Copyright 1999 Federal News Service, Inc.
Federal News Service
MARCH 18, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
4488 words
HEADLINE: PREPARED TESTIMONY OF
ROBERT
BERENSON, M.D.
DIRECTOR,
HCFA CENTER FOR HEALTH PLANS & PROVIDERS
CAROL CRONIN, PH.D.
DIRECTOR,
HCFA CENTER FOR BENEFICIARY SERVICES
JEFF KANG, M.D.
DIRECTOR
HCFA OFFICE OF CLINICAL STANDARDS &
QUALITY
BEFORE THE HOUSE WAYS & MEANS COMMITTEE
HEALTH CARE SUBCOMMITTEE
SUBJECT - MEDICARE+CHOICE
BODY:
Chairman Thomas, Congressman Stark,
distinguished committee members, thank you for inviting us to discuss progress
in implementing the Medicare+Choice program. Medicare+Choice allows private
plans to offer beneficiaries a wide range of options, similar to what is
available in the private sector today. It requires a massive new beneficiary
education campaign to inform beneficiaries about these options. It includes
important new protections for patients and providers, as well as statutory
requirements for quality assessment and improvement. And it initiates a 5-year
transition to a fairer and more accurate payment system.
Successful
implementation of Medicare+Choice is a high priority for us, and we have
accomplished a great deal. We believe very strongly that managed care and other
private insurance plans are important voluntary options, next to original
Medicare, and that Medicare beneficiaries need to be equipped with information
to make more informed decisions about their health care. Medicare managed care
enrollment has nearly tripled under the Clinton Administration, from 2.3 million
when the President took office to now 6.8 million. We are meeting regularly with
beneficiary advocates and industry representatives, and others to discuss ways
to improve the Medicare+Choice program, We are already making refinements based
on these comments and discussions.
We have converted the vast majority of
former Medicare HMOs to the Medicare+Choice program and published all Balanced
Budget Act-mandated Medicare+Choice regulations. Last month, we published
initial refinements to these regulations which improve beneficiary protections
and access to information while reducing plans' administrative workload to make
it easier for plans to offer more options to beneficiaries. And we have met
statutory deadlines for reporting to Congress and to plans on how we will risk
adjust payment to plans.
We launched a national education campaign and
participated in more than 1,000 events around the country to help beneficiaries
understand health plan changes. And we are establishing a federal advisory
committee to help us better inform beneficiaries.
Beneficiary Education
Helping beneficiaries understand the Medicare+Choice program is perhaps our
most important challenge. As mentioned above, we launched the National Medicare
Education Program to make sure beneficiaries receive accurate and unbiased
information about their benefits, rights, and options. The campaign includes:
- mailing a Medicare & You handbook to explain new benefits and health
plan options;
- a toll-free "l-800-MEDICAR(E)" call center with live
operators to answer questions and provide additional print information on
request;
- a consumer-friendly Internet site, www. medicare, gov, which
includes comparisons of benefits, costs, quality, and satisfaction ratings for
plans available in each zip code;
- work with more than 120 national aging,
consumer, provider, employer, union, and other organizations who help
disseminate Medicare+Choice information to their constituencies;
- enhanced
beneficiary counseling from State Health Insurance Assistance Programs; - a
national publicity campaign;
- more than a thousand individual state and
local outreach events around the country in senior centers and town halls, on
radio call-in shows and other venues, and in alternative languages, including
sign language, Spanish, and Chinese; and,
- a comprehensive assessment of
these efforts.
We tested the whole system in five states -- Arizona,
Florida, Ohio, Oregon and Washington in 1998. Unfortunately, the decisions by
some plans to withdraw from the program or reduce their service area
significantly complicated our task. We learned a great deal in this "dry run."
We are also conducting case studies to evaluate the education campaign in five
communities in the five pilot States and one community outside the pilot States.
And we have conducted focus groups.
We have learned a great deal from our
assessment efforts already. For example, we learned that a majority of
beneficiaries found the information in the Medicare & You handbook to be
informative and useful. Fully 93 percent want to be mailed Medicare & You.
However, even with the handbook, they are often confused about differences in
plan options and do not always understand the basic Medicare program. We also
have learned that, even though there are many places to receive Medicare+Choice
information, beneficiaries often do not know where to go for specific types of
information, and they tend to seek it only as they need it.
