Summary

Since the early 1980s, health maintenance organizations (HMO) have entered into risk-based contracts with Medicare and offered beneficiaries an alternative to the traditional fee-for-service (FFS) program. By 1997, 5.2 million Medicare beneficiaries were enrolled in an HMO. Although Medicare HMOs were available in most urban areas, they were often unavailable in rural areas. Medicare+Choice (M+C) has HMO requirements pertaining to benefit package proposals, the beneficiary enrollment process, marketing and enrollee communication materials, and quality improvement, among other areas. An HMO must annually submit a benefit package proposal to the Centers for Medicare and Medicaid Services (CMS) for each M+C health plan that the HMO intends to offer. M+C requirements for the beneficiary enrollment process specify the information that an HMO must include in its enrollment application and the checks that it must perform to ensure that beneficiaries who submit applications are eligible to enroll in the HMO's health plan. M+C marketing requirements prohibit HMOs from using inaccurate or misleading language in advertisements or materials distributed to enrollees. M+C requirements for quality improvements specify that HMOs must undertake multiyear projects intended to improve the quality of health care and must routinely gather and report performance data to CMS.