| Statement of Cindy Polich, Senior Vice President, Secure Horizons, UnitedHealth Group, Minneapolis, Minnesota Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means October 16, 2007
Good morning, Chairman Stark, Chairman Lewis, Representative Camp,
Representative Ramstad, and other distinguished members of the Subcommittees on
Health and Oversight. I am Cindy Polich, Senior Vice President
SecureHorizons, which is a UnitedHealth Group business unit dedicated to serving
the needs of Medicare beneficiaries.
I have spent the past three decades working in the fields of gerontology and
managed care. I am co-author of a book called Managing Healthcare for
the Elderly, which has been used as a college textbook, and have done
extensive research and teaching in gerontology and aging. At UnitedHealth
Group, I have helped lead the company’s efforts in the areas of geriatric health
and long-term care, including work with PacifiCare, UnitedHealthcare, and in the
1990s with the Evercare nursing home demonstration project, which became one of
the models for Special Needs Plans in the Medicare Modernization Act of 2003 (MMA).
My personal focus and commitment on improving health care for elderly
Americans is one of the reasons that I came to work at UnitedHealth Group.
UnitedHealth Group has long been committed to meeting the health care needs of
older Americans. In fact, we serve one out of every five Medicare beneficiaries
through Part D, Medicare Advantage, Special Needs and Medicare Supplement Plans.
We offer such a comprehensive range of Medicare products and services because we
believe fundamentally in enabling beneficiaries to make choices based on their
individual healthcare needs and preferences. We are proud to serve 1.3
million Medicare Advantage members in over 1,500 counties nationwide.
For more than 20 years, private Medicare plans have been a health coverage
option for beneficiaries. Today, more than eight million Americans have
chosen this option through a variety of Medicare Advantage plans offered
nationally.[1] When asked
why they chose Medicare Advantage, members tell us they value the integrated
benefits, enhanced coverage, lower out-of-pocket costs and coordinated care.
The overwhelming majority of beneficiaries are satisfied with their Medicare
Advantage plan. According to a survey conducted earlier this year for
America’s Health Insurance Plans, 90 percent of Medicare Advantage beneficiaries
expressed satisfaction with their coverage, an increase over the 84 percent who
were satisfied in a similar 2003 survey. For millions of Americans,
Medicare Advantage plans are a health care success story.
Our participation in the Medicare program is fundamental to UnitedHealth
Group’s core mission: to support the health and well-being of individuals,
families, and communities. And we know that our role in caring for seniors
and the disabled brings with it heightened responsibility. With that in
mind, I appreciate the opportunity to testify today and offer perspective about
Medicare Advantage and the important role it plays in our health care system.
Let me state at the outset that as one of the nation’s largest providers of
Medicare Advantage plans, UnitedHealth Group and its SecureHorizons business
unit support the need for the Centers for Medicare and Medicaid Services (CMS)
to gather, through audits and other means, the information it needs to provide
timely, impartial and effective oversight of these programs.
We take our role as a partner with the federal government very seriously, and
want to continue to work with the Congress, CMS and other key stakeholders to
address issues in a constructive way. We take very seriously the important role
of Congress, and these Sub-committees, as stewards of the Medicare program.
The Real Advantages of Medicare Advantage
Medicare Advantage (as well as its predecessors, including Medicare + Choice)
was created, in part, to give Medicare beneficiaries additional health coverage
choices. Because health care requirements and preferences vary greatly and
are very personal, a “one-size-fits-all” approach cannot possibly meet the
individual needs of every Medicare beneficiary.
Medicare Advantage members expect their plans to provide them with more value
than they could receive from Original Medicare and at a lower cost than they
would pay for a Medicare Supplement plan. Medicare Advantage plans accomplish
this by providing:
· Integrated Benefits and Care
Coordination: Medicare Advantage plans are often the most
cost-effective and convenient way for Medicare beneficiaries to cover all their
healthcare needs in one integrated benefit package – rather than, for example,
enrolling separately in a Part D plan, purchasing a Medicare Supplement policy,
calling multiple phone numbers for service, and managing the entire process
themselves.
But convenience and seamless customer experience is only a
small part of the value of an integrated benefit plan. A comprehensive and
integrated benefit plan reduces the fragmentation that can occur when a patient
is treated by a number of physicians and other health care providers, and allows
us to manage across the continuum of care. This care coordination is
critically important for Medicare beneficiaries, especially those with multiple
chronic conditions.
Medicare Advantage plans offer a range of programs and services to help
beneficiaries navigate the fragmented health care system, and ensure they
receive the care most appropriate to their health condition. Medicare Advantage
plan sponsors have pioneered programs that focus on pro-active clinical support
for members with serious chronic diseases, such as diabetes, congestive heart
failure or chronic obstructive pulmonary disease. Offerings vary by plan, but
can include care management, disease management and enhanced preventive and
screening programs. These programs are particularly valuable to members with
multiple chronic conditions and those nearing the end of life. These programs
are critical to the future financial health of the Medicare program, since the
20 percent of Medicare beneficiaries with five or more chronic conditions
consume more than two-thirds of Medicare spending.[2]
The Medicare Advantage program also includes Special Needs Plans, which
provide coordinated care and benefits that are uniquely appropriate and tailored
to people with complex health care needs and chronic illnesses.
o For example, when one of our Rhode
Island members was hospitalized for serious health problems including
hypoglycemia, coupled with Type 2 Diabetes her physician recommended that she
move to a nursing home or assisted living facility after discharge, since she
could not take care of herself. But instead she enrolled in one of our
Special Needs Medicare Advantage plans. A Care Manager came to her house, did
an assessment and worked with her physician, social workers and home- and
community-based service providers to develop a care plan that would allow her to
live at home. Today, our member – who just over a year ago could not leave
the apartment without assistance – lives in an independent living apartment
complex for the elderly. She is thirty pounds lighter and goes out for
walks every day.
