*This text serves as the basis for the Administrator’s oral remarks and should be used with the understanding that material may be added or omitted during presentation.
Thank you for that great introduction. I want to take a moment to commend your leaders, Phil Nudelman, Karen Ignani, and the others who serve you so well. All of us in the health care business have had some tense moments. Part of their leadership has been being open. They have been instrumental in keeping the lines of communication between us open. We appreciate and value your input through them. And, I always enjoy the opportunity to appear before you in events such as this. These types of forums provide a great service to us and to you. And whenever I come to AAHP, I realize that I've got to get up pretty early in the morning to keep up with you.
I recently gave another morning speech to a group of Americans that many of you help us serve, the American Association of Retired Persons. Speaking before that group I was reminded of why we do what we do. I was struck by the faith that the group has in the American Dream - a faith that has strengthened since the advent of Medicare.
I was also reminded of the covenant we have among the generations, a covenant to care for those of us who are old, sick, or poor - a covenant that has also been strengthened in the age of Medicare. This covenant is exemplified in our commitment to care for each other and to give our children the opportunity to enjoy the blessings we have enjoyed and the sense of individual obligation and social responsibility that have guided us.
These ideas are the foundations upon which the Medicare and Medicaid programs were built. And these programs have changed what it means to be poor, or sick, or disabled in America. We must never forget who we serve and how these programs have enhanced the health of all Americans. These programs have brought our nation's practice closer to its promise and have become an integral part of our generational covenant.
However, our health system and the ways in which we deliver health care are changing. Nearly one hundred and sixty million Americans are now covered by managed care. And, this transformation has permeated the Medicare and Medicaid programs to include nearly 6.7 million Medicare and over 15 million Medicaid beneficiaries. You are at the heart of this transformation. And keeping our efforts sharply focused on those we serve is especially important if we are to uphold the generational covenant on which these programs are based.
I am committed to continuing to work with you because your input is integral to the success of the programs we administer. You need to know about new developments in the Medicare+Choice program and in Medicaid managed care. And, we need to hear from you as we proceed. Because, after all, between expanded choices, education, regulation, quality improvement and everything else, there's a lot going on right now that we all care a great deal about.
There are a few issues I'd like to touch upon before I move on - Year 2000 systems compliance and quality improvement plans. First, the Y2K issue we've all been struggling with. At HCFA we're making much better progress. In fact, all 25 of our internal "mission critical" systems will be ready. That means they've been renovated, tested, and the changes are implemented. That includes the system that makes managed care payments and handles beneficiary enrollment. Our collective hard work over the past months is paying off.
The reports I'm getting on your Year 2000 progress are very good. Keep up the good work. We must keep doing all that we can to get our Y2K houses in order. I know most of you realize this and none of us can afford to fail. And, if we at HCFA can be of help, please do not hesitate to call us with your questions or problems. We want to help you where we can.
Second, I want mention quality improvement plans. We have received more than half of the quality improvement plans, as required by the Balanced Budget Act, from those of you participating in the Medicare+Choice program. And I must tell you that all of us have been extremely impressed with the quality of these plans. I want to commend you on your efforts and thank you for your cooperation.
These efforts and the program and policy changes I want to discuss with you today must always have the good of beneficiaries in sight - and in sharp focus. We must move forward in protecting the Medicare and Medicaid programs for both present and future beneficiaries. It is my agency's most important work. Risk adjustment and Medicare+Choice, for example, have lots of technical, policy, and business implications. And they are important in and of themselves. But we all need to remember that the real reason we are doing them is to benefit the Americans who depend on these programs. We are here to protect the present and future of Medicare and Medicaid, and the security it guarantees to all of us.
As you know, we are in the process of implementing the Medicare+Choice program. We all believe managed care is a good thing as a voluntary option next to traditional Medicare. But it has to be a good option for beneficiaries as well. For that to be the case, beneficiaries must be confident that both managed care and fee-for-service are strong, stable, and reliable.
That's why I want to mention the sudden withdrawals by some Medicare plans last fall. Plans lost some of the confidence beneficiaries had in them. And beneficiaries lost benefit packages and provider relationships that they relied on. We all want Medicare+Choice to thrive, and for it to thrive we must make sure beneficiaries are confident in their choices. So we all must work hard together to make sure beneficiaries can feel confident in their choices.