These
preliminary results are already suggesting ways to improve our education
efforts. We have identified ways to make Medicare & You easier to use. We
learned that the number of calls to our toll-free number was lower than we
expected, and that the amount of time for each call was about the 7 minutes we
had predicted. And we identified additional links we can add to our website to
help users find key information faster. Last month, almost 300,000 viewers used
the website to review Medicare+Choice plan comparisons, Nursing Home Compare,
and view or download HCFA publications. These and other findings will help us to
refine efforts for a fullscale, national campaign before the November 1999 open
enrollment period.
Also, as mentioned above, we are establishing the
Citizens Advisory Panel on Medicare Education, in accordance with the Federal
Advisory Committee Act, as a formal mechanism to obtain public input for our
education efforts on an ongoing basis. The panel will meet quarterly to help:
- enhance our effectiveness in informing beneficiaries, including the
appropriate use of public-private partnerships;
- expand outreach to
vulnerable and underserved communities, including racial and ethnic minorities;
and - assemble an information base of"best practices" for helping beneficiaries
evaluate plan options and strengthening a community infrastructure for
information, counseling, and assistance.
Panel members will include
representatives from the general public, older Americans, specific disease and
disability group advocates, minority communities, health communicators, health
economics researchers, health plans and insurers, providers, and other groups.
We are already receiving nominations for the Panel, and expect to announce
members and meeting schedules soon.
We are also working with beneficiary
advocates and health plans to standardize plan marketing materials that
summarize benefits so beneficiaries can make apples-to-apples comparisons. Our
goal is to complete this work before the first annual coordinated open
enrollment period in November 1999.
Reaching Out to Plans
We have taken
several steps to reach out to health plans to encourage participation in the
Medicare+Choice program. We have converted the vast majority of Medicare HMOs --
more than 300 -- to the new Medicare+Choice program, and added 12 new plans and
expanded service areas for another 11 plans since last November.
We are
currently reviewing another 24 new plan applications and 18 service area
expansion applications. The newly approved plans include provider sponsored
organizations, which are HMOs run by hospitals and physicians rather than
insurers. One of these plans is the first to enter Medicare with a federal
waiver from State licensure, which is allowed for the first time ever under the
Medicare+Choice program.
Last summer, we held outreach sessions attended by
more than 1,500 plan representatives, and we continue to strengthen lines of
communication with plans. HCFA Administrator Nancy-Ann DeParle has named a
senior HCFA official, Tom Gustafson, whom plans can call directly if they have
trouble resolving issues through normal HCFA channels. Last month, we published
initial refinements to the Medicare+Choice regulation that improve beneficiary
protections and access to information, while making it easier for health plans
to offer more options to beneficiaries. The new rule:
- clarifies that
beneficiaries enrolled in an M+C plan that withdraws or is terminated from
Medicare are entitled to enroll in other remaining locally available M+C plans;
specifies that any changes in plan rules must be made by October 15 to ensure
beneficiaries have all the information they need to make an informed choice
during the November annual open enrollment period; waives the requirement for an
initial health assessment within 90 days of enrollment for commercial health
plan enrollees who remain in the same managed care organization's
Medicare+Choice plan when they become eligible for Medicare at age 65, and for
enrollees who switch plans but remain under the care of the same primary care
provider; allows plans to choose the form of the initial health assessment;
- stipulates that the coordination of care function can be performed by a
range of qualified health care professionals, and is not limited to primary care
providers;
- limits the applicability of provider participation requirements
to physicians rather than all health care professionals; and,
- aligns
requirements for terminating specialists with the process for other providers.
We intend to publish a comprehensive final rule with further refinements
this fall.
To further facilitate plans' ability to offer choices to Medicare
beneficiaries, the President's budget includes a proposal to give plans 2 more
months to file the information used to approve benefit and premium structures.
This "Adjusted Community Rate" data would not be due until July 1, rather than
May 1. The move from May 1 to July 1 should help plans base their cost and
premium packages on more current trends and costs in the marketplace. July 1 is
the latest we can accept, process, and approve premium and benefit package data,
have the data validated by plans, and still mail beneficiaries information about
available plans in time for the November 1999 Medicare+Choice open enrollment
period. Given legislative schedules and the need to act immediately, we have
informed plans that the required filing date this year will be July I. We look
forward to working with you to enact the legislation necessary to support this
change that is so important to the success of the Medicare+Choice program.
