[Congressional Record Volume 143, Number 41 (Wednesday, April 9, 1997)]
[Senate]
[Pages S2866-S2870]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MEDICARE REFORM
Mr. WYDEN. Mr. President, I have come to the floor each day this week
to talk about what I think is the critical need for the Senate to
develop a bipartisan plan to reform Medicare. Medicare is a lifeline
for millions and millions of American families, and I think it is
understood by every Member of this body that this is a program that
faces financial crisis as we look to the next century.
Today, as part of the effort to build support for a bipartisan
Medicare reform effort I will look specifically at the Medicare
reimbursement formula. I think it is important to take this subject up
because I believe today's Medicare reimbursement system in many
instances overcharges taxpayers on costs and shortchanges older people
who need and deserve good quality care.
Now, Mr. President, as we all know, there are essentially two major
types of health care in America. There is traditional health care, what
is known as fee-for-service. It means just what it sounds like.
Providers get paid on the basis of the number of services that they
render. This, unfortunately, can encourage waste. If, for example, an
older person in traditional health care receives 10 medical tests and 4
would have been sufficient, under traditional health care the provider
gets paid for 10. The other type of health care is what is known as
managed care or health maintenance organizations. This is essentially a
prepaid kind of arrangement. It creates incentives to hold down costs.
But as we know, in some instances, tragically, it has also been used as
a tool to hold back on needed health care that older people depend on.
The Federal Government, looking to the great demographic changes, the
demographic earthquake that our country will face in the next century,
has sought to try to change this system of reimbursement and, in
particular, try to encourage the availability of good quality--I want
to emphasize that, good quality--managed care or health maintenance
organizations.
They set up a plan for reimbursing these organizations known as the
average adjusted per capita cost, or AAPCC. Now, I am the first to
admit that discussion of this topic is pretty much a sleep-inducing,
eye-glazing issue, but certainly for folks in rural Wyoming, rural
Oregon and across this country, the low-cost areas, it has great
implications, but also it has great implications for the system as a
whole.
I believe that the Federal Government has botched the job of handling
this reimbursement system, and it is time to make some fundamental
changes. Under this reimbursement system, Medicare pays health
maintenance organizations 95 percent of the estimated cost of treating
a patient under fee-for-service plans in a particular county. What this
very often means
[[Page S2867]]
is that in an area where there has not been an effort to inject
competition, where there has not been an effort to drive out waste, you
have wasteful, inefficient fee-for-service health care being offered,
and it is being used, essentially, as a path to guide reimbursement for
the HMO's, the health maintenance organizations.
I brought a couple of charts to the floor today. The first is one
that shows that many, many of our counties across this country that
have tried to hold down costs are reimbursed for health maintenance
organizations, or the competitive part of the Medicare system, in a way
that is below the national average. Certainly, Mr. President, you and
others like myself who represent rural areas see how critical this
issue is because our providers have difficulty providing the defined
benefits under Medicare, let alone some of the extras such as reduced
drugs, eyeglasses and hearing aids that are available in many of the
high-cost areas.
For example, as my next chart illustrates, in 1997, one of the very
high-cost reimbursement areas was in Florida, in Dade City, FL, with
$748 a month received there, whereas in Arthur, NE, they receive $221
per month. So the question, essentially, is to our colleagues, again,
on a bipartisan basis, our colleagues from Nebraska, Senator Kerrey and
Senator Hagel: Is it true that a typical 72-year-old Nebraskan is that
much healthier than a typical New Yorker of the same age? Well,
Medicare thinks so. That is how the Federal Government does business.
The Federal Government conducts its affairs that way. I think it is
wrong. It is that way not just for folks in Nebraska but many other
parts of the country like ours that, again, we share on a bipartisan
basis, and as a result our seniors get a much thinner Medicare benefit
package than they would if they were in an area that was much more
costly.
