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LOCAL RESIDENTS APPOINTED TO NATIONAL MEDICARE COMPETITIVE PRICING DEMONSTRATION

Health and Human Services Secretary Donna E. Shalala today named 21 residents of Phoenix to the local advisory committee that will help Medicare test new ways to bring greater competition to the managed care market, and better serve Medicare beneficiaries.

"The Clinton Administration and Congress are committed to find ways to protect the Medicare program," Secretary Shalala said. "We are counting on these experts' understanding of how managed care works in Phoenix to help implement this pilot project successfully."

Medicare currently pays HMOs a set rate to provide health care services to Medicare beneficiaries. Because many reports have shown that these rates may be higher than necessary, Congress created a demonstration project in the Balanced Budget Act of 1997. Under the Competitive Pricing Demonstration Program, managed care plans will compete to offer a standard set of benefits at the most reasonable cost to the Medicare program. Asking health plans to bid is closer to the way most employers that offer health care coverage decide how much to pay for health care for their employees.

"To help implement the pilot program, Congress and Medicare sought advice from a national committee of representatives from organizations that work with beneficiaries, doctors, hospitals and managed care plans," HCFA Administrator Nancy-Ann DeParle said. "The Competitive Pricing Advisory Committee, not the federal government, decided where the demonstration would take place." The CPAC selected Phoenix and Kansas City as the first sites for the project.

In addition to the CPAC, Congress called for the creation of a local advisory committee comprised of beneficiary, doctor and health plan representatives to decide on a benefit package that will be similar to what is currently being offered to Medicare beneficiaries in each community. The Area Advisory Committee will hold public meetings to provide Medicare beneficiaries and other interested individuals and organizations with an opportunity to have a voice in the pilot project.

The members of the Phoenix Area Advisory Committee are:

• Joseph P. Anderson, Chair. President and CEO, Schaller Anderson Incorporated.
• Susan Navran. Vice President, Blue Cross Blue Shield of Arizona.
• Dr. Clyde A. Wright. General Manager, Cigna Health Plans of AZ, Inc.
• Edward Munno, Jr. President and Chief Operating Officer, Intergroup of Arizona.
• Rick Badger. Chief Executive Officer, Pacificare of Arizona.
• Anne Lindeman. Executive Director, Governor's Advisory Council on Aging.
• Martha Taylor. Program Director, Arizona SHIP.
• Mary Lynn Kasunic. Executive Director, Area Agency on Aging.
• Donna Redford. Advocacy Unit Manager, Arizona Bridge to Independent Living.
• Erik Olsen, D.D.S. Beneficiary.
• Reginald Ballantyne III. President, PMH Health Resources, Inc.
• Anthony Mitten. Executive Director, Maricopa County Medical Society.
• Leland Peterson. President and CEO, Sun Health Corporation.
• John A. Hensing, M.D. Senior Vice President, System Medical Services,
• Joseph Hanss, M.D. Samaritan Health Systems
• Ben Lopez. Senior Human Services Consultant, Honeywell Corp.
• Arthur Pelberg, M.D. Vice President of Medicare Services, Schaller Anderson Incorporated.
• Herb Rigberg, M.D. Vice President, Medical Affairs, Health Services Advisory Group.
• Thomas Marreel. Principal Office Head, William M. Mercer Associates.
• Donna Buelow. Assistant Director Member Services, Arizona State Retirement System.
• Charles R. Cohen. Director, Arizona Department of Insurance.

"We are excited about the competitive pricing pilot in Phoenix and the Kansas City area," said James Cubbin, chairman of the CPAC and executive director of the Health Care Initiative at General Motors. "What we learn from this project will benefit the community, the national Medicare program, health plans and consumers. We expect this more accountable marketplace approach will drive improved quality and result in better control over cost."

The AAC is charged with making recommendations on the benefit package, the method of setting the government's contribution to premiums, whether to delay using health-based risk adjustment in year one of the demonstration, and whether health plans should bid on one or more counties in the service area. The AAC will also look at ways to reward managed care plans that provide higher quality health care to beneficiaries. The panel, however, cannot alter any CPAC-approved design decision.

The pilot program is being coordinated by the Health Care Financing Administration, the federal agency that administers Medicare and is the largest purchaser of managed care in the United States. More than 6 million of the nearly 40 million Medicare beneficiaries are currently enrolled in managed care across the country. In Phoenix, 158,000 of the nearly 363,000 Medicare beneficiaries are enrolled in managed care. In the Kansas City area, 52,000 of the 230,000 Medicare beneficiaries are enrolled in managed care. The bidding process is expected to take place during the summer of 1999 with plan payments to begin on January 1, 2000.

The first meeting of the Phoenix Area Advisory Committee will be from 9:00 a.m. to 3:30 p.m. Wednesday, March 31 at the Phoenix YMCA, 9440 N. 25th Avenue. From 2:30 to 3:00 p.m., the advisory committee will hear public input about the pilot demonstration.

For additional information, contact Linda Barnhart at (415) 744-3510 or Peter Ashkenaz at (202) 690-6145.

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