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Testimony on Consumer Information in Medicare Managed Care by Bruce Merlin Fried
Director, Office of Managed Care
Health Care Financing Administration
U.S. Department of Health and Human Services

Before the Senate Committee on Aging
April 10, 1997

INTRODUCTION

Mr. Chairman and members of the Special Committee on Aging, I am pleased to submit testimony for the record which describes the Health Care Financing Administration's (HCFA) strategy to disseminate Medicare information to beneficiaries, particularly information involving managed care. One of our highest priorities is making sure that beneficiaries receive timely, accurate, and useful information about their health plan options. We certainly agree with the old saying, "knowledge is power." Beneficiaries who possess information about health care options have the ability to make wise decisions about their well being. Making wise choices about health care options can help beneficiaries receive preventive care, possibly avoid illnesses and costly treatments, and for many, recover from sickness. Expanding beneficiaries' knowledge, so that they can choose a health plan to best meet their needs, is cost-effective and the right approach.

ter for Beneficiary Services (CBS) will exist to protect, serve, and to be an advocate for beneficiaries. It is designed as the focal point for all of the agency's interactions with beneficiaries, their families, care-givers, and other representatives of beneficiaries. The CBS will provide information to help beneficiaries and concerned parties make informed decisions about their health care and program benefits administered by HCFA. It will assess beneficiary and consumer needs, design and implement beneficiary services' initiatives, and develop performance and evaluation programs for beneficiary services activities. The CBS will develop national Medicare policies and procedures for eligibility, enrollment, entitlement, coordination of benefits, managed care enrollment and disenrollment, and appeals. New methods to improve health care delivery systems from the perspective of our beneficiaries will be developed and tested through demonstrations and interventions. Contracts and grants involving customer service will be handled by the Center, and it will coordinate the activities of Medicare's contractors.

Our restructuring is moving HCFA in the right direction. As the Medicare and Medicaid programs evolved over the years, new programs and projects were layered onto existing structures. Over time, this became cumbersome and often confusing. Successfully implementing a more beneficiary responsive agency will facilitate our ability to effectively respond to the needs of beneficiaries. Tter for Beneficiary Services (CBS) will exist to protect, serve, and to be an advocate for beneficiaries. It is designed as the focal point for all of the agency's interactions with beneficiaries, their families, care-givers, and other representatives of beneficiaries. The CBS will provide information to help beneficiaries and concerned parties make informed decisions about their health care and program benefits administered by HCFA. It will assess beneficiary and consumer needs, design and implement beneficiary services' initiatives, and develop performance and evaluation programs for beneficiary services activities. The CBS will develop national Medicare policies and procedures for eligibility, enrollment, entitlement, coordination of benefits, managed care enrollment and disenrollment, and appeals. New methods to improve health care delivery systems from the perspective of our beneficiaries will be developed and tested through demonstrations and interventions. Contracts and grants involving customer service will be handled by the Center, and it will coordinate the activities of Medicare's contractors.

Our restructuring is moving HCFA in the right direction. As the Medicare and Medicaid programs evolved over the years, new programs and projects were layered onto existing structures. Over time, this became cumbersome and often confusing. Successfully implementing a more beneficiary responsive agency will facilitate our ability to effectively respond to the needs of beneficiaries. This is an important structural development as we build the bridge to the 21 st Century.

This Administration is serious about promoting beneficiary and consumer information through ensuring a more beneficiary-centered agency. We have been working hard on strategic measures to strengthen this goal. Our overall strategy involves numerous initiatives such as making available comparative information about plans; strengthening beneficiary education through our Competitive Pricing Demonstration; conducting beneficiary surveys; offering beneficiary counseling and assistance, ensuring unrestricted medical communication; and making available many publications and resource materials. HCFA's initiatives are designed to ensure that our beneficiaries and consumers receive information necessary to compare fee-for-service or managed care options and enable them to choose the right plan for their needs. Under this Administration, HCFA's efforts are firmly focused on helping beneficiaries and consumers obtain information about their health care plan options. By furthering this goal, our beneficiaries will receive the best value for their investment.