For example, in my home community of Portland, OR, we have the
highest concentration of HMO's in the country, the highest level of
penetration of HMO's in the United States, just about 60 percent, and
we are reimbursed at a level significantly below the national average
of $467. We get reimbursed at a $387-per-month level. What happens is a
senior who lives in Dade City, FL, or in southern California or parts
of New York State calls seniors I represent in Oregon and asks them how
Medicare is going, and seniors in the high-cost areas say, ``It's going
great because we can get prescription drugs, eye glasses and hearing
aids all at essentially little or no cost,'' and seniors in Oregon get
none of those things, and, in fact, many of their providers in rural
parts of our State have difficulty providing basic services.
So the question then becomes, what are some of the fundamental ways
in which to change this system which so often rewards waste, penalizes
the frugal and, in effect, creates an incentive for various parts of
the country to do business as usual, even though the General Accounting
Office and other bodies are saying that business as usual will be bad
news for both seniors and for taxpayers. Several practical suggestions
are at hand, Mr. President, and suggestions that I believe ought to be
adopted on a bipartisan basis. I think for the long term, it is time to
separate out, to literally cut off the link between HMO's, the managed
care, and fee-for-service, because I think what we are having today is
a situation that literally creates incentives for wasteful health care.
Second, it seems to me there ought to be a new minimum payment floor
that brings up all the counties that have been low cost, and especially
those in rural areas, and certainly the President of the Senate, just
as I see in rural Oregon, understands the importance of that.
Third, it seems to me that the Senate, on a bipartisan basis, ought
to begin a gradual effort to move to a national reimbursement level, a
blended kind of level, and do it gradually so that areas that have been
more inefficient are not going to face all of the changes
overnight, but are going to understand very clearly that with an effort
to move to a blended or national reimbursement rate, Congress is not
going to tolerate what we have today, which is a system that rewards
waste.
Finally, Mr. President, it seems to me that the Federal Government
should be trying to promote competition, serious competition, as the
private sector does, in areas of high-cost managed care or significant
penetration of health maintenance organizations. There is no question
in my mind that some HMO's are overpaid. We do need to produce
competition in those areas. I believe that that can be carefully
targeted. That, in my view, is the guts of reimbursement reform, Mr.
President.
I would like to conclude my remarks today by saying that going to the
next level of Medicare reform after we take care of the reimbursement
issue is a logical step because it flows from what needs to be done
with the reimbursement formula. By getting good data and more logical
data about the various counties, the Health Care Financing
Administration will be in a position to make information available to
older people and their families across this country about how to make
better choices with respect to their health care. Today, what we have
is a situation where many older people get no choices at all. We see
that in many rural parts of our country because of the reimbursement
formula. The reimbursement formula is so low that many plans won't come
in, so seniors in those areas get few choices. In the high-cost areas,
the Federal Government has put out a mishmash of information which
makes it impossible to choose between the various services that are
available to them, and that is absolutely key because in those high-
cost areas we have exactly the places where it is most important to get
competition.
Yesterday, I brought to the floor--I am going to blow it up in the
days ahead so that it's possible for the Senate to see it in more
detail--an example of what it is like for an older person in Los
Angeles to try to navigate through the various health choices available
to her. In fact, it takes one full wall, in a picture that the General
Accounting Office took, just to put the various pieces of information
that that senior would have to wade through. So I want to see us now
have the Federal Government look to what the private sector is doing to
empower seniors and their families to get understandable, clear
information about Medicare so that they can make appropriate choices.
This involves details on the way different Medicare choices and plans
work, data on the experience of seniors with similar health and income
backgrounds, the methods and the decision steps used by plans to pay
participating practitioners and health care facilities and providers.
And, Mr. President, certainly, Members of this body should understand
that this is doable because this is largely the kind of information
that is available to Members of the Senate and other Federal employees
who participate in the Federal employee health plan.
So in ensuring that seniors can receive a full list of plans
available to them, enrollment fairs are an approach that has been
looked at in the past, and there may be other ways to do that, such as
publishing appropriate performance data on plans. These kinds of steps
are approaches that the Federal Government has pursued and have related
to Senators and members of the Federal service. It seems to me that
there is no reason to further delay making this kind of information
available to those who depend on Medicare. Older people ought to be in
a position to enroll and disenroll from a plan at any time.
