S. HRG. 105-51 IMPROVING ACCOUNTABILITY IN MEDICARE MAN- AGED CARE: THE CONSUMER'S NEED FOR BETTER INFORMATION HEARING BEFORE THE SPECIAL COMMITTEE ON AGING UNITED STATES SENATE ONE HUNDRED FIFTH CONGRESS FIRST SESSION WASHINGTON, DC APRIL 10, 1997 Serial No. 105-3 Printed for the use of the Special Committee on Aging U.S. GOVERNMENT PRINTING OFFICE 40-057CC WASHINGTON : 1997 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-055208-7 SPECIAL COMMITTEE ON AGING CHARLES E. GRASSLEY, Iowa Chairman JAMES M. JEFFORDS, Vermont JOHN B. BREAUX, Louisiana LARRY CRAIG, Idaho JOHN GLENN, Ohio CONRAD BURNS, Montana HARRY REID, Nevada RICHARD SHELBY, Alabama HERB KOHL, Wisconsin RICK SANTORUM, Pennsylvania RUSSELL D. FEINGOLD, Wisconsin JOHN WARNER, Virginia CAROL MOSELEY-BRAUN, Illinois CHUCK HAGEL, Nebraska RON WYDEN, Oregon SUSAN COLLINS, Maine JACK REED, Rhode Island MIKE ENZI, Wyoming Theodore L. Totman, StaffDirector BRUCE D. LESLEY, Minority StaffDirector (II) CMS Library ! C2-07-13 7500 Security Blvd. j^^rtH^LJl^yM^O^^-was-— - CONTENTS Page Opening statement ofSenatorCharles E. Grassley 1 Statement of: SenatorJohn Breaux 30 Senator Conrad Burns 32 SenatorRonWyden 33 SenatorJack Reed 35 SenatorSusan Collins 35 SenatorMoseley-Braun 88 Prepared statement of: SenatorHarryReid 36 SenatorJamesJeffords 37 , Senator LarryE. Craig 38 SenatorJohnWarner 38 Panel I Irvin Stuart, Medicare Beneficiary, Bronx, NY; Accompanied by: Emelda Stu- art 39 Diane Archer, executive director, Medicare Rights Center, NewYork, NY 45 William Scanlon, director, Health Financing and Systems Issues, General Accounting Office, Washington, DC 66 Panel II Helen Darling, manager, Healthcare Strategy and Programs, Xerox Corpora- tion, representingthe Institute ofMedicine, Stamford, CT 91 Margaret Stanley, assistant executive officer, Health Benefits Service, Califor- niaPublic Employees Retirement System (CalPERS), Sacramento, CA 117 APPENDIX GAO responsesto SenatorJeffords Questions 133 (III) IMPROVING ACCOUNTABILITY IN MEDICARE MANAGED CARE: THE CONSUMER'S NEED FOR BETTER INFORMATION THURSDAY, APRIL 10, 1997 U.S. Senate, Special Committee on Aging, Washington, DC. The committee met, pursuant to notice, at 9:05 a.m., in room SD-562, Dirksen Senate Office Building, Hon. Charles Grassley (chairman ofthe committee) presiding. Present: Senators Grassley, Jeffords, Burns, Collins, Breaux, Moseley-Braun, Wyden, and Reed. OPENING STATEMENT OF SENATOR CHARLES GRASSLEY, CHAIRMAN The Chairman. Good morning, everybody. As chairman of the Special Committee on Aging and also for my Democratic colleague, the Senator from Louisiana, the ranking Democrat, I want to wel- come all ofmy colleagues and the witnesses who are here today for this morning's hearing. The focus ofthe hearing will be on how Congress and the Admin- istration can provide better information to Medicare beneficiaries when they are trying to select the right health plan to meet their health care needs. Behind the screen, you will see on that tall panel there 7 or 8 or maybe 9 or 10 different plans that come out of the Los Angeles area, and these are just summaries of plans. You could have pounds of paperwork that would come to a house- hold about the details ofa plan. You will see how complicated these Medicare-approved HMO plans in the Los Angeles area are. A wall of brochures like that obviously demonstrates better than any words I can say or our witnesses can say that seniors have a major problem trying to choose a Medicare plan. They have to contact each health plan to get a copy of their bro- chure, and then, they try to decipher the differences between the plans, and they do that without the benefit of standardized terms or formats in these marketing materials. Most of you in this room are probably very knowledgeable about Medicare, but I would like to challenge anyone to work their way through that maze and