That is not to say we will always see eye to eye. In fact, it's really not surprising that we have differences over things as substantial as all the Balanced Budget Act changes we have to implement. The Balanced Budget Act embodies some of the most significant changes ever to Medicare. It reduced payments for fee-for-service providers substantially which also meant reductions for you as well. It introduced Medicare+Choice, risk adjustment and new managed-care options, new quality requirements, and new patient protection measures. And, you were required to make some hard choices. Some of you chose to withdraw from certain markets for Medicare, as well as from many of these same markets for the Federal Employees Health Benefits Plan and private purchasers. At the same time, other plans are choosing to join Medicare, or expand your service areas to get more Medicare business.
Still, the non-renewals and withdrawals hurt. We have to be honest in admitting that it did. They took a real toll on beneficiaries. In all, about 100 plans gave up some or all of their Medicare service areas, affecting more than 400,000 beneficiaries. More than 50,000 beneficiaries returned to traditional Medicare, with only the prospect of limited and expensive supplemental insurance. That's a problem. I know these business decisions were difficult for you. But the real burden has been on the beneficiaries.
At the same time, I think it would be a mistake to exaggerate the extent of this problem. Some plans that withdrew had market positions or internal management issues that made it hard to compete. Most of those 400,000 disrupted beneficiaries had several other plans to choose from. And all but 50,000 had at least one other plan option.
So, as we're taking stock of where we're at and where we're going, I want to clear up one essential fact. These withdrawals, as troubling as they are, do not in any way toll the bells for Medicare+Choice. Most of the old risk contracts -- more than 300 in all -- have converted to Medicare+Choice. And, we've approved more than 20 new plans and service area expansions since November, and we're reviewing another 25 plan applications now. Medicare+Choice is moving forward.
In fact, I want to welcome two new plans to the Medicare+Choice program. Just yesterday, we approved requests by Mercy Health Plans of Missouri, Inc., based in Springfield Missouri, and Methodist Care Inc., based in Houston Texas, to participate in the program. Over 425,000 eligible Medicare beneficiaries live in their combined service areas.
But the best evidence that Medicare+Choice is healthy is that thousands of new beneficiaries continue to choose to enroll in your plans each month. Remember, the beneficiaries are the ones who matter most in all of this. The program doesn't exist to benefit public officials like me or for plans like yours. It exists for the beneficiaries.
Another indication of the program's positive prognosis is that you are working together with us so constructively. And we do want and need to work together. I am pleased to say that we have been able to provide flexibility in response to your concerns with the implementation of the Medicare+Choice program. We have been able to address some of your concerns regarding the quality improvement program, QISMC, provider contracting, the model compliance plan, and our monitoring strategy. We will continue to do what we can. For example, shortly after the publication of the contract year 2000 payment rates on March 1 we will publish another operational policy letter to inform you of all the information you will need to make your strategic business decisions including policy guidance, time lines and instructions for submission of benefit information, pricing, service area, contract renewal and beneficiary information. I trust these actions have been helpful, and more prompt than some past efforts. We continue to strive to clarify issues that are important to you in a timely and appropriate manner.
To this end, I want to update you on several issues of concern to you in the Medicare+Choice program - a delay in the deadline for your Adjusted Community Rate Proposals, a delay in the implementation of the Plan Benefit Package, the implementation of risk adjustment, the so called "mini-reg" published last week, and our beneficiary education efforts.
First, I want to announce that we intend to extend by two months the filing deadline for the information that we use to approve benefits and premiums. This would move the deadline for your Adjusted Community Rate Proposals, or ACRs, from May 1 to July 1. As you know, the law is explicit about the May 1 deadline but we are working with Congress to implement this extension. I think it's the right thing to do, for you and for beneficiaries who want accurate information on which to base decisions.
Second, we have decided to delay the full implementation of the Plan Benefit Package until contract year 2001. As you know, the Plan Benefit Package is the new format for you to submit benefit data. We are delaying this deadline so that we can conduct a pilot test in contract year 2000 to allow us to make the new tool as responsive to your requirements and our needs as possible.