Certainly, this kind of approach will encourage competition. Perhaps
at some point there ought to be incentives to try to keep people in
plans that are cost effective, and I think that the Federal Government
can look to this kind of approach. But, certainly, significant rights
of older people to enroll and disenroll in plans is critical.
So these kinds of rights, like appeal rights when you have been
denied benefits, a good grievance procedure--in effect, a patients'
bill of rights--is what is fundamental to making sure that older people
are in a position to get the kind of information they need in order to
make choices about their health care and, at the same time, inject
competition into this system.
We have made many of these decisions already as it relates to Federal
employees and Senators. We have made them as it relates to the private
sector and, in fact, we have even made them in areas that have
parallels to this program--for example, in the Medigap
[[Page S2868]]
Program. I and others were involved in this to try to make sure that
seniors who purchased supplemental coverage would be in a position to
make sure they could get full value and have a place to turn to for
their questions. We can take a lesson from the Medigap Program, and the
Federal Government ought to make available troubleshooters to answer
questions from older people as we move to competition.
So, Mr. President, let me conclude by saying that I think every
Member of this body understands that business as usual with respect to
Medicare is unacceptable. I will tell you, if you don't like the
program, if you really dislike Medicare, keep it the way it is, because
the way it is is going to be a path that will cause, in my view, great
calamity for families and seniors. If you believe Medicare is a program
that has made an enormous difference in the lives of older people, I
think that is the best argument for a bipartisan Medicare reform
effort, a bipartisan Medicare reform effort that would ensure that
seniors got guaranteed, secure benefits, not some check or some sort of
voucher that just said, well, maybe this will be enough for your care
and maybe it won't.
Seniors deserve guaranteed, secure benefits. Many of my colleagues on
the other side of the aisle have been absolutely right in saying that
much of Medicare across this country is an outdated tin lizzy kind of
program, a program that the private sector consigned to the attic years
ago. So let us try to bring the parties together around the proposition
that there ought to be defined, secure, guaranteed benefits, around the
proposition that it is time to bring the revolution in the private
sector to Medicare, and do it in a way that protects patients' rights--
no gag clauses or limitations on what older people can know about
plans, grievance procedures, appeal rights. Those are the kinds of
issues I think that both parties can agree on.
I intend to come to the floor day after day to bring the issues of
Medicare reform to the attention of the Senate and to the attention of
the public, because I believe this is going to be the issue that is
going to dominate the debate about our priorities, particularly our
domestic priorities, for the next 15 to 20 years.
I believe that every Member of this body in the next century is going
to be asked: What did you do in 1997 to get Medicare on track?
I believe there are opportunities now, as we move to the budget, as
we move to efforts to have a bipartisan balanced budget, to start the
changes that will put Medicare on track for older people and taxpayers.
Senator WYDEN. Mr. President, to reiterate, the heart of the Medicare
Program is the 38 million beneficiaries now dependent on this health
care system as an essential social lifeline.
Any changes we make to Medicare must, first and foremost, consider
the likely effects those reforms will have on these beneficiaries, many
of whom are frail, infirm, and low-income.
As I've said every day on the floor of the Senate this week, I'm
going to be talking today about the choices and access those
beneficiaries ought to have, but who in too many parts of the country
have no choices and poor access to health care.
I'm also going to be talking about the window of opportunity we have
in this Congress to enact significant changes in the program to cure
the half-trillion-dollar shortfall we can expect in this program by the
end of the coming decade, and to bring new choices, new access and new
efficiencies necessary to save Medicare for not just the next 5 years,
but into 2010, 2020, and 2030.
As I said yesterday, Medicare is a 1965-model tin-Lizzy health care
program showing little resemblance to the rest of American health care.
Various out-dated, out-moded and bureaucratic features of Medicare
practically encourage practitioners in the greater part of the Medicare
system to drive up unnecessary care and resulting over-billing--actions
which over-charge the Government on costs, but short-change
beneficiaries on good health care.
