Consumer service has been only a modest part of the Health Care Financing Administration's (HCFA's) functions. In administering the Medicare program, HCFA has primarily engaged in writing regulations and overseeing contractors; for beneficiaries, Medicare's bill-paying contractors have been the primary points of contact within HCFA. Since HCFA moved from a district office structure when it was formed out of the Social Security Administration, few HCFA employees actually work with Medicare beneficiaries on benefit and payment issues or help them decide on whether to enroll in health plans.

The Balanced Budget Act of 1997 creates a major new role for HCFA, that of a consumer service agency. In carrying out this role, HCFA faces an enormous challenge of managing a national process so that 39 million elderly and disabled individuals can make informed decisions about whether to stay in traditional Medicare or to select another Medicare coverage option. The fundamental importance of HCFA's new mission is reflected in its recent reorganization, in which the Center for Beneficiary Services was made one of the three major operating components of HCFA.

The requirements of informing and educating such a large number of individuals would be a daunting challenge even for an entity with far more resources than the U.S. Congress has provided HCFA (less than $3 per beneficiary). HCFA's administrative capacity is further constrained by a limited ability to use many of its current contractors (Blue Cross/Blue Shield plans and commercial insurers) because they are now major sponsors of competing Medicare health plans.

How can HCFA's success in this new role be measured? Two different objectives could be proposed to define success: (1) Medicare consumers are able to make choices that will produce the greatest value for themselves; and (2) health plans, health care professionals, and other providers have a well-functioning market in which they can prosper by offering better quality, service, and efficiency.

Enabling well-informed consumer choice is fundamental. Only if consumers are armed with tools that enable them to choose health plans on the basis of greater value will health plans be motivated to compete on that basis.

These objectives, however, do not define HCFA's role with much precision. Indeed, there appear to be at least three competing views about what HCFA's appropriate role and strategies should be.

• HCFA as a neutral facilitator. In this view, HCFA would have a limited, neutral role in facilitating consumer choice and market evolution. HCFA would send one or two mailings to each beneficiary. These mailings would explain Medicare choices and would offer a basic set of objective information and some public service announcements, as well as a toll-free number and the address of a web site that would offer similar information. For most questions, for example, whether an individual's physician is in a plan, beneficiaries would be referred to a health plan sales department.
• HCFA as an employee benefits office. In this view, HCFA would operate much more like the employee benefits office of a large corporation that successfully managed a rapid transition from fee-for-service to managed care offerings. There would be extensive communications about the benefits of managed care, how it differs from other options, and how to make good decisions, together with a substantial budget and resources for facilitating the transition. There would also be active contract management: Just as in an effective employee benefits office, HCFA would see that health plans took quick action to resolve problems.
• HCFA as a consumer advocate. In this view, HCFA would adopt a vigorous proconsumer role and would support the development of a national infrastructure for Medicare consumer information, advice, and advocacy. This view reflects concern about the potential for Medicare beneficiaries—many of whom are members of vulnerable populations—to have very bad experiences. Such concern is fueled by the consumer backlash against managed care and the documentation of the high degree of variability in the quality of managed care (National Committee for Quality Assurance, 1997; U.S. Department of Health and Human Services, Office of the Inspector General, 1998). Compared to the practice of major employers that can exclude poorer plans from the list of plans from which employees may choose (a form of leverage to promote good performance by health plans), a broader array of plans will be able to market directly to Medicare beneficiaries.

HCFA can hardly be expected to perform all of the roles described above at the same time, particularly in the absence of more legislative guidance and larger appropriations. HCFA does, however, have a range of discretion in choosing how much to blend these three roles, in setting targets and priorities, in defining its contract management philosophy, in developing relationships with a "Medicare helper" industry, and in assisting groups with special needs. HCFA has already done much preparatory work and is considering its future activities related to its new consumer service role. Some ideas and considerations that could enter into an overall HCFA management strategy for consumer service are discussed below.

