estimates, the increased cost of additional services has generally discouraged coverage expansions. Moreover, Congress has set budget rules for itself requiring that decisions to increase most types of federal spending must be accompanied by explicit decisions to reduce spending elsewhere or to raise taxes. These rules underscore the reality that expanding Medicare coverage involves making trade-offs in the face of resource constraints. In the Balanced Budget Act of 1997 (Public Law 105–33), Congress called for the Department of Health and Human Services to arrange for the National

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Extending Medicare Coverage for Preventive and Other Services Academy of Sciences (NAS) to analyze “the short- and long-term benefits, and costs to Medicare” of extending Medicare coverage for certain preventive and other services. These services were screening for skin cancer; medically necessary dental services; elimination of time restrictions on coverage for immunosuppressive drugs for transplant recipients; nutrition therapy; and routine patient care for beneficiaries enrolled in approved clinical trials. This request from Congress reflects two significant developments since Medicare’s beginnings: an accelerating pace of technological innovation and—partly as a consequence—a greater than anticipated escalation of program expenditures and overall health care costs. Scientific and technological advances have clearly led to a multitude of new medical procedures, drugs, devices, and other services that prolong life, protect physical and mental functioning, prevent disease, and otherwise improve people’s health and well-being. Of course, not all innovations perform as promised. Moreover, most new—and established—technologies have risks that have to be weighed against expected benefits. Cost constraints also require that trade-offs be made. The 1980s and 1990s saw increasing recognition that the knowledge base for clinical practice and health policy was more limited than had previously been acknowledged (e.g., see IOM, 1992; OTA, 1994; PPRC, 1989). For example, those developing clinical practice guidelines often found little or no sound research to inform many of the specific decisions faced in the course of caring for people with a particular health problem. A number of public and private sector initiatives have tackled this knowledge deficit. Some have focused on primary clinical research, and others on systematically assessing the results of past research. Each of the services examined in this report highlights different challenges in using available research and analytic methods to guide decisions. This report, prepared by a committee appointed by the Institute of Medicine (IOM; part of the NAS), analyzes the evidence base for three of the five areas listed in the Balanced Budget Act: (1) skin cancer screening, (2) medically necessary dental services, and (3) elimination of time limits on coverage of immunosuppressive drugs for certain transplant recipients.1 In addition to examining the expected clinical effectiveness and the expected cost to Medicare of covering these services, the IOM also examined more generally the processes and organizational infrastructure for making decisions about Medicare coverage of preventive and other services. The analyses and conclusions presented here are intended to assist policymakers by providing a synthesis of the best evidence available about the effec- 1   The other two areas are covered by separate reports developed by other IOM committees, Extending Medicare Reimbursement in Clinical Trials and The Role of Nutrition Therapy in Maintaining the Health of the Nation’s Elderly: Evaluating Coverage of Nutrition Services for Medicare Beneficiaries, which are available from the National Academy Press (www.nap.edu).