We have also informed plans that they can continue to segment their service
areas, according to the transition rules that were applicable for the 1999
adjusted community rate filings. We are considering whether to make this policy
permanent in our final Medicare+Choice regulation.
Payment Reform
The
Balanced Budget Act of 1997 requires Medicare to "risk adjust" Medicare+Choice
payments starting January 1, 2000. That means we must base payment to plans on
the health status of individual plan enrollees. Data on individual beneficiary
use of health care services in a given year will be used to adjust payment for
each beneficiary enrolled in a Medicare+Choice plan the following year. Health
status adjustments are based on the average total cost of care for individuals
who had the same diagnoses in the previous year. Risk
adjustment represents a vast improvement over the current payment
methodology. It helps assure that payments are more appropriate, and curtails
the disincentive to enroll sicker beneficiaries.
Risk
adjustment will help beneficiaries feel more confident in their
Medicare+Choice options. It assures beneficiaries that Medicare pays plans the
right amount to provide all necessary care because payments take each enrollee's
health status into account. That will help people with serious illnesses, such
as cancer or cardiovascular disease, who can benefit most from the coordination
of care health plans can provide.
Risk adjustment will help
taxpayers by addressing the main reason Medicare has lost rather than saved
money on managed care. Many studies show health plans enroll beneficiaries who,
on average, are much healthier and less costly than those who remain in original
Medicare. That discrepancy has cost taxpayers $2 billion a year. Risk
adjustment will also help level the playing field among Medicare+Choice
plans. It tempers the risk of significant financial loss when plans enroll
beneficiaries who have expensive care needs. And it focuses competition more on
managing care than on avoiding risk. It also will help plans by alleviating
concerns among beneficiaries that plans have financial incentives to deny care.
The law requires us to proceed with risk adjustment
starting January 1, 2000, and does not specifically call for a transition.
However, we believe we must implement these changes in an incremental and
prudent fashion, as was done with other new major payment systems. We are,
therefore, using flexibility afforded to us in the law to phase in risk
adjustment over five years to prevent disruptions to beneficiaries or
the Medicare+Choice program.
Initially, we will use data on inpatient
hospital stays and move in an orderly fashion, as envisioned in the Balanced
Budget Act, to use of data from other health care settings. In the first year,
only 10 percent of payment to plans for each beneficiary will be calculated
based on the new risk adjustment method. By 2004, we and health
plans will be ready to use data from all sites of care, not just inpatient
hospital information, for risk adjustment. Then, and only then,
will payment to plans be 1 O0 percent based on risk adjustment.
It is essential to stress that risk adjustment will not and
cannot be budget neutral if we intend to protect the Medicare Trust Fund and be
fair to taxpayers. The whole reason for proceeding with risk
adjustment is that Medicare has not been paying plans properly. There
is considerable evidence that we overpay plans because payments are not adjusted
for health status, and managed care enrollees tend to be healthier than
beneficiaries who remain in fee-for-service Medicare.
Congress also
recognized that plans have been paid too little for enrollees with costly
conditions, and too much for those with minimal care needs. The simple
demographic adjustments made now for age, gender, county of residence, Medicaid
and institutional status, do not begin to accurately account for the wide
variation in patient care costs. Risk adjustment will. If
risk adjustment was budget neutral, Medicare and the taxpayers
who fund it would continue to lose billions of dollars each year on
Medicare+Choice. Budget neutral risk adjustment would cost
taxpayers an estimated $200 million in the first year of the phase-in, and $11.2
billion over five years if health plans maintained their current, more healthy
mix of beneficiaries.
The impact on plan revenues during the transition will
depend on the extent that less healthy beneficiaries enroll in Medicare+Choice
plans, resulting in higher payments than health plans receive today.
Total payment may be higher for some plans than it would be under the
current system if they enroll a mix of beneficiaries that is more representative
of the entire Medicare population.
Overall, we project plan payment to
change on average by less than 1 percent the first year. Phasing in risk
adjustment substantially buffers the impact. The federal government is
foregoing an estimated $1.4 billion in savings in the first year, and as much as
$4.5 billion over the full five years because of the phase in. Impact will be
further buffered by an annual payment update for 2000 of 5 percent. And,
importantly, we estimate that payment rates in 63 percent of counties in 2000
will be based on the higher, blended rates called for in the BBA, thereby
further helping plans adjust to risk adjustment.
