American College of Physicians: Internal Medicine — Doctors for Adults ®


Making sense of Medicare+Choice

HCFA's new managed care options confusing patients and doctors

From the October 1998 ACP-ASIM Observer, copyright 1998 by the American College of Physicians-American Society of Internal Medicine.

By Deborah Gesensway

While John M. Daniel, FACP, a general internist in Richmond, Va., doesn't participate in any of the Medicare HMO plans in his area, he still spends time nearly every day answering elderly patients' questions about their health insurance. Lately, a lot of his patients have been asking whether they should join an HMO.

"It's very hard for them to understand the basic Medicare system," he said. "It will be very, very difficult for them to understand Medicare+Choice."

Medicare+Choice, also known as Medicare Part C, is the government's new effort to increase the number of seniors who get their health care from managed care, rather than from traditional fee-for-service Medicare. Parts of the program, which was created by the 1997 Balanced Budget Act, will begin to appear this fall.

An educational campaign also scheduled to start this fall will introduce seniors to new types of managed care-style health plans such as provider-sponsored organizations (PSOs). HCFA will send Medicare beneficiaries in five states a detailed handbook describing both new and old programs. Beneficiaries in the other 45 states will receive a bulletin with limited information. (See "How HCFA plans to spread the word".)

For internists whose Medicare patients are already confused about their options within Medicare, Medicare+ Choice promises to make matters worse. Even as HCFA plans to introduce new Medicare+Choice options for beneficiaries, it is trying to assure them that they do not have to change health plans. For those on the receiving end, the message is often one of confusion.

"Doctors are complaining that they've got all these health plans to keep straight, and we're finding consumers have the same [concern]," said Joe Baker, associate director of the Medicare Rights Center in New York City. "And now we'll have to deal with many more players in this market. ... There's going to be an exponential increase in the amount of confusion and bureaucracy."

In part, that's because Medicare+Choice promises to be the biggest-ever overhaul of the 33-year-old public health insurance program for the elderly and disabled. While about 16% of Medicare beneficiaries (about 6 million people) are currently in one of more than 400 HMOs that contract with Medicare, the Congressional Budget Office estimates that Medicare+Choice will help bring that number to 34% of all beneficiaries by 2005.

Over the next five years, Medicare's 38 million beneficiaries will be bombarded with information about a growing number of managed care plans they can enroll in to get their health care. If they choose one of these new types of plans, they will give up access to what is now being called "original" fee-for-service Medicare. And at the end of the phase-in period, beneficiaries will be locked into whatever plan they chose for that year. Like most Americans in employer-provided health plans, they will be able to change their coverage only once a year. (Currently, Medicare beneficiaries can enroll and disenroll in health plans throughout the year.)

Physicians' role

For physicians, these new choices raise questions about their role in helping guide seniors through the world of managed care. In Virginia, for instance, Dr. Daniel is trying to keep abreast of what the different Medicare HMOs offer so he can answer his patients' questions. But with Medicare HMOs already marketing several different plans, each with slightly different premiums, co-pays, benefits and extras, he said, "there's no way of keeping up." Add other options likely to be part of Medicare+Choice such as medical savings accounts (MSAs), private fee-for-service plans and preferred provider organizations (PPOs), he continued, and making choices is only going to get tougher for both patients and physicians.

Advocates for the elderly and even some officials at HCFA, however, would like physicians to play a much more limited role. They are concerned that doctors might be tempted to steer the healthiest of their patients into a health plan in which they have a financial stake—and encourage their sickest patients to either stay in fee-for-service Medicare or to enroll in a competing health plan in which they don't participate. Others fear that some physicians will stop serving patients who stay in original Medicare and instead opt to provide care only through new plans that pay them more.

The Balanced Budget Act is silent on just how far doctors can go in advising patients about their coverage options, but HCFA is "in the process of looking internally at how to address those specific issues," said Carol Cronin, director of HCFA's new Center for Beneficiary Services. The center oversees the National Medicare Education Program (NMEP), HCFA's campaign to educate Medicare beneficiaries about their options.

"We're trying to find the balance between addressing some of the concerns about possible inappropriate or illegal steering and having a conversation with a patient about how to best meet the patient's medical needs," Ms. Cronin said. "It's tricky." (The law does include anti-gag clause provisions that say physicians cannot be limited by health plans in telling patients about their treatment options, including those the health plan may not cover as a benefit.)


The American Association of Retired Persons (AARP) feels the problem of steering patients lies not just with doctors, but also with health plans, which often have incentives to steer patients to or from their offerings depending on that patient's risk factors and health status. Studies have shown that seniors in this country get most of their information about Medicare managed care from HMO advertising.

