We have several additional steps scheduled, as well.
- This November we will conduct the first open enrollment period for Medical Savings
- Also this November, we will begin mailing information, running a toll-free call center,
and providing other educational services to beneficiaries to help them understand the
changes in the program.
- Medicare+Choice plans.
- By March 1999 we expect to report to Congress our plans for "risk adjusting" plan
payment rates. Risk adjustment will help account for the health status of individual
beneficiaries and curb any incentive to avoid enrolling those with chronic or high-cost
- We will work with beneficiaries and health plans to standardize the format and language
used in plan summaries of benefits.
- In November 1999 we will conduct the first annual coordinated open enrollment period
into all Medicare+Choice plans.
OUTREACH TO PLANS
There is substantial interest among health plans in participating in the Medicare+Choice
program. We have scheduled a series of outreach sessions for existing plans and those interested
in offering Medicare+Choice plans.
- An outreach session held July 13-14 in Baltimore had approximately 350 attendees.
- An outreach session held July 21-22 in Chicago had more than 400 attendees.
- An outreach session held July 28-29 in Los Angeles had more than 400 attendees.
- A special outreach session held July 15 for those interested in offering Medical Savings
Account plans was attended by representatives from 11 organizations.
- Another special outreach session on Medicare+Choice quality improvement requirements
is scheduled for August 3-4 in Baltimore with 400 attendees expected.
Also, on July 17, we issued the first federal waiver for a Provider Sponsored Organization so that
it can apply to participate in Medicare+Choice without a state license. .
RIGHTS AND PROTECTIONS
The Medicare+Choice regulation incorporates important rights and protections for beneficiaries,
as well as providers. They address the most common consumer complaints about health plans.
- Appeal rights: Time frames are significantly tightened for decisions on appeals of
decisions to deny care. Plans must issue initial decisions within 14 days, down from a
previous maximum of 60 days. If a beneficiary appeals the initial decision, the plan must
issue a ruling within 30 days, also down from 60 days. Plans must rule within 72 hours
on denial-of-care decisions, including terminations of care, that could jeopardize the life,
health or ability of the enrollee to regain maximum function. For all service-related
decisions, extensions of up to 14 days may be permitted if the enrollee asks or the
organization justifies a need and explains how the delay is in the enrollee's interest. The
rules also sets the same 72 hour and 30 day limits on Medicare's independent appeal
body, where appeals are automatically forwarded when a plan denies a beneficiary
- Protections from Gag Rules: Plans are prohibited from limiting what providers can tell
patients about treatment options.
- Protections in the Emergency Room: Plans can charge no more than $50 copayments for
emergency room visits. They must cover emergency room visits for situations that a
"prudent layperson" would consider an emergency. And they must pay for any services
needed to stabilize a patient until discharge, a plan physician arrives, or an emergency
room physician agrees with a plan physician on transfer of the patient to another facility.
They must return emergency room calls seeking care authorizations for post-stabilization
care within one hour.
- Protections for Women: Women are guaranteed access without primary care referrals to
women's health specialists in plan networks for women's routine and preventive care,
such as Pap smears and breast exams.
- Protections for Preexisting Conditions: Plans may not discourage enrollment or deny,
limit or condition the coverage because of medical history, genetic information, mental or
physical illness, disability, or prior use of services.
- Protections for Serious, Complex Conditions: Patients with complex or serious medical
problems are guaranteed direct access to specialists without a new primary care referral
for each consultation in a given treatment plan.
- Protections for Cultural Differences and the Disabled: Plans must accommodate those
with disabilities, diverse cultural backgrounds, and limited English or reading skills.
- Protections for Privacy: Plans must protect patient confidentiality, disclose records to
patients, and may not sell enrollee names or addresses for any purpose.
- Protections from Fraud: Plan executives are required to certify that data they submit
about enrollees and their health care usage are accurate. This helps ensure that
adjustments in payment to plans based on enrollee health are accurate.
- Protections for Providers: Plans must explain decisions to cancel or refuse to sign
contracts with physicians, and let physicians appeal decisions to remove them from
networks. Plans also are prohibited from discriminating against any class of providers.
- Rights to Financial Information: Plans must provide beneficiaries, on request, data on
their financial condition and on how they pay physicians.