· Enhanced Coverage and Reduced
Out of Pocket Costs: Medicare Advantage members tell us that what they value
most from their plan are the extra benefits, lower costs and catastrophic
protection provided by Medicare Advantage. Medicare Advantage plans
provide benefits that go beyond Original Medicare and Medicare Supplement,
including in many cases: integrated prescription drug coverage at no
additional cost, which in some cases includes coverage in the gap;
preventive/wellness services; vision and hearing benefits; and caregiver
support, to name a few. Obtaining comparable coverage from Medicare Supplement
and Part D plans could cost hundreds of dollars more per month.
Moreover, Medicare Advantage
plans have designed benefit structures that not only appeal to beneficiaries,
but encourage them to access primary and preventive care. This is very
important when managing chronic illness, as it reduces the probability of an
acute episode, lowers the incidence of hospitalizations, and improves the
overall cost and quality outcome for beneficiaries.
o Medicare Advantage makes a real
difference in the lives of real people. For example, when a 78-year-old
SecureHorizons member from Fort Worth suffered a heart attack and kidney
failure, he had a quadruple bypass and months of rehabilitative therapy.
The total bill was $1.3 million – but with his SecureHorizons Medicare Advantage
plan, he paid only $2,300 in out-of-pocket costs for the year.
Regulatory Oversight
Over the past four years, the rapid pace of change in the Medicare program
has created a steep learning curve for insurers, regulators and consumers alike.
After all, the Medicare Advantage program in its current form was approved in
2003 – just four years ago – and implemented less than 22 months ago.
New bidding and oversight provisions implemented with contract year 2006
should greatly improve the ability of CMS to audit plans effectively going
forward. Two improvements that should have a materially positive impact
include replacing the Adjusted Community Rate (ACR) proposal process with a new
bid process, and requiring actuarial certification.
In prior years, the rules governing the ACR proposal process required
Medicare Advantage organizations to estimate the cost of providing benefits
based on trend data related to how much they would charge commercial customers
to provide the same benefit package. The projected Medicare costs were
then adjusted to reflect expanded variations in trend or other factors.
The recent GAO report focused primarily on CMS auditing of this old ACR process
– which no longer exists.
The new bid process is a significant improvement, because it recognizes that
the Medicare business and the commercial business are not the same. The
new bid process focuses on actual costs, trends, and projections for providing
coverage for the expected mix of Medicare beneficiaries served by the plan.
The shift away from the commercial standard means that the rate-setting process
now more accurately reflects the requirements for serving Medicare beneficiaries
and is more in line with the way the business is actually managed. This
means CMS will be evaluating more relevant data and information.
Also new in 2006 was the requirement that Medicare Advantage bids be
actuarially certified before submission to CMS. This provides a higher
level of rigor to bid development and ensures that the bids meet standards of
actuarial practice.
Finally, additional oversight provisions were implemented in 2006. Bids
receive multiple levels of review: from outside auditors hired by CMS and
the CMS Office of the Actuary before bids are approved, through
post-contract-year audits; and from the CMS two-year “look-back” process.
We support CMS in its continuing efforts to improve the Medicare program and
its process of regulatory oversight. We are committed to doing our part to
improve all areas of our Medicare Advantage programs. The GAO has made a number
of recommendations for improving the contracting and auditing process of
Medicare Advantage programs. CMS has concurred with the GAO’s recommendations
and UnitedHealth Group strongly supports this position.
As a further area of consideration, we recommend that as the financial audit
process evolves that it focus on a company’s methodology for developing Medicare
Advantage bids across the range of plans the company offers. Ultimately,
this might allow for a refinement of the current standard – which emphasizes the
number of audits conducted – freeing up resources to focus more on the
underlying approaches a company uses to create its bids and the consistency with
which these approaches are applied.
In addition to its financial oversight, CMS has an important role in the
operational oversight of the Medicare Advantage program.
With respect to our action plans, we take a diligent and aggressive approach
to implementation, including conducting our own internal reviews and checks to
ensure that issues are resolved quickly and thoroughly. And, often, in
areas that CMS highlights for further improvement, we have already engaged in
activity, reflecting the work of our internal quality audits.
Beneficiaries indicate they are highly satisfied with our offerings, and we
are committed to continuous improvement.
Conclusion
For millions of elderly Americans, Medicare Advantage plans provide not only
needed flexibility, but also a wide range of benefits for meeting their unique
health care needs. Smart and effective regulation is good for consumers, and we
firmly believe that what’s good for consumers will be good for our company as
well. We are committed to continue working in a cooperative and collaborative
manner with CMS and all members of Congress to further this goal.
Thank you, Mr. Chairman and other distinguished members of the Subcommittees
on Health and Oversight, for the opportunity to speak today on behalf of
UnitedHealth Group.
[1] Kaiser Family Foundation,
June 2007 fact sheet, http://www.kff.org/medicare/upload/2052-10.pdf
[2] “Chronic Conditions: Making
the Case for Ongoing Care,” Partnership for Solutions, 2004
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