come out feeling you made a wise decision regarding the Medicare man- aged care plan you should join. Thankfully, the choice of health plans in Medicare is increasing at a rapid rate, and as we look at ways to provide more options for (l) 2 Medicare beneficiaries, we need to make sure that the right infor- mation is available so they can make informed decisions. By the end of 1996, approximately 13 percent of the Medicare population or almost 5 million beneficiaries were enrolled in managed care plans, compared to only 5 percent in 1990. The Congressional Budget Office predicts that this figure will approach 25 percent of the total Medicare population by the year 2002. As more bene- ficiaries decide to enroll in Medicare managed care plans, there is increasing concern among seniors and their advocates that they are not being informed about their health care coverage. Current law requires that Medicare beneficiaries are provided with certain in- formation, but according to testimony we are going to hear this morning, it is not adequate, and it is not provided in a very useful format. At a recent hearing before the House Ways and Means Sub- committee, Stan Jones, chairman ofthe Institute ofMedicine, testi- fied that the information provided to Medicare ben—eficiaries about the differ—ences in health plans appears primitive and those are his words compared with what is available to private purchasers. He said: "many elderly are making these new choices about man- aged care without enough information to iudge which option is best for them, what the plan they choose will actually cover and how the plan will operate." This morning, we are going to hear a real life experience of some- one who recently became eligible for Medicare and is trying to de- cide what plan to select but cannot seem to get the information to do so. We will hear from experts in the field and from the General Accounting Office about ways we can improve what and how much information is being provided by Medicare. I would just like to note that we invited the HealthCare Financing Administration (HCFA) to testify about it's plans to improve what information is provided to Medicare beneficiaries, but beyond submitting testimony, they declined to appear. So, I would like the record to show that HCFA decided not to tes- tify before this committee because they did not like the order of witnesses that I, as the chairman ofthis committee, requested. So, I say shame on HCFA. There is a certain snobbery, it seems to me, in the bureaucracy of our democracy when these administrators think they are too good to sit at the same table with the average citizen. [The statements from the Health Care Financing Administration follow:] 3 STATEMENT FORTHE RECORD BRUCE MERLIN FRIEig? DIRECTOR f** OFFICE OF MANAGED CARE HEALTH CARE FINANCE ADMINISTRATION %fi ON : "CONSUMER INFORMATION SN MEDICARE.l||p|(||^§|iE" SENATE COMMTTT1EON AGI8G , , APRIL 10, 1gjTjt = 4 INTRODUCTION Mr. ChairmanandmembersoftheSpecialCommitteeonAging,Iampleasedtosubmittestimony fortherecordwhichdescribestheHealthCareFinancingAdministration's(HCFA)strategyto disseminateMedicareinformationtobeneficiaries,particularlyinformationinvolvingmanaged care. Oneofourhighestprioritiesismakingsurethatbeneficiariesreceivetimely, accurate, and usefulinformationabouttheirhealthplanoptions. Wecertainlyagreewiththeoldsaying, "knowledgeispower." Beneficiarieswhopossessinformationabouthealthcareoptionshavethe abilitytomakewisedecisionsabouttheirwellbeing. Makingwisechoicesabouthealthcare optionscanhelpbeneficiariesreceivepreventivecare,possiblyavoidillnessesandcostly treatments,andformany,recoverfromsickness. Expandingbeneficiaries' knowledge, sothat theycanchooseahealthplantobestmeettheirneeds, iscost-effectiveandtherightapproach. Currently,HCFAisundergoinganinternalreorganizationdesignedtoenhanceourbeneficiary- centeredfocus. ThereorganizationwillbecompletebythissummerandwillenableHCFAto