MEDICARE+CHOICE BENEFICIARY EDUCATION
Among the most important facets in implementing the Medicare+Choice program is helping
beneficiaries understand their options so they can make informed decisions. The Institute of
Medicine held a conference of experts to examine this task and make recommendations on how
we should proceed. I have attached to my testimony a letter from them outlining their
recommendations. The IOM strongly recommended that we stagger mailings to allow for market
testing, and that we emphasize to beneficiaries that they do not have to make any change.
Our own work with some 30 beneficiary focus group sessions, conducted by an outside
contractor, Barents Group/Westat/Project HOPE/Sutton Social Marketing, also counsels against
immediate nationwide mailing of detailed information to all beneficiaries. Based on this advice
and experience, we have revised plans for the special information campaign called for in the
Balanced Budget Act [1851(e)(3)(D)] for November 1998. This will allow us to refine our efforts
before November 1999, when the first full-scale education campaign and mailing mandated by
the Balanced Budget Act [1851(d)(2)] will occur.
We have an eight-point plan beginning this summer that includes:
- beneficiary mailings;
- toll-free telephone services;
- internet activities;
- a national train-the-trainer program;
- a national publicity campaign;
- state and community-based publicity and outreach campaigns;
- enhanced beneficiary counseling from State Health Insurance Assistance Programs; and
- targeted and comprehensive assessment of our education efforts.
We will first test the whole system, including the comprehensive handbooks and the toll free call
center, in five states -- Arizona, Florida, Ohio, Oregon and Washington.
The handbooks will include detailed information on Medicare+Choice options, and be tailored to
each market with side-by-side comparisons of costs and benefits for local plans. The call center
will have personnel to answer questions about specific options. We plan to phase in call center
access to another 25 percent of beneficiaries every three months, with full nationwide service by
Outside the five pilot states we will send beneficiaries a bulletin outlining Medicare+Choice
options and other useful information. It will stress that beneficiaries do not have to make any
change. It will discuss assistance for low-income beneficiaries, new preventive benefits, and
other changes. And it will tell how to obtain comparison data on plans in local markets.
The American Association of Retired Persons endorses this strategy. A July 2, 1998 letter,
attached to my testimony, calls the decision "the right course of action under the circumstances."
EDUCATION CAMPAIGN COSTS
Our phased education campaign allows us to make wise use of scarce resources. As you know,
$200 million was authorized for the first year of this education campaign, but only $95 million
was appropriated by Congress. We are supplementing those funds with $19.2 million in funds
from HCFA's program management and peer review organization budgets.
For FY 1998, the first year of the education campaign, we expect to spend:
- $30.2 million on printing and mailing materials to beneficiaries and outreach partners.
We will spend $9.3 million of this to produce and mail the comprehensive booklet with
localized plan comparison charts in the five test states, $13 million to mail the Medicare
bulletin to beneficiaries in other states, $4 million to provide an initial enrollment
package to new beneficiaries, and $3.9 million on materials for training outreach partners.
- $50.2 million on the toll-free call center. The call center operation will cost $38.2 million.
Mailing printed comparison information on Medicare+Choice options in local markets to
those who request them as the call center is phased into other states will cost $12 million.
- $22.3 million on program development. Evaluation of the education program will cost $2
million, fielding the Consumer Assessment of Health Plans survey will total $6.8 million,
grants to State Health Insurance Assistance Programs will total $5 million, training
outreach partners will cost $2.75 million. The rest will cover such activities as project
integration and management and business requirements analysis.
- $9.9 million on community-based outreach activities, including health fairs.
- $1.5 million on the Internet site.
For the second year, FY 1999, an effective education campaign will cost $173 million. We
propose to finance it by a combination of the full $150 million in user fees authorized in the
Balanced Budget Act, plus $23 million from other agency accounts. We project spending:
- $50 million for printing and mailing the handbook and other materials;
- $68 million for the toll-free Call Center;
- $39 million for program evaluation, development and technology investments;
- $2 million for the Internet site,
- $14 million for health fairs and other community-based outreach.
Appropriation of only $95 million in user fees in FY 1999 would result in an inadequate
education campaign. That would thwart Congressional intent to bring market forces to bear since
we would not be able to provide Medicare beneficiaries with all the tools they need to make truly
informed choices. We would have to scale back a number of activities including: toll free call
center service, funding to State Health Insurance Assistance Programs, local community
outreach, and beneficiary satisfaction surveys. We would also have to postpone investments in
technology needed to make it easier for beneficiaries to access comparative plan information.