GAO's REPORT ON MANAGED CARE DATA

Late, last year, the Senate's Special Committee on Aging released recommendations submitted by the General Accounting Office in a report entitled, "Medicare: HCFA Should Release Data to Aid Consumers, Prompt Better HMO Performance." The Department of Health and Human Services and HCFA agree with the GAO that Medicare beneficiaries need more information and that informed beneficiaries can hold plans accountable for the quality of care. HCFA's beneficiary and consumer initiatives, which I will soon describe, have directly responded to GAO's suggestions and comments. We are confident that our current strategy is the right one in resolving GAO's concerns.

We believe that our numerous initiatives, programs, and publications are contributing to a stronger Medicare beneficiary-centered program and agency. Our efforts have already begun to make a significant difference in the way in which beneficiaries and consumers choose their health care plans. As we continue to develop and implement our strategies, beneficiary and consumer information about Medicare choices will be enhanced.

One of the GAO's recommendations was that we make disenrollment data available to our beneficiaries. Currently, we use plan specific disenrollment data generated by our systems to assist us in determining which plans need more focused reviews or monitoring. There are a number of reasons that beneficiaries disenroll. A careful analysis in the context of a particular plan's activities and its market of operation needs to be conducted before any meaningful conclusions can be drawn from disenrollment data. We are currently evaluating the different ways in which disenrollment rates, across plans, can best be expressed and presented, so that beneficiaries can use this data, in conjunction with other plan-specific information, to make good choices among plans. Ultimately, we plan to provide appropriate disenrollment data in HCFA's comparability charts. At this time, I would like to describe some of our initiatives.

HCFA's BENEFICIARY AND CONSUMER INITIATIVES
Comparative Information

We wish to make comparative information available to all Medicare beneficiaries to assist them in making appropriate health care choices. Currently, some of HCFA's regional offices sponsor and disseminate comparative information for beneficiaries. For instance, HCFA's San Francisco, Seattle, Philadelphia, and Denver regional offices are in the process of distributing comparative information. Charts compare benefits offered by area plans, including payments for hospital coverage, physicians and specialists, home health care, emergency care, preventive services, pharmacy benefits, dental, and mental health coverage. In the near future, we plan to provide information regarding Medicare's managed care beneficiary satisfaction surveys and the Health Plan Employer Data and Information Set (HEDIS). HEDIS is designed to provide quantitative and qualitative data on the performance of health plans. This data source is helpful because it includes information about the effectiveness of care, access and availability of care, health plan stability, use and cost of services, and a description of health plans.

Building on these pilots, HCFA plans to make current, comparative data on cost and benefits, and other information available for all plans nationwide. We are working on making comparative information available on the Internet and to beneficiary insurance counseling centers, HCFA Regional Offices, and others with Internet access. Phase I of this project will be available by June 1997, and will provide comparative market data about HMO benefits, premiums, and cost-sharing requirements. Individuals will be able to use HCFA's Internet Web site to retrieve data which will be helpful in making informed decisions about plan options. Currently, the majority of beneficiaries do not have a direct link to Internet. However, beneficiary and consumer advocates, insurance counselors, and public entities who are the most frequent sources of beneficiary advice and counseling do possess this technology, and it will become an even better source for helping to disseminate this data. Our beneficiaries will greatly benefit through this widely accessible and user-friendly data source.

Under the President's 1998 Budget Plan, we seek to further empower beneficiaries by ensuring wider and more consistent dissemination of health plan information in a format that is easier to understand. The President's budget proposes that beneficiaries receive comparative materials on all of their coverage options -- both managed care and Medigap. To help beneficiaries compare various plans, standardized packages for additional benefits offered by managed care plans would be developed. Adjustments would then be made to the current standard Medigap packages to make comparison easier for beneficiaries. Medigap plans would be required to operate under the same rules followed by Medicare managed care plans. Plans would be required to offer community rated policies and to participate in coordinated open enrollment periods. In addition, plans would be precluded from imposing preexisting condition exclusions.

Competitive Pricing Demonstration

HCFA is currently working to implement a Competitive Pricing Demonstration located in Denver, Colorado, which includes three major components: 1.) Beneficiary education; 2.) Enrollment by a neutral third-party; and 3.) Bidding process for rates. The first and second components relate to beneficiary information. This demonstration is designed to enable Medicare to make the transition to operating like other large payers.