Third, we are phasing in risk adjustment. We must work to ensure that, as we move to this fairer payment system, we prevent disruptions to the marketplace and the beneficiaries you serve. This approach will do that. The phase-in will be over five years. Next year only 10 percent of your payment for each beneficiary will be calculated based on the new risk adjusters. The full effects won't be in effect until 2004. After that, we'll be able to use a more comprehensive data base for risk adjustment.
I also want to touch on another issue near and dear to many of us, the so-called "blend" whereby plans receive a blend of a local and national rate. The good news is that blended payment rates will finally kick in next year. Our actuaries estimate that about 60 percent of counties will get blended rates next year and that should help you provide more options, to more Medicare beneficiaries, in more parts of the country.
I realize a transitioning of risk adjustment payments and an implementation of the "blend" rates are things that you wanted to hear. Now let me reiterate a point you have already heard. Risk adjustment won't be -- can't be -- budget neutral. That just wouldn't be fair to the taxpayers who pay for our programs.
The whole reason for proceeding with risk adjustment is that Medicare has not been paying plans accurately. We have paid too little for enrollees with costly conditions, and we have paid too much for those with few health care needs. We have a responsibility to make every effort to pay appropriate amounts for beneficiaries in managed care. Risk adjustment is intended to get payments right by paying accurately for the healthy and for those who require more care. We all know that this is a step we have to take. Payments based on health status will be a vast improvement over the simple demographic adjustments we have been using. The result will be much better and fairer predictions of costs and, thus, fairer and more accurate payments.
Risk adjustment also should encourage more beneficiaries to enroll in your plans. That's because they will feel confident that we are providing responsible payments with positive incentives for you to give them proper care. They will feel confident that you are being paid a fair amount that is tailored to their own individual likely need for care. That's what we have to do if we really believe that this program exists to benefit beneficiaries. That's what risk adjustment is all about, and that's why it is so important.
Now, I have heard the concerns you have raised about the particular risk adjustment system we are using at first. It is based on inpatient data only for now. That is what we can do now, and it is what we must do now. Again, we are willing to work with you where we can and we are willing to make incremental changes - if necessary - to the inpatient model as we move forward. But we must continue to move forward.
And by 2004 we will be using full encounter data, not just hospital stays, to determine the health status of a beneficiary. We all agree that's our goal. If we could do it now, we would. But we have to be realistic. This is a work in progress, a project that is too important to delay, and too important to rush.
By now you're all familiar with our so-called "mini-reg." It addresses many of the issues you have raised with us and it refines the Medicare+Choice program. It improves beneficiary protections and access to information while making it easier for health plans to offer more options to beneficiaries. We still intend to publish the final rule later this year but these clarifications should help beneficiaries and plans alike immediately.
The rule reduces your administrative responsibilities. We have made clear that the provider participation requirements are applicable only with respect to physicians. We have also dropped the requirement that a treatment plan can only be updated by a primary care physician and clarified that any health professional or a team of professionals may develop the treatment plan. We have also dropped the notification requirements for the involuntary termination of specialists.
All these refinements resulted from strong communication between us and you. In fact, I think our dialogue is so important that we are putting together a group to facilitate our communications and provide an additional forum for future discussions. This group will help us assess the lessons we've learned to move us forward together.
We are also helping beneficiaries become more informed consumers, which is another key to Medicare+Choice success. As you know, last spring we sent the Consumer Assessment of Health Plans Study, or CAHPS managed-care questionnaire, to about 136,000 beneficiaries. We had an impressive 74% response rate. The interest in, and the demand for, the information are obviously very strong.
These surveys are the modern day equivalent of the backyard fence. They let people find out what their neighbors think about their health plan options. They ask the things people really want to know about, only in a much more scientific way. These findings are posted on our website at http://www.medicare.gov/ They include overall ratings of each health plan's service, overall ratings of each health plan's care, ratings of how well doctors communicate with patients, and ratings of experience in getting referrals to specialists.