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Extending Medicare Coverage for Preventive and Other Services tiveness of the services and the cost to Medicare of covering these interventions. The conclusions do not include detailed coverage recommendations for Medicare, nor are they specific enough to constitute practice guidelines that physicians, dentists, nurse practitioners, or other clinicians could use to inform day-to-day clinical decisions. The analyses are, however, meant to be credible to clinicians as well as policymakers. The next sections of this chapter briefly summarize the evolution of the Medicare program and review current processes for determining what services Medicare will cover. This discussion provides context for the remainder of the report. THE MEDICARE PROGRAM Historical Background When Congress—following years of debate—created Medicare as Title XVIII of the Social Security Act (SSA), it was responding to the growing availability of effective medical services and the difficulty faced by older people in either paying for these services directly or obtaining private health insurance.2 At the same time, Congress also created the federal-state Medicaid program (Title XIX of the SSA), which provided health insurance for certain categories of low-income individuals (primarily low-income mothers and children and low-income aged, blind, or disabled people). Reflecting the needs of these lower-income beneficiaries, Medicaid covers a generally broader array of services than Medicare (e.g., well-baby visits, extended nursing home care). It also provides states some flexibility in deciding what to cover (e.g., certain dental services, outpatient prescription drugs). Certain low-income people, called “dual eligibles,” qualify for full or partial Medicaid benefits as well as regular Medicare coverage. Their Medicaid benefits cover many of the Medicare program’s cost-sharing requirements and “fill in” some of the gaps in Medicare benefits. In 1972, Congress expanded Medicare to cover certain disabled persons and created a unique entitlement to coverage for people who suffer from end-stage kidney disease (ESRD).3 Continuing a division that had emerged earlier in private health insurance, the Medicare program as initially created had two parts: hospitalization insurance, also known as HI or Part A, and supplementary medical insurance for physician and certain other services, also known as SMI or Part B.4 Part A, which is 2   This discussion draws on Ball, 1995; Feingold, 1966; Harris, 1969; Marmor, 1973; Somers and Somers, 1961, 1967, 1977a,b; Starr, 1982; and Stevens, 1989. 3   Appendix D briefly reviews the history of the ESRD benefit. See also IOM, 1991. 4   In 1997, as part of the Balanced Budget Act, Congress created Part C (known as Medicare+Choice), which restructured and expanded options for Medicare beneficiaries to enroll in approved health maintenance organizations and other private health insurance plans. These plans, which are paid a fixed monthly amount per enrolled beneficiary, must provide Medicare-covered services but may also offer additional benefits.

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Extending Medicare Coverage for Preventive and Other Services financed by payroll taxes (1.45 percent paid by employers and employees), covers inpatient hospital care subject to an annual deductible set at $768 in 1999 and a per-day copayment after 60 days. It also covers (subject to various time limitations, cost-sharing requirements, and other restrictions) services provided by other institutional providers including skilled nursing facilities and hospices. One rationale for covering these kinds of services and providers has been that such coverage may encourage the use of alternatives to more expensive hospital care. Part B covers physician and certain other professional services provided in the hospital, office, and selected other settings. It also covers a number of additional services such as outpatient dialysis services, clinical laboratory tests, durable medical equipment, ambulance services and, since 1997, most home health care services. For Part B coverage, beneficiaries pay a monthly premium (set to cover 25 percent of Part B expenditures or $45.50 per beneficiary in 1999) and coinsurance of 20 percent for most services. Part A coverage is virtually automatic for those eligible, but enrollment in Part B is voluntary, although nearly all those eligible do enroll. As noted above, the legislation creating Medicare excluded coverage for services not deemed “reasonable and necessary” for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body member. Preventive services, dental care (except in very limited situations related to serious medical problems), and outpatient prescription drugs were among the services categorically excluded in 1965. One rationale for excluding preventive services from Medicare was that they did not fit the traditional insurance model of providing coverage for expenses that are unpredictable (and thus cannot be budgeted) and substantial (and thus are a serious financial burden to individuals and families). When Medicare was created, hospitalization and other major expenses related to care for acute illnesses fit the model; expenses for most preventive services, outpatient prescription drugs, and dental care did not. In addition, insurance principles also discouraged coverage for “broad and ill-defined” services such as routine physicals and health education or counseling (Breslow and Somers, 1977; OTA, 1990b). Since 1965, Congress has authorized a few exceptions to the coverage exclusions just described. After rejecting 350 bills to make one or more exceptions to Medicare’s exclusion of preventive services, Congress approved its first exception—for pneumococcal pneumonia vaccine—in 1980 (Schauffler, 1993). More exceptions have followed. As discussed in Chapter 6, Congress has waived the application of the Part B deductible and coinsurance provisions for some covered preventive services. Although the significance and cost of drug therapies have increased substantially since 1965, Congress has approved very few exceptions to its exclusion of coverage for prescription drugs. In 1986, Congress authorized time-limited coverage of self-administered immunosuppressive drugs for Medicare-