Medicare's beneficiaries in this demonstration will have a guaranteed open enrollment period, slated for the Fall of 1997, during which they will be able to enroll in any of the local Medicare managed care plans. This managed care demonstration will use competitive bidding to set payment rates and will help beneficiaries to be more informed consumers, which win foster competition among plans. A main feature of the project is an expanded, intensified information and education effort. It is designed to test a range of new educational and informational resources for beneficiaries --- including new formats of printed materials, in-person seminars, and a 1-800 hotline. We plan to provide area-specific health insurance option comparison charts, including detailed comparisons of the Medicare managed care plans available in the area. There will also be opportunities for beneficiaries to view brief educational video tapes and taped presentations of the seminars. A special contractor, BENOVA, Inc. of Portland, Oregon, not affiliated with any of the plans, will be available to counsel beneficiaries and will handle the enrollment functions. Beneficiaries wishing to remain in Medicare's fee-for-service or who are already enrolled in a Medicare managed care plan and want to remain in that plan will not need to take any action to retain their existing arrangement. The goal of these resources is to help beneficiaries understand their options under Medicare and to help them make the best choices for their circumstances --- whether it is choosing between fee-for-service and managed care or choosing among various managed care and Medigap options.

We believe that the Denver project will provide beneficiaries with everything they need to be informed consumers, which is essential for this competition to work. In addition, beginning in 1999, payments to managed care plans will be adjusted for risk based on health status measures. Plans will be paid more for enrolling people with disabilities, certain chronic health conditions, or expensive care needs. We expect to learn the fairest way to pay HMOs and to build upon the traditional American reliance on the free-market. It is anticipated that in 1999, we will implement similar competitive pricing demonstrations in two other sites, yet to be determined.

We are encouraged by the strong support of health care experts who believe that there is a right way to implement market-oriented concepts. We are disappointed that some health plans, despite their stated support for a market-oriented approach, oppose these demonstrations. We have been and will continue to work with these health plans with the hope that plans will end up agreeing with us in this important area of intense study.

Survey of Managed Care Plan Enrollees

In cooperation with HCFA, the Agency for Health Care Policy and Research (AHCPR) initiated the Consumer Assessment of Health Plans Study (CAHPS) to design a Medicare managed care beneficiary satisfaction survey. This survey provides information from Medicare enrollee responses about satisfaction with plan providers, access to services and providers, availability of services, and quality of care. Beginning January 1, of this year, HCFA is requiring a health plans to use CAHPS. We plan to include the results of the beneficiary survey in HCFA's comparability charts so that beneficiaries have important information about particular plans.

Health Insurance Advisory Program

The Health Insurance Advisory Program (HIA) is designed to develop and strengthen the capability of states to provide Medicare beneficiaries with information, counseling, and assistance on adequate and appropriate health insurance coverage. Funding for this program supports information, counseling, and assistance relating to Medicare and Medicaid matters, as well as Medigap, long-term care insurance, and other health insurance benefit information. The President's Fiscal 1998 Budget Proposal continues to provide funding for these health advisory services.

Over half of the states had attempted to deliver counseling and assistance services to Medicare beneficiaries before the IRA grant program began. The significant interest in this effort, shown by states, attests to the perceived need for such services. Currently, all 50 states, as well as the District of Columbia, Puerto Rico, and the Virgin Islands participate in the HIA grant program. Two-thirds of the MA programs are administered by states' Department on Aging, and one-third of the programs are based in the states' Department of Insurance.

The primary modes of delivering I-HA services to Medicare beneficiaries and their representatives are face-to-face counseling, telephone hotlines, and outreach activities. The majority of programs have incorporated a combination of these methods into their programs. In counseling sessions, beneficiaries usually come to a central meeting place, such as a senior center or library, to meet with an HIA volunteer. Counseling sessions focus on general information, education, enrollment, claims forms, and the appeals process. The HIA's volunteers often answer questions about what Medicare pays and assist in solving claims and billing problems.

We are pleased to report that the IRA program is helping to improve the lives of beneficiaries in this country. In Iowa, through the state's Iowa Department of Elder Affairs, the FHA program provides funds to the state's Insurance Division, Senior Health Insurance Information Program (SHIIP). Through this project, Iowa's senior volunteer counselors perform valuable services to beneficiaries.