Beginning in the last decade, the Government's partial solution to
this was to institute coordinated care in Medicare. We encouraged
health insurers to begin offering plans that managed service Medicare
beneficiaries received, and we offered encouragement to beneficiaries
to participate in the form of lower out-of-pocket costs and, we
anticipated, a broader package of goods and services.
And we would determine how each plan, in each city, would be paid for
each beneficiary in the plan according to an arcane formula called the
average adjusted per capita cost--or the AAPCC.
Now, before your eyes glaze over, let me give you a very simplistic
idea of how the local AAPCC payment rate is determined, and how this
formulation really penalizes beneficiaries living in places where
medical costs are relatively low.
The AAPCC is any given county is formulated on the cost of providing
medicine, per beneficiary, in the most costly portion of Medicare--the
traditional sector known as fee-for-service. This is the portion of the
program where beneficiary can elect to see just about any doctor they
want, whenever they want, and the individual care providers in those
situations can be reimbursed for just about any services they deem
necessary for that beneficiary.
No questions asked. No oversight.
This may sound like a pretty good deal for the beneficiaries. But it
doesn't always mean they get the care they need or require. For
example, there's nothing to stop an individual provider in fee-for-
service for ordering up 10 or 12 tests for a beneficiary, when only 3
or 4 really are required.
This is one of the reasons why fee-for-service Medicare is growing at
a much more rapid rate than the rest of the program--and it's one of
the reasons we find ourselves in such a deep financial hole.
It is also clear that the rapid growth of fee-for-service Medicare
seems endemic to certain large metropolitan regions of the county.
As my colleagues may be able to see, the areas in blue and white
represent portions of the country where the AAPCC rate is below the
national average.
The areas in red and orange represents areas where the payments are
above the average.
And just for the record, the variation is huge. The 1997 high-
reimbursement county is Richmond County, up in New York, at $767 per
month, per beneficiary, while the lowest paid county was over here in
Arthur County, Nebraska, at $221 per month.
Now, I'd ask my colleagues Bob Kerrey and Chuck Hagel whether they
think a typical 72-year-old Nebraskan is that much healthier than a
typical New Yorker of the same age?
Medicare seems to think so, and I think they're wrong.
And unfortunately for folks in Nebraska and other low pay States--my
home State of Oregon is certainly one of them--the difference is that
they get a much thinner Medicare benefit package in coordinated care
plans, if they have access to such plans at all because their monthly
reimbursement rate is so abysmally low.
Let's talk about some examples of how this hurts beneficiaries in
cost-efficient counties where the reimbursement rate is particularly
screwy.
In Mankato, MN, where the average payment is $300 per month,
beneficiaries in coordinated plans get their basic managed care
coverage under Medicare rules--but nothing else. No discounts on
prescription drug purchases, no additional preventative care, no
hearing aid discounts, no coverage for eyeglasses.
In Portland, OR, my home town, the rate is a little better at $387
per month, but that's still well below the $467 national average. That
means the best additional benefit received by these folks, who have the
highest managed care penetration rate in the country at about 60
percent, is a 30 percent discount on prescriptions up to a $50 maximum.
Now, let's go up to the high end of this wacky AAPCC payment system.
In Miami, FL, where the payment rate is all the way up to $748 per
month, seniors in these programs get unlimited prescription drug
reimbursements, a $700 credit for hearing aids, and dental coverage--
all add-ons that are virtually unheard of in most of the rest of the
country.
Mr. President, I wish I could say that this is the kind of cost-
accounting that's going to add stability and integrity to the Medicare
Program into the
[[Page S2869]]
next century. Unfortunately, all this payment formula accomplishes is:
First, huge overpayments in some counties, with resulting extravagant
profits to insurance companies, and second, payments to other counties
which are obviously too low, and which result in either no coordinated
care offerings to beneficiaries in those communities or bare-bones
plans that for millions of beneficiaries to incur higher out-of-pocket
costs purely as a matter of geographic accident.
I believe we can transform Medicare from an aging dinosaur insurance
program into a comprehensive seniors health care system while
maintaining our historic commitment to a basic package of benefits for
every beneficiary, no matter their health or income status.
But that transformation necessarily will involve providing seniors
with many more choices with regard to their health plan selection.