The costs of beneficiary education are ongoing. The authorization provided in the Balanced
Budget Act, however, declines from $150 million to $100 million in user fees for fiscal years
2000 and beyond. Due to the uncertainty about the demands for Medicare+Choice information,
we may need to revise these funding levels to ensure that all activities are funded.
Among the most important provisions in the Medicare+Choice program are those that address
the quality of care and services. These help make sure beneficiaries have meaningful information
so they can compare plans. They also help ensure that coordinated care plans improve quality,
and that Medicare will use its market leverage to promote quality and be a prudent purchaser.
All plans must report objective, standardized measurements of how well they provide care and
services. They will use HEDIS, the Health Plan Employer Data and Information Set. HEDIS is
the industry standard for measuring health plan performance, and it has been tailored specifically
for the Medicare program. Medicare+Choice plans must have HEDIS data audited before
submission to ensure accuracy. We also will use CAHPS, the Consumer Assessment of Health
Plans Survey, to objectively measure beneficiary satisfaction with plan care and service. The
results of both HEDIS and CAHPS will be translated into plain English and arranged in charts so
beneficiaries can make direct, apples-to-apples comparisons among their plan options.
Plans with provider networks must conduct performance improvement projects and over time
achieve demonstrable and sustained improvement. Eventually these plans, except for
network-based Medical Savings Account plans, will have to meet minimum performance
standards. Establishing minimum performance standards is important because data now starting to come in
from the objective HEDIS performance measures show wide variation in how well plans provide
care. For example, according to HEDIS data from existing Medicare managed care plans, 90
percent of women in some plans get yearly mammograms, while in one plan only 15 percent get
this essential screening service.
Plans that do not have defined provider networks, such as non-network MSA plans and private
fee-for-service plans, must report the same standardized performance measures as all other plans.
These non-network plans also must evaluate the continuity and coordination of care that
enrollees receive. However, they do not have to meet the quality improvement requirements
because they lack the ability to influence provider behavior.
Appropriate flexibility will be provided so plans with networks that are less rigid than networks
in traditional HMOs, such as preferred provider organizations (PPOs), can meet quality
improvement requirements. The regulation preamble makes clear that we are not adopting a "one
size fits all" approach for all types of Medicare+Choice plans. Our quality improvement systems
will be sensitive to different plan structures and their different abilities to affect provider
behavior. However, while there is flexibility in quality improvement standards, all plans must
report standardized data. Collecting information from PPOs is feasible, according to a General
Accounting Office investigation. In a July 16, 1998 letter to Senate Finance Committee member
John Chafee and others, the GAO reports that "several large purchasers already collect
quality-related information from PPOs."
PROVIDER SPONSORED ORGANIZATIONS
Appropriate flexibility is also provided for Provider Sponsored Organizations (PSOs). The
Medicare+Choice regulations establish standards that, while similar to the time-tested HMO
standards, reflect the unique characteristics of these provider-based plans. The PSO solvency
standards are the result of a negotiated rulemaking process that included a broad range of
interested parties. The standards are designed to assure that these plans are financially sound.
The PSO regulations require that affiliated providers own and maintain control of at least 51
percent of the PSO. These plans must demonstrate that each affiliated provider shares in the
financial risk. The statute requires that affiliated providers furnish a "substantial proportion" of
the services delivered to Medicare enrollees. The regulations establish that the "substantial
proportion" of services that providers must furnish directly, rather than through contracts with
unaffiliated providers, is 70 percent for most PSOs, and 60 percent for rural PSOs. This ensures
that many types of providers work together to coordinate care and share risk.
PSOs that meet these standards may obtain waivers to participate in Medicare without state
licenses, so long as they meet all other Medicare+Choice standards, including state standards on
quality and consumer protection.
Federal waivers are non-renewable, state-specific, limited to 36 months and cannot be granted
after Nov. 1, 2002. We have already approved one such PSO waiver, for the St. Joseph
Healthcare PSO in Albuquerque, New Mexico.
The Medicare+Choice program is the most significant change to Medicare in the program's 33
year history. We have already published all of the regulations required under the Balanced
Budget Act. We are helping health plans understand how to participate. And we are undertaking
a prudent strategy to help beneficiaries understand their new options. Adequate funding for
education is essential if the Medicare+Choice program is to succeed. We appreciate this
committee's support as we proceed, and I am happy to answer any questions you might have.