respondmoreefficientlytorapidchangesoccurringinhealthcaresothatwecanbetterserveour beneficiaries. ThreeseparateHCFAdivisionsarebeingestablishedtofocusonourthreeprimary audiences,whichincludeourbeneficiaries,thehealthcareplansandproviderswhocarefor beneficiaries,andthestateswhopartnerwithusinservingourMedicaidbeneficiaries. This customermodelissimilartomarketsintheprivatesector. Itrecognizesthatdrivingforces behindcurrentchangesinthenation'shealthcaresystemarenotinternaltotheagency,but external. Justasinthecommercialhealthcaresystem,managedcareisemergingasanintegral andrapidlygrowingpartofouroperations. Therefore, itmakessensetointegratemanagedcare andfee-for-serviceoperationsthroughouttheagency,ratherthantomaintainaseparateOfficeof ManagedCare,forexample. Similarly,wearecombiningtheMedicaidBureau, surveyand certificationoperations,insuranceregulation,clinicallaboratoryregulation, andintergovernmental affairsintotheCenterforStateOperations. HCFA'sneworganizationalstructurefocusesonthebeneficiaryasHCFA'sultimatecustomerby establishing,forthefirsttime,acomponentdedicatedexplicitlytounderstandingandmeetingthe needsofbeneficiaries. TheCenterforBeneficiaryServices(CBS)willexisttoprotect, serve, and tobeanadvocateforbeneficiaries. Itisdesignedasthefocalpointforalloftheagency's interactionswithbeneficiaries,theirfamilies, care-givers, andotherrepresentativesof beneficiaries. TheCBSwillprovideinformationtohelpbeneficiariesandconcernedpartiesmake informeddecisionsabouttheirhealthcareandprogrambenefitsadministeredbyHCFA. Itwill assessbeneficiaryandconsumerneeds,designandimplementbeneficiaryservices' initiatives, and developperformanceandevaluationprogramsforbeneficiaryservicesactivities. TheCBSwill developnationalMedicarepoliciesandproceduresforeligibility,enrollment,entitlement, coordinationofbenefits,managedcareenrollmentanddisenrollment,andappeals. Newmethods toimprovehealthcaredeliverysystemsfromtheperspectiveofourbeneficiarieswillbe developedandtestedthroughdemonstrationsandinterventions. Contractsandgrantsinvolving customerservicewillbehandledbytheCenter,anditwillcoordinatetheactivitiesofMedicare's contractors. 1 5 OurrestructuringismovingHCFAintherightdirection. AstheMedicareandMedicaid programsevolvedovertheyears,newprogramsandprojectswerelayeredontoexisting structures. Overtime,thisbecamecumbersomeandoftenconfusing. Successfullyimplementing amorebeneficiaryresponsiveagencywillfacilitateourabilitytoeffectivelyrespondtotheneeds ofbeneficiaries. Thisisanimportantstructuraldevelopmentaswebuildthebridgetothe21st Century. ThisAdministrationisseriousaboutpromotingbeneficiaryandconsumerinformationthrough ensuringamorebeneficiary-centeredagency. Wehavebeenworkinghardonstrategicmeasures tostrengthenthisgoal. Ouroverallstrategyinvolvesnumerousinitiativessuchasmaking availablecomparativeinformationaboutplans;strengtheningbeneficiaryeducationthroughour CompetitivePricingDemonstration;conductingbeneficiarysurveys;offeringbeneficiary counselingandassistance;ensuringunrestrictedmedicalcommunication;andmakingavailable manypublicationsandresourcematerials. HCFA'sinitiativesaredesignedtoensurethatour beneficiariesandconsumersreceiveinformationnecessarytocomparefee-for-serviceormanaged careoptionsandenablethemtochoosetherightplanfortheirneeds. UnderthisAdministration, HCFA'seffortsarefirmlyfocusedonhelpingbeneficiariesandconsumersobtaininformation abouttheirhealthcareplanoptions. Byfurtheringthisgoal,ourbeneficiarieswillreceivethebest valuefortheirinvestment. GAO'sREPORTONMANAGEDCAREDATA Late,lastyear,theSenate'sSpecialCommitteeonAgingreleasedrecommendationssubmittedby theGeneralAccountingOfficeinareportentitled, "Medicare: HCFAShouldReleaseDatato AidConsumers,PromptBetterHMOPerformance." TheDepartmentofHealthandHuman ServicesandHCf-AagreewiththeGAOthatMedicarebeneficiariesneedmoreinformationand