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Extending Medicare Coverage for Preventive and Other Services covered transplant patients, and it has since added a handful of further exceptions for other prescription drugs that patients self-administer on an outpatient basis. Congress has made no additional exceptions to the original coverage exclusion related to dental care. As discussed in Chapter 4, the Health Care Financing Administration (HCFA) has ruled that very few services meet the limited exception provided in the 1965 legislation. Because of gaps in Medicare coverage, about 80 percent of beneficiaries purchase or otherwise obtain some form of supplemental coverage to help pay for certain excluded services, deductibles, and copayments or coinsurance (HCFA, 1998a). This coverage may be provided through an employer-sponsored program, an individually purchased “Medigap” policy, or a state Medicaid program. Medicare beneficiaries covered by health maintenance organizations (HMOs) may be eligible for additional preventive and other services, sometimes by paying an additional premium, but HMOs vary greatly in the extent to which they offer benefits not required by Medicare (Kaiser Family Foundation, 1998). Enrollment and Expenditure Trends Since the program was implemented, the number of Medicare beneficiaries has roughly doubled, from 19.1 million when the program took effect in 1966 to approximately 38.4 million in 1997 (about 4.8 million of whom qualify for Medicare due to disability and about 0.3 million due to a diagnosis of end-stage renal disease [HCFA, 1999a]). The growth in Medicare enrollment will accelerate as the baby boom generation begins to reach age 65 (and becomes eligible for coverage) in 2011. By 2015, the population age 65 years and over is projected to reach 56.3 million. Unless age or other eligibility requirements change, virtually all will be covered by Medicare. Those qualifying because of disability or end-stage renal disease are expected to constitute a somewhat larger fraction of the total beneficiary population by 2015 (about 16 percent compared to 13 percent in 1997). Initial forecasts of program spending proved to be gross underestimates of actual spending. While the number of beneficiaries was doubling, Medicare net outlays grew from $2.7 billion in 1967 (the program’s first full year) to $174.2 billion in 1996 (U.S. House of Representatives, 1997, 1998). (In constant 1995 dollars, 1967 expenditures would amount to about $10 billion.) Current debates about Medicare’s future revolve primarily around predictions that Part A of the program will become insolvent (spending will exceed revenues) early in the 21st century. Projections of long-term Medicare program costs—and health care costs more generally—have many uncertainties (White, 1999). Nonetheless, concerns about the federal spending and program solvency have prompted discussions of major and controversial program changes such as raising the age of eligibility, instituting some kind of means testing, directing

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Extending Medicare Coverage for Preventive and Other Services more beneficiaries into capitated managed care plans, and establishing a formula for the government’s contribution to program costs that would shift more of the risk for continued health care cost escalation to beneficiaries. A major component of the Balanced Budget Act of 1997 was a set of measures to slow the growth in program spending and at least delay the date at which Medicare spending is projected to exceed revenues (Kahn and Kuttner, 1999).5 Solvency concerns are also shaping reactions to less comprehensive changes of the kind considered in this report. As mentioned earlier, congressional budget rules require that certain decisions to increase federal government spending in one area be offset with actions to reduce spending in other areas or to increase taxes or other revenues. For example, higher estimated net spending for covering new preventive or dental services or outpatient drugs would usually have to be matched by increased taxes or reduced spending either elsewhere in the Medicare program (e.g., through lower payment rates for health care providers) or in other areas (e.g., Medicaid). MEDICARE COVERAGE DECISIONS Medicare coverage decisions range from very broad-based decisions about whole categories of services to very narrow decisions about whether a specific service will be covered for a specific individual. In between are decisions about the general circumstances under which a specific service will be covered (e.g., that bone marrow transplant will be covered for certain cancers and not others). For the most part, these kinds of decisions are made at three different levels, with Congress making broad decisions about categories of coverage and coverage exceptions, HCFA focusing on the circumstances under which a new or established service will be covered, and private contractors that administer Medicare claims for the government deciding whether specific services billed for a specific beneficiary are covered and also establishing policies for services and circumstances for which HCFA has no policy. Congress Congress establishes the broad categories of covered and excluded services. It may also make coverage exceptions for individual services in otherwise ex- 5   As this report was being completed, Congress extended coverage of immunosuppressive drugs for up to eight months (subject to expenditure limits) for transplant recipients eligible for Medicare by reason of age or disability (P.L. 106–113).

