Summary

Until recent years, nearly all Medicare beneficiaries received care through a fee-for-service arrangement, with benefits and cost-sharing provisions standardized nationwide. Today, however, nearly 4 million beneficiaries have opted for health maintenance organizations (HMO), Medicare's leading managed care alternative. Although HMOs must cover the benefits available under traditional fee-for-service Medicare, they differ from one another in the provision of additional benefits, required premiums, provider networks, and ability to satisfy members. As a result, beneficiaries need reliable information to pick the plan that is right for them. Some beneficiaries do not understand even the basic difference between traditional Medicare and HMOs and may confuse HMOs with supplemental "Medigap" insurance. Moreover, some HMO sales agents have misled or used other questionable marketing practices to enroll poorly informed beneficiaries. This report reviews (1) the performance of the Health Care Financing Administration (HCFA), which administers Medicare, in providing beneficiaries with enough information on Medicare HMOs and (2) the usefulness of readily available HCFA data to caution beneficiaries about poorly performing HMOs.

GAO found that: (1) HCFA does not provide beneficiaries any of the comparative consumer guides that federal government and many employer-based health insurance programs routinely provide to their employees and retirees; (2) Medicare beneficiaries seeking similar information face a laborious, do-it-yourself process which includes calling to request area HMO names and telephone numbers, calling each HMO to request marketing materials, and attempting to compare plans from HMO brochures that may not use the same format or standardized terminology; (3) HCFA collects volumes of information that could be packaged and distributed to help consumers choose between competing Medicare HMO and also compiles data regarding HMO disenrollment rates, enrollee complaints, and certification results; (4) HCFA is developing comparison charts that will contain information on the benefits and costs for all Medicare HMO, but plans to post the charts in electronic format on the Internet rather than distribute them to beneficiaries; and (5) HCFA provision of information on HMO disenrollment rates may be particularly useful in helping beneficiaries to distinguish among competing HMO, since beneficiaries could then ask HMO representatives questions and seek additional information before making an enrollment decision.