The current formula used for paying Medicare in rural counties and in
other places where communities have worked hard to reduce general
health care costs is precisely antagonistic to that purpose.
This system denies folks choice because it necessarily results in
poor quality health plans, high out-of-pockets expenses, or no managed
care choices--or a combination of all three--for vast numbers of
beneficiaries.
And again, an accident of geography seems to be the deciding factor
in the current state of affairs.
I believe Medicare reform has to include remedies for these problems.
This is not just a matter of increasing the benefit package for folks
in low pay counties. More fundamentally, this is an issue of providing
more choices, to encouraging the entry of more plans, into large areas
of this country where the current AAPCC formula creates reimbursement
rates which are so low--which are so nonsensical--as to completely
discourage anything but fee-for-service Medicare in those communities.
I believe reimbursement reform include several important features:
A new minimum payment floor that brings all counties up to 80 percent
of the national average, immediately.
A new annualized reimbursement increase formula that shifts
adjustments away from localized fee-for-service medicine costs, and
toward actual cost increases in coordinated care.
A systematic imposition of financial controls reimbursement growth in
high-reimbursement counties in order to squeeze out what have to be
monumental over-payments to plans in those communities, and huge losses
to the Medicare Program.
Mr. President, reforming Medicare isn't just about reforming payment
systems, however.
It's also about helping beneficiaries to become smarter shoppers in a
new Medicare environment that we hope will offer many of them many more
choices and options for care.
Therefore, it is critical that we change the program in way that will
empower seniors to make the appropriate choices.
At the bottom, this means developing and executing a much better
system of informing beneficiaries about their rights in managed care,
and about the most important provisions of the health plans available
to them. This information must be given to seniors as ``news they can
use''--data that is in clear and accurate layman's language, and which
conforms to standardized reporting practices so that consumers can
compare one plan against another in a traditional kitchen-table-
assessment.
Indeed, these tools if we had them would be useful, today, with
80,000 beneficiaries per month choosing to leave fee-for-service
Medicare for Medicare managed care organizations.
According to Stanley Jones, chairman of the National Institute of
Medicine's committee on choice and managed care:
Many elderly are making these new choices without enough
information to judge which option is best for them, what the
plan they choose will actually cover, or how the plan will
operate.
Jones said that many seniors misunderstand the basic structure of HMO
payment and care practices. He criticized Medicare managers for
providing information to beneficiaries about differences in available
health plans that ``appears primitive'' compared with what's available
from private purchasers.
Mr. President, last year I asked the General Accounting Office to
look into this problem, and the GAO auditors came to similar
conclusions:
Though Medicare is the nation's largest purchaser of
managed care services, it lags other large purchasers in
helping beneficiaries choose among plans. The Health Care
Financing Administration (HCFA) has responsibility for
protecting beneficiaries' rights and obtaining and
disseminating information from Medicare HMOs to
beneficiaries. HCFA has not yet, however, provided
information to beneficiaries on individual HMOs. It has
announced several efforts to develop HMO health care quality
indicators. HCFA has, however, the capability to provide
Medicare beneficiaries useful, comparative information now,
using the administrative data it already collects.
The kind of data HCFA collects, now, of use to beneficiaries includes
performance indicators such as: First, annual disenrollment rates,
second, cancellation rates, third, so-called rapid disenrollment
rates--the percentage of enrollees who disenroll within 12 months of
signing up, fourth, rate of return to fee-for-service Medicare from the
plan, and fifth, disenrollments tied specifically to sales agent abuses
involving, among other things, marketers who mislead enrollees about
what a plan may cover.
I think we can go beyond these quality indicators. The Federal
Employees Health Benefits Program [FEHBP], for example, includes a
graded system of reports on the quality of key services in federal
employee health plans. There is no reason why Medicare beneficiaries,
who must make these decisions on their own without benefit of employers
or corporate benefit managers, shouldn't have at least the kind of
qualitative analysis available to members of Congress who are covered
by FEHBP plans.