I recently announced that this fall we will begin another step in helping beneficiaries be more informed consumers. We will conduct a CAHPS survey specifically of beneficiaries who disenroll from plans. It will be a mail survey with follow-up phone calls. It will ask about the beneficiary's experience and why they left their plan. This will give all our beneficiaries a more complete picture of each plan, providing both the perspectives of those who left and those who stayed.
As you know, the law now requires us to collect and publish disenrollment rates for all Medicare+Choice plans. Disenrollment information is useful in and of itself for many reasons. Congress has made clear that it is something the beneficiaries need, deserve and will get. And I suspect it will be of interest to all of you, too.
We are also working to level the playing field between managed care and fee-for-service. We will survey beneficiaries in the original fee-for-service Medicare program in the year 2000 with the CAHPS instrument. After all, as many of you have pointed out, if we believe beneficiaries should have options, we should provide comparable data on all options.
We are also continuing to move forward with the collection of HEDIS performance measures - from your plans now and from fee-for-service providers as soon as we are able. One of the important lessons we learned this past year came when we audited the collected data, and could see that improvements must be made. I know many of you are working to get that done. All our systems need to be able to provide accurate information -- that's what our beneficiaries expect and deserve. This year we hope to make HEDIS results available not just on our web site but upon request through the 800-number. After all, it doesn't do any good to collect and publish all of this valuable information if we don't make it easily available to beneficiaries. And by collecting comparable data from fee-for-service providers we will move closer to leveling the playing field for all players in the Medicare program.
Our toll-free (800) Medicare line, by the way, is now up and running and providing another avenue for us to get information to beneficiaries who need it. It should be available nationwide by this Spring.
We have another important way to get information to beneficiaries who need it besides our web site and phone lines. And it is perhaps the best one of all. It is our alliance with about 100 national organizations, like AAHP, AARP, the Administration on Aging, employers and unions, doctors and hospital groups, and many other groups. I know that beneficiaries often request information from your plans to help in their decision-making so you are an essential part of our educational efforts.
Finally, just two weeks ago I announced the creation of a Citizens Advisory Panel on Medicare Education to advise us on these education efforts. The panel will include representatives from the broad spectrum of people the Medicare+Choice program serves including representatives from beneficiary groups, health plans, and, most importantly, beneficiaries themselves.
As you can tell, our Medicare+Choice plate is full. Our Medicaid managed care efforts are equally as important. And as with Medicare+Choice, we are moving forward and our partnership with you is critical.
By now, you know of our proposed Medicaid managed-care rule. It implements important Balanced Budget Act protections, and is built on a premise which I think is unassailable: If managed care can expand benefits and improve quality in the private sector, then surely it can do the same for Medicaid.
Three principles guided the development of our Medicaid regulation. We want as much flexibility for states as our federal responsibilities allow. We want consistency with Medicare to ease the burden on plans. And, we want to incorporate the Consumer Bill of Rights, again for consistency and fairness.
The proposed Medicaid regulation spells out the key statutory provisions. States are required to establish specific enrollee protections in quality, appeals, emergency care, and other areas. Also, the regulation anticipates the elimination of some requirements the States see as impediments to the growth of managed care. For example the states can amend their own plans to require enrollment in managed care under specific conditions without a waiver from us.
We are currently reviewing over 300 detailed comments and working towards publication of a final rule. And you should know a few things about that. Some provisions will require contract revisions. However, 1915(b) waivers will not have to come into compliance until they are renewed and 1115 waivers will not be affected during the current waiver period and for three additional years. Again, we need to move forward, but we don't need to rush into unnecessary disruptions. The rate of change will be deliberate while avoiding self-defeating burdens on the States, providers, enrollees, and your plans. It is our responsibility to keep you and all these other groups in sight, in mind, and at the table as we proceed.
I want to close by again asking for your continued assistance. It is essential. With your help, we will continue to move forward in strengthening our generational covenant. Together we can improve the quality, the availability and the fiscal responsibility of health care -- so that the programs we run and the services we provide will survive into the next century. None of this is easy. But, together we are learning. Together we are keeping up with the rapid rate of change. We have to. The market demands it. Our beneficiaries deserve it. That's why I'm glad to be here with you today. Thank You.
Last Updated March 4, 1999
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