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Expanding Health Care Coverage Choices for
Seniors through Improving Medicare+Choice
AIM is a coalition of organizations representing seniors,
doctors, hospitals, small and large businesses, medical researchers and innovators, insurance plans and providers and others dedicated to improving and strengthening Medicare for all Americans.
AIM seeks to ensure that all senior citizens have more health care coverage choices, better benefits (including prescription drug coverage), and access to the latest in innovative medical practices and treatments. These recommendations address problems specifically confronting Medicare's managed care program, Medicare+Choice.
In the Balanced Budget Act of 1997, Congress took the
important step of creating the Medicare+Choice program as a health insurance benefits option to Medicare beneficiaries. This option was designed to offer more choices for beneficiaries, and to provide
beneficiaries with the ability to obtain additional benefits not covered under traditional Medicare, such as prescription drug benefits. Many beneficiaries who have selected Medicare+Choice plans are pleased
with their ability to select these plans, and believe they have benefitted significantly from the comprehensive integrated benefits.
Indeed, most Americans under age 65, especially those utilizing employer-provided health care, have managed care coverage choices similar to those offered in the Medicare+Choice program, and as more baby boomers become Medicare eligible, they will expect those same plan choices under Medicare.
AIM believes the principles of beneficiary choice inherent
in the Medicare+Choice program can serve as a foundation for strengthening and improving the Medicare program. Building and ensuring a strong Medicare+Choice program requires that beneficiaries have an
expanded range of options similar to those available to Members of Congress, federal employees and retirees, and millions of working Americans under 65 years of age who are covered by private plans. The
Medicare+Choice program was envisioned to include a variety of health maintenance organizations, private fee-for-service plans, provider-sponsored organizations, and preferred provider networks but has been unable
to attain that goal. Inadequate payments and excessive regulation of private sector plans and providers participating in Medicare+Choice have seriously constrained the ability to expand coverage areas and have
caused numerous plans to withdraw from coverage areas where reimbursement was inadequate to cover even the costs of basic care. As a result, millions of beneficiaries are at risk of losing their access to
these plans and the additional benefits they have offered.
(1)
Ensure Adequate Payment Levels for Health Plans and Providers
Currently, Medicare pays one set fee per month for each beneficiary enrolled in a Medicare+Choice plan based on a payment formula in the Balanced
Budget Act of 1997 and regardless of the number of services the beneficiary may require. This payment formula has resulted in inadequate payment levels for Medicare+Choice plans in many parts of the
country. For example, payments to health plans in many counties have been capped at two percent (three percent in 2001) annual increases over the past several years, despite growth rates in local health care
costs that are as much as 8 to 12 percent.
This has resulted in significant disparities between Medicare+Choice payments and local fee-for-service costs in some areas and contributed to many plans withdrawing from the program and reducing service areas. AIM supports an immediate increase in funding levels in order to save the program.
(2)
Adopt Different Payment Structures for Different Plan Types
The current one-size-fits-all Medicare+Choice program payment structure sets many plans up for failure, especially in rural areas, and is unworkable
if the program is to succeed and provide a variety of coverage options for Medicare beneficiaries nationwide. For example, building rural health plan and provider networks is difficult given less conducive
health care market economics.
Plans in many rural areas have difficulties negotiating payments because of higher-than-average Medicare volumes and because the cost of bearing full risk for a potentially small population is relatively high when plans cannot spread costs over a larger pool of insured individuals.
The Federal Employee Health Benefit Program (FEHBP)
provides an example of flexible plan design and benefit structures. The FEHBP allows qualifying participants to choose from among a minimum of 10 plans nationwide, varying in plan type, benefit structure, and
cost. FEHB program offerings currently include PPOs, HMOs, and indemnity plans which do not participate in the Medicare+Choice program because of inadequate payment levels caused by the program's inflexible
payment structure.
AIM supports Medicare+Choice program improvements that
will ensure a competitive market-based system of health plan options similar to that available to private sector Americans and federal employees and retirees. Congress and CMS should ensure that beneficiaries have a
choice of plan types similar to those available to FEHBP participants.
Allowing flexibility in the Medicare+Choice program payment structure to accommodate different plan types would encourage creativity in the market and could encourage more participation by a wider variety of plans.
(3) Improve Medicare's Regulatory Framework
AIM
members believe that excessive regulation present in the Medicare+Choice program reduces innovation and consumer choice. AIM believes Medicare administrators must reduce excessive program complexity and
bureaucracy caused by the more than 110,000 pages of federal rules, regulations, guidelines and directives. AIM supports the elimination of real fraud and abuse in Medicare but our members believe this can be
achieved without relying on unnecessarily complex and heavy-handed regulation. Providers and plans must not be forced to divert resources from patient care in order to respond to ever-changing regulation.
CMS has had a fragmented approach to Medicare+Choice
program oversight in the past. AIM members are pleased that CMS Administrator Scully has recognized this problem and begun to address it with the announcement of the new Center for Beneficiary Choices to focus
on Medicare beneficiaries in private plans.
This will allow for greater efficiencies and streamline requirements that now may be developed within different offices. We recognize and applaud the efforts of the Bush administration and Congress to begin to streamline many burdensome procedures and we encourage the administration and CMS to consider these additional actions:
- Publish Guidelines for Beneficiary Materials: End efforts to standardize written materials for Medicare beneficiaries. The current
requirement for CMS approval of all documents and CMS's long term objective for standardizing many more communications is problematic.
Health plans need to tailor their communications to their own programs. CMS should provide a checklist for plans of the information required to send to beneficiaries and develop marketing and communications guidelines.
- Create a Medicare Office of Technology and Innovation: Important new medical technologies and services must go through three sequential
stages of Medicare decision-making - initial coverage, procurement code assignment, and payment level determination - before they are available to Medicare patients.
This process has suffered from a lack of coordination and created long delays in patient access to new technologies.
(4)
Increase Availability of Beneficiary Education Materials
In a survey of Congressional Medicare caseworkers, AIM found that many beneficiaries are unaware of existing opportunities for assistance from such
organizations as State Health Insurance Assistance Programs and other medical hotlines or simply lack access to opportunities such as the Internet ( and the 800 Medicare hotline.
Additionally, some beneficiaries currently have difficulty comparing benefits available through Medicare fee-for-service with benefits available through Medicare+Choice plans.
Medicare beneficiaries should have easy access to good
information and benefit comparisons on the types of plans available.
Beneficiaries need adequate, easy to understand information and clearly identified customer service representatives and insurance agents who can provide assistance by explaining coverage and benefit information and options. CMS can assist beneficiaries by recognizing that, because some beneficiaries desire more information on available plans, there is a need for a range of resources varying in scope and detail. The web site currently offers differing layers of information not elsewhere available to beneficiaries. These materials should be available to all beneficiaries, not just those with web access. CMS has begun to address this problem by increasing its ability to mail comparative information to beneficiaries who contact the Medicare hotline but who do not have Internet access.
Beneficiaries also need additional assistance
understanding Medicare claims and appeals procedures for denial of payment for services. CMS should expand efforts to clearly explain claims and appeals procedures should be provided to beneficiaries and
providers.
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