Health Financing and Public Health Issues Issue Area Plan--Fiscal Years
1996-98 (Letter Report, 08/01/95, GAO/IAP-95-34).

GAO presented its Health Financing and Public Health issue area plan for
fiscal years 1996 through 1998.

GAO plans to assess: (1) how the management and financial integrity of
the Medicare and Medicaid programs can be improved; (2) new approaches
to current payment methods that could curb Medicare spending growth; (3)
how financing arrangements affect Medicare and Medicaid beneficiaries'
access to quality care; (4) efforts that offer lessons for the Medicare
and Medicaid programs and for the ongoing congressional deliberations on
insurance reform; (5) the efficiency and effectiveness of the Food and
Drug Administration's regulation of medical products; (6) whether Public
Health Service agencies are efficiently and effectively meeting the
nation's public health needs; and (7) opportunities for improving the
nation's health care and ensuring accountability for performance.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  IAP-95-34
     TITLE:  Health Financing and Public Health Issues Issue Area 
             Plan--Fiscal Years 1996-98
      DATE:  08/01/95
   SUBJECT:  Health insurance cost control
             Beneficiaries
             Payments
             Cost effectiveness analysis
             Claims processing
             Public Health Service facilities
             Food and drug law
             Accountability
IDENTIFIER:  Federal Employees Health Benefits Program
             Medicare Secondary Payer Program
             Medicare Program
             Medicaid Program
             
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Cover
================================================================ COVER


Health, Education and Human Services Division

August 1995

HEALTH FINANCING AND PUBLIC HEALTH
ISSUE AREA PLAN - FISCAL YEARS
1996-98

GAO/IAP-95-34



Abbreviations
=============================================================== ABBREV

  FDA - Food and Drug Administration
  HCFA - Health Care Financing Administration
  HHS - Department of Health and Human Services

FOREWORD
============================================================ Chapter 0

As the investigative arm of Congress and the nation's auditor, the
General Accounting Office is charged with following the federal
dollar wherever it goes.  Reflecting stringent standards of
objectivity and independence, GAO's audits, evaluations, and
investigations promote a more efficient and cost-effective
government; expose fraud, waste, abuse, and mismanagement in federal
programs; help Congress target budget reductions; assess financial
and information management; and alert Congress to developing trends
that may have significant fiscal or budgetary consequences.  In
fulfilling its responsibilities, GAO performs original research and
uses hundreds of databases or creates its own when information is
unavailable elsewhere. 

To ensure that GAO's resources are directed toward the most important
issues facing Congress, each of GAO's 35 issue areas develops a
strategic plan that describes the significance of the issues it
addresses, its objectives, and the focus of its work.  Each issue
area relies heavily on input from congressional committees, agency
officials, and subject-matter experts in developing its strategic
plan. 

The Health Financing and Public Health issue area focuses on federal
and state financing and operations of Medicare and Medicaid--the
insurance programs for the elderly, disabled, and poor--and national
and public health issues associated with access to care and research
and regulatory activities.  It also reviews programs and practices of
the Health Care Financing Administration (HCFA), the Food and Drug
Administration (FDA), and other Public Health Service agencies in the
Department of Health and Human Services (HHS). 

GAO's work on health financing and public health generally focuses on
the following issues: 

  -- improving the management and financial integrity of the Medicare
     and Medicaid programs;

  -- evaluating new approaches to current payment methods that could
     curb Medicare spending growth;

  -- assessing how financing arrangements affect Medicare and
     Medicaid beneficiaries' access to quality care;

  -- identifying private and public sector efforts that offer lessons
     for the Medicare and Medicaid programs and for the ongoing
     congressional deliberations on insurance reform;

  -- determining if the Public Health Service agencies are meeting
     the public health needs of the nation efficiently and
     effectively;

  -- evaluating the efficiency and effectiveness of the Food and Drug
     Administration's regulation of medical products; and

  -- identifying opportunities for improving the nation's health care
     and ensuring accountability for performance. 

In the pages that follow, we describe our key planned work on these
pivotal issues. 

Because events may significantly affect even the best of plans, our
planning process allows for updating and the flexibility to respond
quickly to emerging issues.  If you have any questions or suggestions
about this plan, please call me at (202) 512-7119. 