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Extending Medicare Coverage for Preventive and Other Services eluded categories. In considering legislative proposals to extend coverage, Congress may hold hearings to solicit expert advice (including assessments of scientific evidence) and the views of patients, families, clinicians, health industry manufacturers, administrators, and other interested groups. Until it was terminated in 1995, the congressional Office of Technology Assessment (OTA) responded to congressional requests for assessments of clinical preventive measures, immunosuppressive drugs, and other services. The OTA analyses considered scientific and clinical issues but were also explicitly intended to provide guidance to policymakers by examining the cost-effectiveness of clinical interventions, possible costs to Medicare of extending coverage, and other policy issues. For categories of covered services, Congress has authorized HCFA to establish procedures for making more specific coverage decisions about individual services within the broad categories established legislatively. It could also authorize HCFA (which is part of the Department of Health and Human Services) or a quasi-public body either to make coverage exceptions or recommend exceptions for services that now fall in the categories of generally excluded services. For example, the early 1990s discussion of health care reform saw various proposals for delegating decisions about preventive services (OTA, 1993). Health Care Financing Administration Within the broad coverage categories established by Congress, more specific determinations about what services are or are not covered are the responsibility of the Health Care Financing Administration (Bagley and McVearry, 1998). HCFA also provides detailed guidance to Medicare contractors regarding the application of its coverage rules and the development of local contractor medical policies for situations not dealt with by such rules. Altogether, HCFA has issued about 700 national coverage policy decisions (personal communication, John Whyte, July 1999). These decisions typically involve either new services and technologies or new indications (clinical circumstances) for the use of technologies that had previously been covered for a limited set of indications. Some determinations restrict coverage of an already covered service—usually because new evidence suggests the service is unsafe or ineffective. The coverage determination process may involve reviews of the scientific evidence, consultations with clinical experts, and comparisons with similar technologies. For those outpatient drugs (e.g., immunosuppressants for transplant patients) that fall under congressionally established coverage categories or exceptions, HCFA usually requires, among other conditions, that drugs have

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Extending Medicare Coverage for Preventive and Other Services final marketing approval by the Food and Drug Administration, meaning they are considered safe and effective for the indications specified on the label.6 Some technology assessments are conducted by HCFA staff, whereas others are referred to different governmental or private organizations including the federal Agency for Health Care Policy and Research (AHCPR) and its Evidence-Based Practice Centers (EPCs). Created by Congress in 1989, AHCPR supports an array of activities intended to increase and evaluate the evidence base for health care services. The EPCs—many of which are consortia or partnerships of universities and other institutions—produce evidence reports and technology assessments on topics as requested. If nongovernmental parties request a coverage determination from HCFA, they are expected to provide supporting documentation including reviews and analyses of the scientific evidence, unless they lack the resources to do so. In making coverage determinations, HCFA must follow federal rule-making procedures and requirements. After criticism that agency procedures violated federal open government rules, HCFA created a new Medicare Coverage Advisory Committee, for which administrative procedures are being developed and reviewed.7 Because the services considered in this report are explicitly excluded by statute from current coverage categories, they would not normally be candidates for consideration by this new committee. HCFA has interpreted the congressional requirement that services be covered only if “reasonable and necessary” for the diagnosis or treatment of an illness or injury to mean that they must be (1) safe and effective, (2) provided in an appropriate setting, and (3) not experimental or investigational (HCFA, 1989). The criteria and processes for determining what services are medically necessary have been the subject of much debate and dissatisfaction (e.g., see Anderson et al., 1998; Bergthold, 1995; Cunningham, 1999; IOM, 1992; NHPF, 1998, 1999). In January 1989, and as recently as 1996, HCFA proposed to consider the cost-effectiveness of technologies as part of the coverage review process (HSR, 1997). The proposal provoked considerable controversy and was never adopted. HCFA should shortly be issuing a new Federal Register notice proposing national coverage criteria. 6   In establishing specific coverage policies, HCFA does not necessarily restrict coverage to the so-called labeled indications. For decisions about off-label uses, HCFA provides that its administrative contractors may consider authoritative medical literature and “accepted standards of medical practice” (Carriers Manual, section 2049.4 [HCFA, 1999b]). 7   This committee will operate under the Federal Advisory Committee Act (Federal Register [FR] Vol. 63, No. 239, December 14, 1998, p. 68780). HCFA has also published a notice explaining the new process of making national coverage decisions (FR Vol. 64, No. 80, April 27, 1999, pp. 22619–22625). A notice on proposed coverage criteria is expected by the end of 1999.