Let me share with you an example of an HIA-related beneficiary experience. The caretakers of a beneficiary, which we refer to as Sarah, received advice from a SHIIP volunteer. Sarah had three long-term care policies, two Medicare supplemental policies, and five other health insurance policies of limited coverage. As a result of a volunteer's counsel, the caregivers canceled duplicative policies and saved Sarah more than $4,400 in insurance premiums annually. The HIA program successfully serves beneficiaries in other states, such as in Louisiana where the state grantee is the Louisiana Department of Insurance, and the state counseling program is also known as SHIIP. Louisiana's program has 35 counseling sites located throughout the state, which provide counseling services to thousands of beneficiaries each year. It is estimated that during 1994 and 1995, this program saved clients in Louisiana over half a million dollars involving health insurance related concerns.

HCFA's regional offices have been instrument in building partnerships with the HIA programs and other organizations directly affected by the HIA. For instance, HCFA's New York office sponsored a conference which brought together representatives from HIAs, peer review organizations, carriers and intermediaries, the Social Security Administration, and state and local Agencies on Aging. This event created a forum for the exchange of information and customer service techniques. The majority of beneficiary concerns, as reported by the HIA programs, continue to focus on Medicare supplemental insurance issues, including an explanation of the ten standardized plans and the process to determine which plan best fits a beneficiary's needs. Other issues that rank high among beneficiary concerns include what is covered under Medicare, obtaining prescription coverage, obtaining insurance for the disabled, and dealing with primary and secondary insurance issues. The HIA programs provide an invaluable service to HCFA, supplying much-needed information and assistance, as well as a vital link for HCFA, to the Medicare beneficiary.

Unrestricted Medical Communication

The Medicare statute requires that contracting health plans must make all covered services available and accessible to each beneficiary as determined by the individual's medical condition. In fee-for-service, physicians who participate in the Medicare program are required to make beneficiaries aware of the full range of treatment options. Managed care enrollees are entitled to the same advice and consultation. This is a basic righ health care providers.

We anticipate having this new national marketing initiative available on the Internet as early as this month. Medicare managed care health plans that are members of the American Association of Health Plans (AAHP) will be notified by that organization of this added service. Contracting health plans that are not AAHP members will be notified by HCFA. Interested parties may request a hard copy of the document to be mailed. Once the guidelines are available, there will be a 45-day interim period prior to implementation. During this interim period, HCFA and the contracting health plans will communicate directly to ensure that sales and marketing practices are consistent with the standards. Open communications will ensure that health plans properly understand the guidelines' criteria and instructions.

Beneficiary Information Dissemination

HCFA's Consumer Information Program (CIP) is a highly visible public education campaign directed toward improving the health of Medicare and Medicaid beneficiaries. It is a nationwide effort led by HCFA in partnership with the Public Health Service. The program conducts public health campaigns, provides customer-friendly health education messages, and encourages greater use of HCFA's preventive health care benefits, such as flu and pneumonia immunizations and screening mammograms.

In addition, HCFA and its Department of Health and Human Services (DHHS) partner agencies have developed several publications to inform Medgh health care providers.

We anticipate having this new national marketing initiative available on the Internet as early as this month. Medicare managed care health plans that are members of the American Association of Health Plans (AAHP) will be notified by that organization of this added service. Contracting health plans that are not AAHP members will be notified by HCFA. Interested parties may request a hard copy of the document to be mailed. Once the guidelines are available, there will be a 45-day interim period prior to implementation. During this interim period, HCFA and the contracting health plans will communicate directly to ensure that sales and marketing practices are consistent with the standards. Open communications will ensure that health plans properly understand the guidelines' criteria and instructions.

Beneficiary Information Dissemination

HCFA's Consumer Information Program (CIP) is a highly visible public education campaign directed toward improving the health of Medicare and Medicaid beneficiaries. It is a nationwide effort led by HCFA in partnership with the Public Health Service. The program conducts public health campaigns, provides customer-friendly health education messages, and encourages greater use of HCFA's preventive health care benefits, such as flu and pneumonia immunizations and screening mammograms.

In addition, HCFA and its Department of Health and Human Services (DHHS) partner agencies have developed several publications to inform Medicare beneficiaries of their rights and options. These beneficiary advisory publications answer frequently-asked questions about HMO enrollment and disenrollment, potential fraud and abuse, and the appeals process. Also, the latest edition of the Medicare Handbook was sent to all 37 million Medicare beneficiaries and it is our goal that all beneficiaries receive an updated handbook every year.