Sarah F.  Jaggar
Director
Health Financing and Public Health Issue Area


CONTENTS
============================================================ Chapter 1


   FOREWORD
---------------------------------------------------------- Chapter 1:1

1


   TABLE I:  KEY ISSUES
---------------------------------------------------------- Chapter 1:2

4


   TABLE II:  PLANNED MAJOR WORK
---------------------------------------------------------- Chapter 1:3

8


   TABLE III:  GAO CONTACTS
---------------------------------------------------------- Chapter 1:4

10


TABLE I:  KEY ISSUES
============================================================ Chapter 2

Issue                          Significance
-----------------------------  -------------------------------------------------
Medicare and Medicaid          Medicare and Medicaid are complex programs
management: What actions are   serving vulnerable populations and reimbursing a
needed to improve the          wide variety of providers. Effective management
management and financial       and oversight are essential to ensure that
integrity of the Medicare and  program dollars are well spent and that
Medicaid programs?             opportunities for fraud, waste, and abuse are
                               reduced. Both programs also face new challenges
                               as more beneficiaries enroll in managed care
                               plans, which present a new set of incentives to
                               providers.









Medicare payment methods:      The demands of deficit reduction and Medicare's
What new approaches and        large funding requirements underlie the appeal of
changes in current payment     curbing Medicare's 10-percent projected annual
methods hold promise for       growth. Changes in payment methods are one major
restraining Medicare spending  tool for controlling spending.
growth?








Medicare and Medicaid access:  Historically, providing beneficiaries with access
How do financing arrangements  to care of acceptable quality has been difficult
affect beneficiaries' access   for Medicaid and, for some rural areas, for
to quality care?               Medicare. The importance of this issue is
                               growing, as more beneficiaries in both programs
                               enter prepaid health plans with incentives
                               towards limiting services.










Alternative delivery,          Congress is seeking alternative ways to provide
benefits, and financing        Medicare and Medicaid benefits while controlling
models: What private and       the growth of the programs. Both private and
public sector efforts offer    public experience with more effective models of
lessons for Medicare and       financing and delivering of health care, as well
Medicaid programs and for the  as with the design of benefit packages, can guide
ongoing congressional          improvements in Medicare and Medicaid and can
deliberations on insurance     shape incremental insurance reforms.
reform?
--------------------------------------------------------------------------------
Objectives                                         Focus of work
-------------------------------------------------  -----------------------------
--Improve the efficiency of Medicare claims        --HCFA use of new
processing and increase beneficiary                technologies to improve its
satisfaction.                                      Medicare claims processing
                                                   --HCFA and state oversight
--Identify methods by which HCFA and the states    activities of managed care
can minimize fraud, waste, and abuse in the        plans'contracting
Medicare and Medicaid programs.                    arrangements and
                                                   administrative procedures
--Improve the oversight of managed care plans      --HCFA and state review of
that serve Medicare and Medicaid beneficiaries.    managed care health plans'
                                                   financial solvency
--Improve methods HCFA and state Medicaid          --HCFA and state Medicaid
agencies use to set capitated payment rates.       agency methods for setting
                                                   capitated payment rates for
--Improve HCFA's approach to introducing new       Medicaid managed care plans
technologies as covered services in Medicare.      --Medicare process for
                                                   resolving providers' appeals

--Improve Medicare's payment methods for           --HCFA efforts to reform Part
providers and health plans.                        A payment methods
                                                   --Proposals to revise
                                                   physician payment
                                                   methodology
                                                   --Proposals for setting
                                                   health plan rates
                                                   competitively
                                                   --Methods of risk adjustment
                                                   for HMO payments
                                                   --Medicare payments for
                                                   physical therapy and other
                                                   services for nursing home
                                                   residents

--Identify barriers to health care for Medicaid    --HCFA efforts to develop
beneficiaries.                                     measures of Medicare and
                                                   Medicaid access to quality
--Identify ways to improve information given to    services for Medicare and
beneficiaries about the quality of health care     Medicaid beneficiaries
Medicare and Medicaid contract plans provide.      --HCFA efforts to improve
                                                   information for Medicare
                                                   beneficiaries in managed care
                                                   plans
                                                   --State activities to ensure
                                                   access to health care for
                                                   Medicaid beneficiaries
                                                   --HCFA and state efforts to
                                                   ensure managed care plans
                                                   comply with quality assurance
                                                   and operational requirements
                                                   in their Medicare and
                                                   Medicaid contracts