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Extending Medicare Coverage for Preventive and Other Services Because individual coverage determinations by HCFA are not directly governed by the “budget neutrality” rules of Congress, new services that fit within established coverage categories face different hurdles to coverage approval than do services that require congressional action. The last chapter of this report returns to this and other issues related to the role of effectiveness, cost, and cost-effectiveness analyses in coverage decisions. Administrative Contractors In practice, many coverage determinations—perhaps 90 percent (HIMA, 1999)—are made not by HCFA but by the 60-plus private contractors that the agency uses to administer payment of Medicare claims on a state, substate, or multistate basis. On the Part A side, these organizations are called “intermediaries.” For Part B, which generates nearly all coverage questions, they are known as “carriers.” HMOs and other private health plans approved by Medicare to serve beneficiaries must follow intermediary and carrier policies, but they also must make their own coverage determinations in the absence of such policies. Frequently, it is the private carriers that first encounter questions about new medical services or services for which coverage is sought beyond the uses originally recognized. Their determinations are codified in the form of local medical review policies. Local medical policies may also specify more precisely the appropriate indications for established technologies for which excessive use is suspected. This is consistent with HCFA’s description of medical review policy as a “program integrity” tool intended to protect the program from fraud and abuse (Program Integrity Manual section 7501.2 [HCFA, 1999b]). Carriers make decisions about payment after services have been provided. HCFA uses another group of contractors, Peer Review Organizations (PROs), to conduct prior reviews of certain surgical procedures and engage in other activities intended to improve the quality of care provided Medicare beneficiaries. Contractors administering provider claims for payment must coordinate with the appropriate PROs to assure that payments are made consistent with the PROs’ decisions (Carriers Manual section 4170 [HCFA, 1999b]). HCFA’s new procedures for national coverage decisionmaking make clear that local medical policy decisions cannot conflict with a national decision by HCFA. Other HCFA policies direct carriers to base policies on the best evidence available, cite the basis and references for local medical policies, submit the policies to their Carrier Advisory Committees, publish them in their provider bulletins, and consider comments submitted in response (Carriers Manual, section 7501 [HCFA, 1999b]). Carriers may conduct their own assessments of new or established services and technologies, or they may rely on others, for example, ECRI (originally the Emergency Care Research Institute) or the Technical

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Extending Medicare Coverage for Preventive and Other Services Evaluation Center of the Blue Cross and Blue Shield Association (both of which are designated EPCs). Carrier coverage policies are generally prompted by the need to make determinations about coverage of a service provided to a specific individual rather than by, for example, a request for a policy or by the anticipation of claims related to an emerging technology. When the judgments are negative, such case-by-case negative decisions may readily evoke images of big, impersonal bureaucracies refusing to pay for innovative treatments that provide the last hope for desperately ill individuals. Controversies about such negative coverage decisions—and conflicting decisions from different carriers—may then prompt HCFA on its own initiative or at the request of others to develop a uniform national policy. In addition to revising procedures for national coverage decisionmaking and clarifying the role of local organizations in the coverage process, HCFA has a contractor examining variation in local medical policies. COVERAGE, ACCESS TO CARE, AND OUTCOMES Rationales for Extending Medicare Coverage The conditions and services examined in this report illustrate the range of arguments—which may or may not be supported by evidence—for altering statutory coverage exclusions. For screening services, which are directed at people without symptoms, the argument in favor of Medicare coverage typically assumes that coverage will encourage the use of services (especially among low-income beneficiaries) by reducing the cost barrier to care. It is argued further that increased use of screening services will mean that problems will be caught earlier and