[Congressional Record Volume 144, Number 142 (Saturday, October 10, 1998)]
[Senate]
[Pages S12273-S12275]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 REGARDING THE MEDICARE+CHOICE PROGRAM

  Mr. FRIST. Mr. President, the Medicare+Choice program was created as 
part of the Balanced Budget Act of 1997 to provide Medicare 
beneficiaries with high quality, cost effective options, in addition to 
the continuing option of traditional fee-for-service Medicare. When 
fully implemented, Medicare+Choice will provide seniors with one stop 
shopping for health care; including hospital and physician coverage, 
prescription drugs, and even preventive benefits, at a savings.

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  This change in Medicare is monumental. It is dramatic. And it is 
essential to preserving and strengthening Medicare for our seniors and 
individuals with disabilities. This change breeds challenges--some that 
can be predicted but many which cannot. The potential for these 
challenges to hurt and harm is very real. The senior, so relieved to 
finally find a health plan that covers the cost of his prescription 
drugs because of Medicare+Choice, hears this week that he might not 
have that plan--or that coverage next year. Who to call? What to do? We 
as a government must respond. This Administration must move decisively 
to respond and to mend flaws in the system.
  We on the National Bipartisan Commission on the Future of Medicare 
are working hard to address ways to strengthen the security provided by 
Medicare. And the red flags raised by the announcements this week 
underscore the importance of this work. No longer can we be satisfied 
with an outdated, 30 year old bureaucracy as the best way to care for 
our nation's seniors. A typical 65 year old senior who retires moves 
from a private sector health care system--with a variety of quality, 
low cost options, including prescription drug coverage, and out-of-
pocket protections--to a more limited, antiquated government program, 
without any limits on how much you are required to pay and no drug 
coverage. By updating Medicare, we not only ensure its continued 
existence past the current bankruptcy date 10 years from now, but we 
provide continuity of care, limited out of pocket expenses, and a 
mechanism for improving quality of care that you the patient receive.
  As of October 8, forty-three of the current health care plans 
participating in Medicare announced their intention not to renew their 
Medicare contracts in 1999. Another 52 plans are reducing service 
areas. The net result is that 414,292 beneficiaries in 371 counties 
face the daunting task of securing alternative coverage provided by 
Medicare by January 1, 1999. Although this represents a small number of 
total beneficiaries, about one percent, those who have relied on their 
health plan to bridge the traditional gap between Medicare and Medigap 
now must either find another HMO (which means switching doctors in many 
cases), or move back to traditional fee-for-service Medicare which 
frequently means more personal expense. Should these individuals choose 
the traditional Medicare option, they will probably also scramble to 
find a supplementary Medigap policy, with likely higher premiums than 
their original Medigap policy and perhaps fewer benefits. 10% of the 
disadvantaged beneficiaries live in areas where no alternative Medicare 
HMO plans are offered. However, traditional Medicare remains an option 
for every beneficiary, and by law, seniors may return to that program.
  In addition to the serious dilemmas this disruption has caused for 
those seniors, the extent to which HMOs pulled out sent shock waves 
throughout the Federal government and health care industry. There are 
many profound questions provoked by this announcement. Why are 
insurance companies, hospital systems, and physicians who once 
applauded the Medicare+Choice program, now seemingly hesitant to 
participate? Are the pullouts the beginning of a trend which will 
ultimately undermine the Medicare+Choice program, which was 
specifically designed to restore Medicare's fiscal health and give 
seniors more options? To what extent are insurance companies and health 
plans over-reacting to natural ``growing pains'' associated with the 
implementation of new policies? What actions, if any, should HCFA and 
Congress take in response to what President Clinton characterized as 
HMO's breaking ``their commitment to Medicare beneficiaries?'' The 
President now vows to initiate ``abandonment'' legislation to punish 
those plans leaving and prevent a further exodus, but will he only 
succeed in discouraging new Medicare participating contracts? How can 
we avoid a short-sighted political response and create realistic 
incentives to provide seamless continuous coverage across geographic 
boundaries? How can we more adequately risk adjust payments to 
encourage health plans to accept, rather than avoid the most seriously 
ill? How can we incentivize health plans, who have little experience in 
caring for the chronically ill, to develop systems that appropriately 
address the very unique and specific needs of the older population?
  The insurance industry is responding defensively to charges that they 
have ``abandoned beneficiaries.'' They contend that in many regions 
Medicare's payments to HMOs fall far short of even covering the cost of 
care for beneficiaries. Furthermore, they argue at the very time a 
fledgling market structure most needs flexibility, the Administration 
has instead placed such rigid bureaucratic burdens that their hands are 
tied and they have no choice but to opt out of certain regions. Some 
believe the recent pullouts may simply reflect an effort on the part of 
insurance companies to bide time in the hopes that Congress will 
eventually ease requirements and make further progress with plan 
payments.
  Seeing what has happened to their HMO competitors, provider-sponsored 
plans, or PSO's, have also been wary of Medicare+Choice contracts. 
Their uneasiness over the Administration's treatment of new 
participants, however, is secondary to their concern that private 
sector plans may boycott their facilities, viewing them as competing 
insurers, rather than providers. PSOs face an uphill battle with state 
regulatory agencies. They fear that other insurers will use them as a 
``dumping ground'' for the expensive, chronically ill cases many 
insurers are tempted to avoid.
  Both HMOs and PSOs complain loudly about the high administrative 
costs inherent in new Medicare contracts. By participating with the 
government, they agree to submit large amounts of data, pay for 
extensive education campaigns for their enrollees, participate in 
government sponsored health fairs, and keep up with all the regulatory 
rules and regulations. Mayo Clinic estimates that the rules governing 
their participation in Medicare are spelled out in 586 pages of law and 
accompanied by 111,088 pages of regulation, guidance, and supporting 
documents. We in government should listen to this call for 
simplification, streamlining the regulatory burden, demanding 
accountability without trying to micromanage.
  The Health Care Financing Administration (HCFA), the government 
agency in charge of Medicare, is surprisingly optimistic and upbeat 
about the long term feasibility of Medicare+Choice. They urge skeptics 
to remember that the program is in its infancy. They point to data on 
Medicare HMO participation, which after a rocky start in the mid 1980s, 
now boasts one in six Medicare beneficiaries. They anticipate increased 
enrollment as more Medicare recipients have a greater understanding of 
their options and of how the opportunity to have a plan that meets 
specific needs meaning better care with greater security, not less. To 
date, full scale educational efforts have only occurred in five states. 
The beneficiary education program, which includes a booklet and hotline 
campaign, is slated for nationwide expansion by August, 1999. Most 
seniors are still unaware of their options in their regions. Many 
associate expanded choice with insecurity. Only education will change 
this. And that is a government responsibility.
  HCFA also takes issue with the HMOs' assertion that it is underpaying 
managed care plans. They cite evidence obtained by the Physician 
Payment Review Commission in 1997 that Medicare has been paying $2 
billion a year too much to managed care plans. This observation led to 
HCFA's September decision to reject the insurance companies' proposal 
to resubmit their cost projections, to obtain additional reimbursement. 
HCFA did not intend to raise reimbursement levels, and feared that such 
an opportunity would allow plans to hike beneficiary premiums and 
decrease benefits. In addition, HCFA points to reluctance on the part 
of HMOs to pay their fair share of marketing and education costs. But, 
despite HCFA's point that, in the aggregate, they overpay HMOs, the 
agency governing Medicare may not be adequately considering the fact 
that within that average there may well be plans with a 
disproportionate number of older and sicker beneficiaries who are 
indeed underpaid. We must be committed to fair and just payment to 
these plans for the service we are asking them to deliver. Because of 
the tendency, at the federal level, to look at