A study released this summer by the Henry J. Kaiser Family Foundation analyzed the content of Medicare health plan ads placed in newspapers and on television last year, as well as the marketing materials used during recruitment seminars. The study found not only inaccuracies about the plans but also that health plans continue to target only the healthiest and most physically active seniors.

And an AARP study released in June found that only one in 10 Medicare beneficiaries living in communities where managed care has made great inroads (Miami; Albuquerque, N.M.; Tucson, Ariz.; San Diego; and San Bernardino, Calif.) had only "adequate" knowledge of the differences between managed care and traditional Medicare. That study also discovered that relatively few seniors actually consult doctors about their health insurance options. The AARP study concluded that with most people learning about their options only through HMO advertisements, Medicare beneficiaries are "more open to manipulation through aggressive marketing by health plans" than ever before.

Meanwhile, advocates say that Medicare beneficiaries are already confused. "We're getting calls from beneficiaries who think they have to join an HMO," said Mr. Baker of New York's Medicare Rights Center.

As a result, most advocacy organizations and even HCFA have adopted a new stance. Their key message, and the bottom line of HCFA's educational campaign this year, is that beneficiaries don't have to do anything differently than they have in the past. In other words, just because there is Medicare+Choice, nobody has to make a choice.

"Basically, if they are happy with the way they receive their health care now, they don't have to take any action," HCFA's Ms. Cronin explained.

(The one exception is if Medicare beneficiaries want to enroll in an MSA as their form of Medicare, they have to do so by January and stick with it for a year. At press time, no MSAs were on the market for Medicare patients, but some insurance companies have said they plan to offer the option.)

Getting involved

What does all this change mean for physicians? While "Do nothing" may be the message that HCFA is sending to beneficiaries this year, Mr. Baker suggested that physicians bone up on the Medicare+Choice options in their area. When HCFA begins to aggressively promote Medicare+Choice, he said, advocacy organizations like his will advise patients to do their homework on these plans, which will include talking to their physicians.

Mr. Baker said his organization will urge patients to ask whether or not they can expect to receive the same level of service through a new program as they currently receive. He said that it will be up to physicians to know whether one program is better at diabetes management, for example, or whether a particular HMO will cover the same treatments already prescribed.

Beneficiaries are also going to be advised to consult new comparison charts being put together by HCFA. One of these will list all health plans by zip code on the Internet ( and include information on the co-pays, deductibles and basic benefits they offer. Later this fall, the site will also have information about how well each of the Medicare+Choice health plans scored on Health Plan Employer Data and Information Set (HEDIS) standardized performance measures. In addition, patient satisfaction data for each plan collected by the government's Consumer Assessment of Health Plans Survey (CAHPS) will be available. Over the years, HCFA plans to collect and post more plan-specific quality measures, with the goal of enabling beneficiaries to compare and choose a health plan based not only on its cost but also on how well it provides certain services compared to the competition.

One role for physicians to take on now, explained HCFA's Ms. Cronin, is to download information on plans in their region from the Medicare Web site to distribute to seniors who express an interest. Fewer than 4% of the elderly in this country use the Internet, and according to the Medicare Rights Center, a recent literacy survey indicted that about half of all seniors either cannot read or can only pick out one point in short, uncomplicated text.

How HCFA plans to spread the word

HCFA is experimenting with different ways to educate Medicare beneficiaries about the changes that will be part of the Medicare+Choice program. Here are some of the ways the agency plans to educate seniors this year:

  • Every beneficiary in five states (Arizona, Florida, Ohio, Oregon and Washington) will receive a handbook describing the specific health plans available in each region. The handbook, scheduled to be mailed later this month, will include a worksheet to help beneficiaries select a different plan than one they already have, if they so choose. Carol Cronin, director of HCFA's new Center for Beneficiary Services, which is overseeing the educational campaign, said that the information should help beneficiaries ask some key questions, such as what will happen to their supplemental (Medigap) coverage if they opt for an HMO. The answer, she said, will depend on how beneficiaries get supplemental coverage now.
  • The 33.5 million Medicare beneficiaries in the other 45 states will receive a six- or eight-page bulletin late this month introducing them to the idea of new health plan choices. The bulletin will "assure them that if they are happy with the way they receive health care now, they don't need to take any action," Ms. Cronin said.
  • A toll-free telephone number will be phased in, starting in the five states where handbooks will be sent. By this time next year, beneficiaries in all states should be able to call the number and get information in either English or Spanish from a trained customer service representative. Meanwhile, Ms. Cronin said, there will be an interim phone line set up this fall in all states that patients can call to leave a message requesting information about MSAs or about health plans in their areas.
  • HCFA's carriers will be undergoing train-the-trainers-type education on Medicare+Choice, Ms. Cronin said. If physicians or their associations want training as well, they should contact their local carriers, she added.
  • This fall, HCFA will unveil a national publicity campaign and will begin to provide information through health fairs and other venues.

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