that this will permit more successful treatment. A related claim in support of screening is that it will save Medicare money by reducing the use of expensive late-stage care. For “medically necessary dental services,” the argument is that dental care is one part of appropriate care for many people with serious medical problems, particularly those vulnerable to life-threatening systemic infections. Excluding coverage for these services unreasonably adds to the physical, emotional, or financial burden of illness and may increase Medicare costs for treating avoidable complications of the medical conditions. Finally, for immunosuppressive drugs, the argument is that eliminating the three-year coverage limit will reduce the financial and emotional burdens on transplant patients (especially those without other financial resources) and will improve patient access and adherence to drug regimens that are effective in reducing graft rejection and mortality. Reduced rejection of grafts will then reduce Medicare spending for retransplantation or dialysis. Extended coverage might also reduce incentives for some beneficiaries to stay qualified for disability benefits rather than try to return to work. More generally, because organs are a

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Extending Medicare Coverage for Preventive and Other Services scarce resource for which demand far outstrips supply, the larger society of citizens has a strong interest in the successful maintenance of grafts. In each example above, one assumption is that Medicare coverage will increase the use of beneficial health care by reducing the cost to the beneficiary. Certainly, as an insurance program, Medicare has sought both to increase access to appropriate health care and to reduce the financial burden of ill health. Insurance and the Use of Health Care Services Health services research suggests that insurance coverage encourages the use of preventive and other health services (e.g., see Cohen et al., 1997; Faulkner and Schauffler, 1997; German et al., 1995; Lave et al., 1996; Marquis and Long, 1996; Powell-Griner et al., 1999). Research also suggests that lack of financial access is not the only barrier to the provision or use of preventive and other services (e.g., see CDC, 1997; Chan et al., 1999; Lave et al., 1996; Lieu et al., 1994; Schauffler and Rodriguez, 1993; Weese and Krauss, 1995). Other barriers may include lower levels of education or information, rural or inner city residence, language difficulties, physical or cognitive disabilities, transportation difficulties, and health care organizational or system problems. The latter problems include long waiting times for appointments, poor coordination of services, requirements for advance approval of services by health plans, and lack of reminder and follow-up systems for both patients and clinicians. Thus, although health insurance supports access to care, it cannot guarantee it. Moreover, some studies suggest that insurance may be more effective in encouraging use of preventive services among higher-income, lower-risk people than among those more at risk (e.g., see Amonkar et al., 1999; Roos et al., 1999; Solberg et al., 1997; Taira et al., 1997). As discussed further in Chapter 6, policymakers, public health officials, and others have worked to develop additional strategies to deliver needed care to the latter groups. Another problem has been highlighted by research that links insurance to greater use of both appropriate and inappropriate care, and conversely, the application of some cost management strategies to reductions in the use of both categories of care (e.g., see Foxman et al., 1987; Kahn et al., 1990; Keeler et al., 1985; Lohr et al., 1986; Shaughnessy et al., 1994; Siu et al., 1986). Inappropriate care may be informally defined as care that evidence or expert judgment indicates will be ineffective given a patient’s condition. Such care wastes scarce resources and may endanger patients. It is, consequently, a prime target of many educational, financial, administrative, and other strategies that attempt to both control the costs and improve the quality of health care. Even appropriate care may be subject to coverage limits based on traditional insurance principles that target coverage for events or services that are (1) unpredictable for the insured individual but predictable for large groups, (2) outside the control of the insured individual, (3) precisely definable and measur-