--Inform Congress of alternative delivery,         --Use of disease-and case-
benefits, and financing models for federal health  management techniques to
care financing and insurance programs.             improve quality of care and
                                                   control costs
                                                   --Opportunities for using new
                                                   technologies to deliver
                                                   Medicare services

--------------------------------------------------------------------------------
Issue                                    Significance
---------------------------------------  ---------------------------------------
Public Health Service: Are the Public    By October 1996, HHS' Public Health
Health Service agencies meeting the      Service intends to implement major
public health needs of the United        changes in the structure and
States efficiently and effectively?      organization of its subagencies and
                                         programs. These changes are occurring
                                         within the context of budget deficit
                                         reduction and reinventing government.
                                         Specific HHS discretionary programs are
                                         to be consolidated into performance
                                         partnerships or block grants. The new
                                         budgetary situation raises concerns
                                         about future priorities and
                                         capabilities of the Public Health
                                         Service agencies, as well as mechanisms
                                         to ensure accountability by grant
                                         recipients.



Drug and medical device regulation:      FDA's regulatory responsibilities have
Does FDA regulate medical products       continued to increase over recent
efficiently and effectively?             years. The drug, device, and
                                         biotechnology industries have claimed
                                         that there is now excessive regulation
                                         and unwarranted delays in product
                                         approvals, and they and other critics
                                         are proposing fundamental changes in
                                         FDA's role and policies. In response,
                                         FDA is changing some procedures and
                                         Congress is considering a wide range of
                                         reforms.








Access and accountability in health      As health care is increasingly taking
service delivery: How can the United     place in a managed care environment,
States improve health care and ensure    there are increasing bipartisan
accountability for performance?          concerns about access to effective
                                         care, particularly for vulnerable
                                         populations, and ways to hold plans
                                         accountable for performance.






--------------------------------------------------------------------------------
Objectives                               Focus of work
---------------------------------------  ---------------------------------------
--Assess the ability of Public Health    --The Centers for Disease Control's
Service agencies and programs to         capacity to respond to public health
conduct health service activities after  threats
organizational and structural changes
have been made.                          --Effectiveness of current federal
                                         organ allocation policy to distribute
--Assess the need for and type of        organs equitably
federal oversight and accountability
measures that can be used to ensure      --Development of performance measures
federal dollars are effectively used     for block grants/performance
under performance partnerships.          partnerships

--Identify ways to strengthen the        --Financial and scientific oversight of
National Institutes of Health's          research projects of the National
management and oversight of federally    Institutes of Health
funded health research.

--Assess changes in FDA's processes for  --FDA's regulatory standards and
reviewing and approving new medical      approval processes for new medical
products.                                devices

--Determine the adequacy of FDA's post-  --Alternative approaches to expedite
market surveillance programs in          FDA's approval of new drugs while
identifying and analyzing adverse        maintaining safety and efficacy
product experiences.                     standards

--Provide a factual basis for assessing  --FDA's post-market surveillance
various regulatory reform proposals.     activities for medical products,
                                         including adverse reaction reporting
                                         processes

                                         --Adequacy of surveillance and
                                         enforcement operations associated with
                                         importation of drugs

                                         --FDA's regulation of the drug
                                         advertising and promotion activities of
                                         pharmaceutical companies

--Provide Congress with an assessment    --Access to specialty services in
of the impact of managed care systems    managed care plans
on access to services for special
populations.                             --Impact of Medicaid managed care on
                                         access to services for low-income
--Identify lessons from private sector   children and other special populations
approaches for enhancing cost-
effectiveness that have implications     --Health plan accountability in the
for the management of federal health     Federal Employees' Health Benefits
insurance programs.                      Plan

                                         --Cost-effectiveness of the gatekeeper
                                         approach for resource allocation in
                                         managed care organizations
--------------------------------------------------------------------------------

TABLE II:  PLANNED MAJOR WORK
============================================================ Chapter 3

Issue                    Planned major job starts
-----------------------  -------------------------------------------------------
Medicare and Medicaid    ï¿½Examine managed care contracting and subcontracting
management               arrangements where management and other intermediate
                         entities receive funds, but pass the financial risk of
                         health care along to providers.
                         ï¿½Review states' activities and ability to monitor and
                         affect managed care plans' financial solvency and
                         administrative costs.
                         ï¿½Review states' activities and ability to promote
                         competitive Medicaid managed care markets and secure
                         efficient capitated reimbursement rates.
                         ï¿½Examine potential duplication of payments by Medicare
                         for certain home health services.
                         ï¿½Review HCFA efforts to collect payments from other
                         insurers in the Medicare Secondary Payer program.
                         ï¿½Examine Medicare Part B appeals.
                         ï¿½Examine the potential for duplicate payments by
                         Medicare and Medicaid for services received by
                         beneficiaries in nursing facilities.