Competitive Pricing Demonstration
We will soon begin a test of
competitive pricing for managed care, as called for in the BBA. This test is an
important step in our efforts to learn how to improve and protect Medicare. It
will provide objective data that is needed to evaluate Medicare reform proposals
that assume savings from rate-based competition among plans.
In this
demonstration project, managed care plans will compete to offer benefits at the
most reasonable cost. A bidding process, similar to what most employers and
unions use to decide how much to pay plans, will be used to set Medicare+Choice
rates. To ensure broad community involvement in this project, a Medicare
Competitive Pricing Advisory Commission, chaired by General Motors Health Care
Initiative Executive Director James Cubbin, has made recommendations regarding
key design features. It also has selected the markets of Phoenix, Arizona and
Kansas City, Kansas and Missouri, as initial demonstration sites. We are
establishing local advisory committees in these communities, and they will hold
public meetings to ensure that local beneficiaries and other stakeholders have a
voice in how the test program will operate. In particular, the local committees
will set the local minimum benefit package on which plans will bid. We will also
explore ways to reward plans that provide higher quality care.
Ensuring
Quality
The BBA includes important quality provisions for Medicare+Choice.
It raises the bar by requiring most plans to not only monitor quality but also
to improve quality. The new requirements will be phased in over the next several
years. This way beneficiaries can compare plans based on quality, and we can
utilize Medicare's substantial market leverage to be a prudent purchaser and
promote competition based on quality. We are working to incorporate quality
assessment and improvement into original fee-for-service Medicare, as well, so
beneficiaries will be able to make truly informed choices about all their
options. And we have committed to making measurable quality improvements
throughout the Medicare program as part of our Government Performance and Review
Act objectives for fiscal 2000.
All Medicare+Choice plans must report
objective, standardized measurements of how well they provide care and services.
They have been using HEDIS, the Health Plan Employer Data and Information Set,
for reporting purposes since 1997. HEDIS is the industry standard for measuring
health plan performance, and it has been tailored specifically for the Medicare
program. As a result of our audit of data from the initial round of HEDIS
reporting, we learned that some plans needed to improve data systems, and we are
seeing improvement. We will continue to require HEDIS data to be audited before
submission to ensure accuracy. We also are using CAHPS, the Consumer Assessment
of Health Plans Study, to objectively measure beneficiary satisfaction with plan
care and service. We are in the second year of requiring Medicare HMOs to
conduct CAHPS surveys, and got a strong 74 percent beneficiary response rate.
Reported results 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.
This fall, we will conduct a CAHPS survey specifically of beneficiaries who
disenroll from plans, asking about the beneficiary's experience and why they
left their plan. This will give beneficiaries the perspectives of both those who
left and those who stayed. Also, importantly, next year we will conduct a
Medicare fee-for-service survey with results available in 2001. This will enable
us to provide beneficiaries with comparable data on all options.
The results
of both HEDIS and CAHPS are being formatted so beneficiaries can make direct,
apples-to-apples comparisons among their plan options, and are posted on our Web
site at Medicare.gov. Beneficiaries may also request HEDIS and CAHPS information
through our 1-800-MEDICAR(E) call center. To the extent possible, we intend to
also include this information in the 2000 edition of Medicare & You.
Plans must conduct performance improvement projects and achieve demonstrable
and sustained improvement. Eventually, plans will have to meet minimum
performance standards. The date for meeting these standards may be delayed until
2001 in order to make sure plans have adequate time to comply. These standards
are important because there is wide variation in how well plans provide care.
For example, our HEDIS data show that 90 percent of women in some
Medicare+Choice plans get yearly mammograms, while less than 50 percent get this
essential service in other plans. Also, the National Committee on Quality
Assurance State of Managed Care Quality reports that, despite the promise and
capacity of managed care to improve quality, the industry's overall performance
on HEDIS measures was "essentially unchanged" from 1996 to 1997. We recognize
that it takes time for plans to adapt to the quality improvement requirements,
and that a learning curve is involved. Therefore, we made several changes from
our draft proposal to help plans comply.
We are requiring plans to conduct
two performance improvement projects per year. This workload is comparable to
standards imposed by private sector accrediting organizations. Plans can choose
projects they believe will target their enrollees' specific concerns.