The Medicare Handbook includes useful beneficiary information regarding the Medicare program, supplemental Medigap insurance, and managed care plans. It describes who is eligible for Medicare, how to enroll for Medicare, and what hospital and medical expenses are covered by Medicare, including how much of the bill beneficiaries are responsible for paying. The handbook provides a detailed description of the different services covered under Medicare Part A and Part B, including a listing of requirements which beneficiaries must meet. It is user-friendly, because the handbook includes numerous examples of services, benefits, deductibles, and copayments. An added feature of the handbook is a state-by-state telephone listing of insurance counseling centers, Medicare carriers, peer review organizations, and durable medical equipment regional carriers available for further information.

Community-based Medicare Information Resource

This past October marked the opening of a pilot project to provide beneficiaries with the latest Medicare information in a convenient, one-stop, personal service facility. The test site for "Your Medicare Center" is a Philadelphia shopping mall, and it is staffed by HCFA employees who explain managed care options, resolve concerns, and correct records. This innovative project will allow the public's concerns about entitlement, managed care choices and enrollment, Medigap insurance, coverage, premiums, and appeals to be answered promptly and efficiently. Additional services including educational seminars on managed care-related issues and health screening will also available, using technology such as interactive video-conferencing and computerized information kiosks.

National Toll-free Hotline

To assure Medicare's beneficiaries with quick and easy assistance or information, we are in the process of piloting a single, national toll-free telephone number for complete and accurate answers to beneficiaries' questions. Currently, beneficiaries must call different toll-free numbers depending on the issue. HCFA maintains or supports more than 150 toll-free numbers nationally, with the total annual volume of calls equaling 34 million. Our market research indicates that beneficiaries are unsure of whom to contact and often must call several toll-free numbers to reach an agent who can address their problem. However, as a result of HCFA's streamlined hotline system, we anticipate reducing beneficiary confusion and increasing the number of calls that are resolved on the first contact.

We are pleased to let you know that as a result of our existing hotlines and in collaboration with the DHHS's Office of Inspector General's hotline, beneficiaries are able to report potential cases involving Medicare and Medicaid fraud and abuse violations. As soon as these fraud cases are reported, prompt action is initiated by either HCFA's intermediaries, carriers, peer review organizations, or the states in the investigation of fraud allegations. The Office of Inspector General with the DHHS also plays a vital role in fraud investigations and corrective action. We believe that our single toll-free line will enhance our ability to combat fraud, because it will be easier for beneficiaries and concerned parties to make calls about potential fraud and abuse.

Information Needs for Consumer Choice

In an effort to assist HCFA in creating information which is easily understandable by our beneficiaries, wave awarded the Research Triangle Institute (RTI) a contract to develop and test prototype materials. HCFA plans to have this prototype language available by midsummer which will be helpful in making our Medicare and Medicaid managed care beneficiary publications more user-friendly. This project determined what consumers find most helpful in selecting their health insurance coverage. The RTI examined different types of information consumers use involving plans, providers, and physicians and practitioners in making their chosen health care plan system work best for them. Information needs vary across insurance groups. In general, Medicare beneficiaries were concerned with their access to current providers and the specialists of their choice, providers' communication skills, technical quality of care, and specific benefits relevant to their circumstances. Medicaid eligibles were most interested in access to after-hours care, provider choice, waiting time, and providers' communication and interpersonal skills.

Medicare beneficiaries consistently preferred a combination of individual or group presentations with printed reference material. Medicaid eligibles wanted group counseling sessions, similar to sessions, which they currently receive, but with the addition of detailed information on available plans. All participants indicated that they prefer receiving information from unbiased, consumer- oriented sources. Overall, traditional health plan information, such as premium amounts and benefit coverage, was the most common type of data included in the consumers' materials reviewed.

CONCLUSION

As the largest purchaser of health care, we believe that HCFA has a responsibility to ensure that beneficiaries have the information they need to make the best possible health care decisions. As our many consumer activities demonstrate, we are constantly improving our commitment to being a beneficiary-centered purchaser. Recently, this Administration included beneficiary and consumer information improvements within the President's Fiscal 1998 budget proposal submitted to Congress.

President Clinton is personally committed to ensuring that our beneficiaries, particularly seniors, receive accurate, complete, and timely information regarding their health care options. This Administration's proposals ensure that comparative information, involving fee-for-service, managed care, and Medigap, will be made available to beneficiaries. With the help of Congress, we hope to make a difference in the fives of our beneficiaries through enactment of our legislative proposals. In addition, we are confident that our current initiatives and programs are making it possible for numerous beneficiaries and consumers to be better informed.