Medicare payment         ï¿½Assess HCFA's efforts to reform Medicare Part A
methods                  payment methods.
                         ï¿½Examine how the use of current Part B payment methods
                         has affected the volume and mix of services for
                         Medicare.
                         ï¿½Examine alternative methods for reimbursement of Part
                         B home health services.







Medicare and Medicaid    ï¿½Examine the adequacy of HCFA's processes for reviewing
access                   new Medicare managed care plan applications.
                         ï¿½Review states' ability to monitor quality of Medicaid
                         services.
                         ï¿½Review managed care programs for chronically ill
                         Medicaid beneficiaries and those with special needs,
                         focusing on access to quality care.
                         ï¿½Examine differences in care Medicare beneficiaries in
                         traditional and managed care plans receive from
                         integrated delivery networks.





Alternative delivery,    ï¿½Identify private and public sector techniques to
benefits, and financing  negotiate with managed care plans and determine their
methods                  applicability to federal health programs.
                         ï¿½Examine disease management approaches of
                         pharmaceutical firms to determine their applicability
                         to federal health programs.





--------------------------------------------------------------------------------
Issue                    Planned major job starts
-----------------------  -------------------------------------------------------
Public Health Service    ï¿½Evaluate management and priorities of the Centers of
                         Disease Control in responding to public health
                         threats.
                         ï¿½Assess the effectiveness of current federal organ
                         allocation policy to distribute organs equitably.
                         ï¿½Review the development of performance measures for
                         block grants/performance partnerships.
                         ï¿½Examine financial and scientific oversight of research
                         projects of the National Institutes of Health.








Drug and medical device  ï¿½Assess FDA's regulatory standards and approval
regulation               processes for new medical devices in comparison to the
                         European Union approach.
                         ï¿½Analyze alternative approaches to expedite FDA's
                         approval of new drugs while maintaining safety and
                         efficacy standards.
                         ï¿½Assess FDA's post-market surveillance activities for
                         medical products, including adverse reaction reporting
                         processes.
                         ï¿½Evaluate the adequacy of surveillance and enforcement
                         operations associated with importation of human drugs.
                         ï¿½Review FDA's regulation of the drug advertising and
                         promotion activities of pharmaceutical companies.

Access and               ï¿½Evaluate access to specialty services in managed care
accountability in        plans, particularly for vulnerable populations.
health care delivery     ï¿½Review gatekeeper mechanisms in health plans in the
                         Federal Employees' Health Benefits Program.
                         ï¿½Analyze cost-effectiveness of the gatekeeper approach
                         for resource allocation in managed care organizations.
                         ï¿½Examine use of federal practice guidelines in federal
                         employees health plans to ensure access to quality
                         care.
                         ï¿½Assess cost-effectiveness of federally funded rural
                         and other underserved area programs.
                         ï¿½Evaluate impact of Medicaid managed care on access to
                         services for low-income children and other special
                         populations.
--------------------------------------------------------------------------------

TABLE III:  GAO CONTACTS
============================================================ Chapter 4


      DIRECTOR
-------------------------------------------------------- Chapter 4:0.1

Sarah F.  Jaggar (202) 512-7119


      ASSOCIATE DIRECTORS
-------------------------------------------------------- Chapter 4:0.2

Mark V.  Nadel (202) 512-7125
Jonathan Ratner (202) 512-7107
William J.  Scanlon (202) 512-4561


      ASSISTANT DIRECTORS
-------------------------------------------------------- Chapter 4:0.3

Kathryn Allen
James Cosgrove
Thomas Dowdal
Jerry Fastrup
John Hansen
Michael Gutowski
Rosamond Katz
Bruce Layton
Rose Martinez
James McClyde
Scott Smith
Barry Tice


      BOSTON FIELD OFFICE
-------------------------------------------------------- Chapter 4:0.4

William Reis


      CHICAGO FIELD OFFICE
-------------------------------------------------------- Chapter 4:0.5

Paul Alcocer


      SEATTLE FIELD OFFICE
-------------------------------------------------------- Chapter 4:0.6

Frank Pasquier

*** End of document. ***