We are
permitting waivers of mandatory participation in a national project each year,
and allowing plans to substitute any related ongoing projects of their own. For
1999, the national HCFAsponsored project focuses on diabetes, but plans with
existing diabetes projects can instead continue these projects without obtaining
preapproval from HCFA.
We are phasing in quality improvement requirements by
giving plans three years before they must achieve demonstrable improvement. In
the first contract year, plans need only select a topic, establish performance
indicators, and collect baseline data.
We are clarifying the schedule for
compliance with minimum performance level requirements. We intend to establish
these levels in 1999, first measure compliance in 2000, and require plans to
have achieved demonstrable improvement in 2001.
We are giving plans
discretion as to where they conduct site visits for provider credentialing,
rather than mandating site visits to each provider location. Plans also have
discretion in developing criteria for site visits, and they may delegate these
functions.
Phasing in enforcement is normal and prudent when implementing
new programs or rules. The Medicare+Choice quality improvement requirements
remain similar to those in the private sector. We are simply making sure plans
have sufficient time to come into compliance. Appropriate flexibility will be
provided so plans with networks that are less structured than traditional HMOs,
such as PPOs, can meet these requirements. Our quality improvement systems will
be sensitive to different plan structures and their different abilities to
affect provider behavior,
We are extremely impressed with the quality
improvement project outlines submitted by plans. Most are very thorough and
thoughtful. Many include detailed benchmarks and timetables. They make
abundantly clear that plans are very capable of achieving what Congress
envisioned in the BBA. We will continue to work closely and extensively with
plans to help them understand and meet all Medicare+Choice quality requirements.
But, if plans do what they have indicated in these outlines, we are confident
that they will succeed and, as a result, provide beneficiaries with better care
and taxpayers with better value for their money.
Once we have published the
final Medicare+Choice rule, we will begin to allow private accrediting
organizations to "deem" that plans meet requirements for quality,
confidentiality, and records accuracy, as allowed under the BBA. We will
continue to review compliance with other requirements.
Market Volatility
As you know, some Medicare HMOs did not convert to the Medicare+Choice
program, and others reduced their service areas last year. While we are
concerned about the business decision that some Medicare HMOs made to reduce
participation in the program, and especially the impact on beneficiaries who
were left with no other managed care options, it is important to put those
business decisions in context. Some of the plans that withdrew had market
positions or internal management issues that made it hard for them to compete.
And they faced rising prescription drug prices and other commercial pressures.
Many of the disrupted beneficiaries had several other plans to choose from, and
all but 50,000 had at least one other plan option.
It is our understanding
that the Federal Employees Health Benefits Program experienced a similar rate of
plan pullouts. We have observed instances where plans that withdrew Medicare
service from specific counties also withdrew from FEHBP in many of those same
counties. As mentioned above, the vast majority of Medicare HMOs converted to
the Medicare+Choice program. We have approved 23 new plan and service area
expansions since November, and are now reviewing applications from another 42
plans that want to get into or expand their role in Medicare+Choice. This
suggests that plan withdrawal decisions have more to do with internal plan and
larger marketplace issues than with Medicare rates or regulations. In fact, a
certain amount of market volatility must be expected when relying on the private
sector to serve beneficiaries.
To buffer against such market volatility, the
President's budget includes proposals to protect beneficiaries from disruption
by plan withdrawals. We have provided for earlier notification of plan
withdrawals in our recent refinement to Medicare+Choice regulations. We look
forward to working with you on legislation the President has proposed to broaden
access to supplemental Medigap polices if beneficiaries lose their plan option,
and to allow enrollees with end stage renal disease to move to another plan.
Conclusion
We are making substantial progress in implementing the
Medicare+Choice program. We are incorporating lessons learned from our initial
beneficiary education campaign to refine future efforts. And we are establishing
an advisory committee to further help improve these essential efforts. We are
working with plans to encourage participation. And we are refining regulations
so plans will be able to offer beneficiaries more choices. We are proceeding
with payment system improvements in a prudent manner that will meet the
statutory mandate while minimizing any impact on beneficiaries and plans. We are
also proceeding with quality improvement requirements in a prudent manner that
will meet the statutory mandate while giving plans reasonable time and
flexibility to comply.
We look forward to working with you to enact
necessary beneficiary protections and make other adjustments that may be
necessary to ensure success of the Medicare+Choice program. We thank you again
for holding this hearing, and we are happy to answer your questions.
END
LOAD-DATE: March 19, 1999
