[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with an outdated, 30 year old bureaucracy as the best way to care for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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