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averages, rather than individuals, and the reality of where people 
live, we must commit to address reasonable compensation in greater 
detail. The reality is: the reimbursement system for health care plans 
is surprisingly disassociated with the actual costs of delivering care. 
We must invest today in designing and implementing a realistic, 
scientifically based reimbursement structure.
  A key component of the Balanced Budget Act was the move toward equity 
in payment across the country. Many HMOs were counting on receiving 
additional funds, following review by HCFA on the vast geographic 
disparities in payment. However, HCFA decided to postpone this 
adjustment until 2000, based on inadequate funds following an across-
the-board 2% update. Thus, the so-called ``blended rates'' will not be 
applied until 2000. HCFA plans to incorporate risk adjustment in 2000 
to reduce selective enrollment by plans and reduce total overpayments 
to managed care plans. HCFA has also recognized the adjustments 
necessary in implementing new plans, and has thus allowed leeway with 
quality improvement plans. There are some who feel that recent 
developments could have been avoided if HCFA acted more rapidly and 
more responsibly in carrying out Congress' mandate. Congressman 
Bilirakis, chairman of the House Commerce Subcommittee on Health and 
the Environment, stated that federal health officials were ``guided by 
a rigid bureaucratic mentality which led to ossification rather than 
modernization of the Medicare program.''
  The decision of so many managed care plans to withdraw and downsize 
their Medicare contracts raises a red flag. We must first resolve the 
immediate coverage disruptions facing many of our elderly, and then 
we--this Congress, this President, HCFA, the insurance industry and 
seniors--must pledge to work together to make this program a success. 
Not only in the short term, but with an eye to the future. To survive, 
Medicare must change. Medicare needs the flexibility to respond to the 
changing health care environment, not only for our generation, but for 
our children and grandchildren. Now is the time for commitment and 
compassion, rather than overreaction or prematurely concluding failure 
of changes made to date. Knee jerk reactions, rather than thoughtfully 
moving to solve the problems, will only wreak further havoc on this 
evolving program. A commitment to education, and a more rational, 
responsive administrative and oversight structure must be pursued to 
meet future needs in Medicare and the care of our seniors. On a 
positive note, there are 48 pending applications of private plans 
wishing to enter the Medicare Market; 25 plans have requested to expand 
their current service areas. By working with HCFA, the insurance 
industry, hospitals, health care providers, and beneficiaries, we can 
assure that the Medicare+Choice program will reach its full potential 
of better and more secure care for seniors and individuals with 
disabilities.
  Also embedded within my remarks is a challenge to the Congress. 
Although we just passed, last year, the Balanced Budget Act that 
stretched the solvency of Medicare until 2008, it is clear that the 
Congress must promptly revisit Medicare once the National Bipartisan 
Commission on the Future of Medicare files its report by March 1, 1999. 
The dynamics of American health care, and the rapid changes in care for 
the nation's seniors, will not allow for maintenance of the status quo 
for the next decade. It is my hope that the current focus on 
Medicare+Choice serves as a catalyst for renewed discussion on the 
future of Medicare once we have the Medicare Commission's 
recommendations in hand. We will be remiss in our responsibility if we 
do not again next year continue our efforts to insure the solvency and 
improve the quality of the Medicare program--for our seniors, our 
parents and grandparents, today--and for all Americans--including our 
children--tomorrow.
  Mr. LOTT. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  Mr. GRAMS. I object.
  The PRESIDING OFFICER. Objection is heard.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak for 15 
minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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