Mr. President, I am heartened by the announcement earlier this year
by HCFA Administrator Bruce Vladeck that the program would begin
offering beneficiaries some qualitative information on managed care
plans through the Internet. I think that's great for seniors that use
the Internet in their homes or have access to that technology somewhere
else.
I think it's clear, however, that we need to step up efforts going
beyond the limited information that eventually would be made available
at a HCFA website.
Here's the bare minimum of information that seniors need in a
revamped Medicare program which empowers them to make appropriate
choices:
Details on the way different Medicare choices and plans work.
Data on the experience of seniors of similar health and income
background in those plans.
The methods and the decision steps used by plans to pay participating
practitioners and health care facilities and service providers.
And here are the steps we need to take to insure seniors receive that
information and the other tools they need to prevail in an increasingly
more complex and choice-intensive Medicare marketplace:
First, Medicare managers must ensure that every senior, in every
county, receive a full list of plans available to him, with a detailed
description of what each plan offers. These submissions must be written
in a way that allows a consumer to make easy comparisons between plans.
HCFA should require annual ``enrollment fairs,'' giving seniors a
chance to review all plan materials at least once a year in order to
determine if alternative Medicare offerings might be more suitable to
the individual enrollee.
Second, Medicare must collect, evaluate and publish appropriate
performance data on every plan. Using independent quality review
organizations like the National Council of Quality Assessment, Medicare
must devise and publish qualitative analysis--consumer report cards--on
each Medicare plan, further enabling seniors to make appropriate
choices among offerings.
Third, consumers must be allowed to enroll and disenroll from plans
at any time during their first 12 months in a plan. After the first
year of enrollment, disenrollment with guaranteed enrollment in a new
plan would be limited to a first opportunity after six months in the
second year.
[[Page S2870]]
We would make it somewhat tougher to disenroll after the first year
because we would expect plans to make investments of preventative
health services for new enrollees in the initial few months of their
enrollment.
Fourth, health plan enrollees need a patient bill of rights that by
Federal statute protects certain baseline issues fundamental to their
good health. At the top of this list would be a Federal statute
absolutely protecting the free and unfettered communication between
patient and doctor on that enrollee's health condition and any
appropriate services and procedures necessary to treat the patient.
Fifth, give Medicare beneficiaries a certain and sure grievance and
appeals process, and the information they need to use it. Medicare must
streamline the current process, allowing beneficiaries to by-pass
certain bureaucratic roadblocks in the present system--most especially
those that force time-delaying procedural exercises when the outcomes
already are known. On an initial enrollment, and at any time a
beneficiary changes plans, an explanation of new or amended appeals
procedures must be part of the enrollment exercise.
And as with Medigap insurance, HCFA should hire and train ombudsmen
and trouble-shooters tell help beneficiaries both understand provisions
in plans, generally, and appeals and grievance procedures specifically.
Sixth, every Medicare risk provider should offer at least one plan in
his portfolio that includes a point-of-service provision, so that those
seniors who would try plans if they could keep going to a particular
practitioner would be allowed to do so.
Mr. President, I have spent quite a number of years talking with
seniors about their health care. Before I was elected to the House of
Representatives in 1980, I was cochairman of the Oregon Gray Panthers.
I know that seniors are deeply suspicious of any changes to Medicare,
in particular, and many of them view the current debate over the shape
and direction of the program with a good deal of alarm.
But many more who I've talked to recognize the need for changes and,
indeed, want to see this debate begin.
And on the basis of those conversations I am convinced that seniors
will feel a lot better about anything we do if we give them more
decision-making power to fashion the health care they receive through
the program.
Fundamental to that is making sure they have the information and
tools to make the right decision, at the front end, and to protect
themselves in the case of disputed decisions while they are enrolled in
plans. These changes would go a long way toward providing seniors with
that kind of empowerment, and in the long run strengthening and
improving Medicare as a critical government program.
Mr. President, I yield the floor.
Mr. FAIRCLOTH addressed the Chair.
The PRESIDING OFFICER. The Senator from North Carolina [Mr.
Faircloth], is recognized.
Mr. FAIRCLOTH. Mr. President, I ask unanimous consent to be
recognized for 10 minutes in morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________