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Extending Medicare Coverage for Preventive and Other Services able, (4) too expensive for most people to budget, but (5) not so expensive that the cost of coverage is unacceptable to the insurance purchaser (Donabedian, 1976; Faulkner, 1940; IOM, 1993; MacIntyre, 1962). One or more of these restrictions can be cited to justify exclusions for many preventive and dental services, and prescription drugs. Nonetheless, as the broader social implications of insurance principles and programs have been recognized, insurers as well as governments have weighed these principles against other values and found occasions to make health insurance programs less restrictive. For example, as evidence has grown of the effectiveness of services such as screening mammography, Pap smears, and immunizations, public and private insurers have extended coverage to a variety of preventive services—including some for which the evidence is inconclusive or inadequate (see Chapter 6). OVERVIEW OF THE REPORT To develop this report, the Institute of Medicine, part of the National Academy of Sciences, created a seven-member committee of clinical and health policy experts that met five times between February 1999 and August 1999. This committee engaged consultants to develop background papers on each of the services it was examining, and other consultants assisted the committee in developing cost estimates. Appendix A includes more information about study activities. Most of this report focuses on two questions. One is whether evidence indicates that the services examined here will be effective in improving the health and well-being of Medicare beneficiaries. The other is what extending coverage to these services would cost Medicare. Whether coverage itself can be linked to better health outcomes is considered primarily in relation to immunosuppressive drugs. For skin cancer screening, a key issue is whether coverage of screening—even if evidence indicates that screening can improve outcomes—would effectively attract those at highest risk: older white males. Given the constraints of the committee’s charge and resources, formal cost-effectiveness analyses are not included, and equity issues are not considered in any depth. Nonetheless, each of the categories of services reviewed raises different concerns about how resources are allocated through the Medicare program. Screening presents questions about the political saliency of different health problems and the importance of scientific evidence in decisions about which preventive services Medicare should cover. Proposals to extend the coverage of immunosuppressive drugs raise questions of why one disease or organ gets differential priority (i.e., immediate Medicare coverage of dialysis or kidney transplants for persons with renal failure) and why coverage has been extended to a few expensive lifesaving outpatient drugs but not others. The near-total exclusion of coverage for dental services raises the question of why some

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Extending Medicare Coverage for Preventive and Other Services parts of the body are considered less germane to the health of Medicare beneficiaries than others. Chapter 2 reviews the methods and principles that guided the committee in its assessment of the “benefits and costs to Medicare” of extending coverage. More specific information about methods is provided in the chapters and appendixes examining specific coverage topics. Chapters 3, 4, and 5 focus, respectively, on screening for skin cancer, medically necessary dental services, and immunosuppressive drugs for transplant patients. Each is written with the expectation that it might be read with little or no reference to this introduction or to other chapters of the report, so some background material that might otherwise have been included in this chapter (e.g., definitions) is deferred and some material is repeated in all three chapters. These three chapters review current Medicare coverage; provide background information on the clinical problems being considered and the burden of illness they cause; describe the specific clinical interventions that were analyzed; and summarize the literature on the benefits and harms of the interventions. They also present estimates of the five-year cost to Medicare of covering the interventions. Chapter 6 compares current Medicare coverage of preventive services with the recommendations on clinical preventive services published by the U.S. Preventive Services Task Force. It more generally considers the processes for making coverage decisions about preventive and other services and the adequacy of the scientific, procedural, and organizational infrastructure for coverage decisionmaking. Finally, Appendixes B, C, and D include background papers commissioned by the committee to provide detailed reviews of the scientific literature related to the topics considered in Chapters 3, 4, and 5. Appendix E provides a more detailed discussion of the Medicare cost estimates used by the committee.