thatinformedbeneficiariescanholdplansaccountableforthequalityofcare. HCFA'sbeneficiary andconsumerinitiatives,whichIwillsoondescribe, havedirectlyrespondedtoGAO's suggestionsandcomments. Weareconfidentthatourcurrentstrategyistherightonein resolvingGAO'sconcerns. Webelievethatournumerousinitiatives,programs,andpublicationsarecontributingtoa strongerMedicarebeneficiary-centeredprogramandagency. Oureffortshavealreadybegunto makeasignificantdifferenceinthewayinwhichbeneficiariesandconsumerschoosetheirhealth careplans. Aswecontinuetodevelopandimplementourstrategies,beneficiaryandconsumer informationaboutMedicarechoiceswillbeenhanced. OneoftheGAO'srecommendationswasthatwemakedisenrollmentdataavailabletoour beneficiaries. Currently,weuseplanspecificdisenrollmentdatageneratedbyoursystemsto assistusindeterminingwhichplansneedmorefocusedreviewsormonitoring. Therearea numberofreasonsthatbeneficiariesdisenroll. Acarefulanalysisinthecontextofaparticular plan'sactivitiesanditsmarketofoperationneedstobeconductedbeforeanymeaningful 2 6 conclusionscanbedrawnfromdisenrollmentdata. Wearecurrentlyevaluatingthedifferentways inwhichdisenrollmentrates,acrossplans, canbestbeexpressedandpresented, sothat beneficiariescanusethisdata,inconjunctionwithotherplan-specificinformation,tomakegood choicesamongplans. Ultimately,weplantoprovideappropriatedisenrollmentdatainHCFA's comparabilitycharts. Atthistime,Iwouldliketodescribesomeofourinitiatives. HCFA'sBENEFICIARYANDCONSUMERINITIATIVES ComparativeInformation WewishtomakecomparativeinformationavailabletoallMedicarebeneficiariestoassistthemin makingappropriatehealthcarechoices. Currently, someofHCFA'sregionalofficessponsorand disseminatecomparativeinformationforbeneficiaries. Forinstance,HCFA'sSanFrancisco, Seattle,Philadelphia,andDenverregionalofficesareintheprocessofdistributingcomparative information. Chartscomparebenefitsofferedbyareaplans,includingpaymentsforhospital coverage,physiciansandspecialists,homehealthcare, emergencycare,preventiveservices, pharmacybenefits,dental, andmentalhealthcoverage. Inthenearfuture,weplantoprovide informationregardingMedicare'smanagedcarebeneficiarysatisfactionsurveysandtheHealth PlanEmployerDataandInformationSet(HEDIS). HEDISisdesignedtoprovidequantitative andqualitativedataontheperformanceofhealthplans. Thisdatasourceishelpfulbecauseit includesinformationabouttheeffectivenessofcaie,accessandavailabilityofcare,healthplan stability,useandcostofservices,andadescriptionofhealthplans. Buildingonthesepilots,HCFAplanstomakecurrent, comparativedataoncostandbenefits, and otherinformationavailableforallplansnationwide. Weareworkingonmakingcomparative informationavailableontheInternetandtobeneficiaryinsurancecounselingcenters,HCFA RegionalOffices,andotherswithInternetaccess. PhaseIofthisprojectwillbeavailablebyJune 1997,andwillprovidecomparativemarketdataaboutHMObenefits,premiums,andcost-sharing requirements. IndividualswillbeabletouseHCFA'sInternetWebsitetoretrievedatawhichwill behelpfulinmakinginformeddecisionsaboutplanoptions. Currently,themajorityof beneficiariesdonothaveadirectlinktoInternet. However,beneficiaryandconsumeradvocates, insurancecounselors,andpublicentitieswhoarethemostfrequentsourcesofbeneficiaryadvice andcounselingdopossessthistechnology,anditwillbecomeanevenbettersourceforhelpingto disseminatethisdata. Ourbeneficiarieswillgreatlybenefitthroughthiswidelyaccessibleand user-friendlydatasource. UnderthePresident's 1998BudgetPlan,weseektofurtherempowerbeneficiariesbyensuring widerandmoreconsistentdisseminationofhealthplaninformationinaformatthatiseasierto understand. ThePresident'sbudgetproposesthatbeneficiariesreceivecomparativematerialson alloftheircoverageoptions~bothmanagedcareandMedigap. Tohelpbeneficiariescompare variousplans, standardizedpackagesforadditionalbenefitsofferedbymanagedcareplanswould bedeveloped. AdjustmentswouldthenbemadetothecurrentstandardMedigappackagesto 3