Much experience and expertise can be mined and refined for HCFA's benefit. For starters, a great deal can be learned from the more than 5 million Medicare enrollees who are already enrolled in managed care plans. In some parts of the country (e.g., California, Oregon, and Florida), 30 to 50 percent of Medicare enrollees have chosen managed care plans. Evidence indicates that many Medicare beneficiaries who are enrolled in health maintenance organizations (HMOs) are satisfied with their care, but

A great deal can be learned from the more than 5 million Medicare enrollees who are already enrolled in managed care plans.

there also are examples of practices that should not be repeated in health plan operations and in the actions that HCFA takes to correct health plan deficiencies. Health plans, marketing experts, consumer advocacy agencies, health service researchers, health care professionals, accreditation agencies, data specialists, and state insurance departments all have gained useful insights. Large employers have led the way in moving more than 80 percent of their enrollees from traditional fee-for-service plans to managed care plans over the past decade and are also a valuable source of expertise. On the basis of some inter- views that the author of this chapter conducted over a period of time, the following might be useful points for consideration.

1. The Medicare population is highly varied. Certain identifiable subgroups are much more likely than other subgroups to shift to managed care plans over the next few years. Marketing professionals portray the Medicare population as having a number of subgroups, so that health plans can target in their marketing efforts those individuals who are most likely to switch to a private health plan and those individuals whom a health plan should want to enroll. Some of these subgroups will consist of healthy Medicare enrollees; some may consist of individuals with moderate incomes and high health care expenses for whom financial savings are highly attractive; still others may be "dual eligibles"* or residents of counties where adjusted average per capita cost payments are particularly generous. By using such market analysis, HCFA could also target those who most need good advice and set priorities by recognizing that in the next year or two major subgroups of Medicare fee-for-service enrollees are very unlikely to choose a managed care plan.

2. *

   According to HCFA, "Some aged and/or disabled persons are covered under both the Medicaid and Medicare programs. For Medicare beneficiaries who are also fully eligible for Medicaid, Medicare coverage is supplemented by health care services that are available under the state's Medicaid program. If a person is a Medicare beneficiary, payments for any services covered by Medicare are made by the Medicare program before any payments are made by the Medicaid program. Medicaid is always 'payor of last resort.' As each state elects, services such as eyeglasses, hearing aids, and nursing facility care not covered by Medicare may be provided by the Medicaid program. For certain poor Medicare recipients known as 'Qualified Medicare Beneficiaries' (QMBs) (those beneficiaries with incomes below the federal poverty level and with resources at or below twice the standard allowed under the SSI [Supplemental Security Income] program), the Medicaid program pays the Medicare premiums and cost-sharing expenses for Medicare [Part A and Part B]. For 'Specified Low-Income Medicare Beneficiaries' (SLMBs) (those like QMBs, but with slightly higher incomes), the Medicaid program pays only the [Part B] premiums" (Health Care Financing Administration, 1998).

2. Most Medicare beneficiaries make limited and selective use of information in making decisions. Although HCFA will be providing objective information on health plans, quality of care, and consumer satisfaction (e.g., Medicare Health Plan Employer Data and Information Set [HEDIS] and Consumer Assessment of Health Plans), marketing experts report that potential enrollees are most interested in having answers to the following: (1) Will I save money? and (2) Is my physician in the plan? If the answer to both questions is "yes," the prospect of enrolling the individual in the health plan is good; if the answer to either or both questions is "no," enrollment is unlikely. The reputation of a plan can also be a salient issue: As one person interviewed for this chapter remarked, "I am always asked: 'Which plan is the best one?' They get really annoyed when I tell them they have to decide and I give them lots of tables." Market research that has been done for the Federal Employees Health Benefits Plan shows that individuals key their decisions to a small number of plan features; health plans use such information to design benefits packages and marketing strategies.
   
   

   HCFA can use understanding of consumer psychology, marketing strategies, and sales tactics to make sure that beneficiaries get their questions answered and to help them become better comparison shoppers. For example, HCFA could develop a checklist of questions most frequently asked by beneficiaries. Beneficiaries could then use this checklist when querying sales personnel. Standardization of health plan options would be a great help; absent legislation, HCFA might develop certain "model" options administratively and compare plans on the basis of their differences from these model options.

3. Medicare beneficiaries rely on multiple sources of information and advice. Some sources of information and advice are more influential than others. Family members are often involved in discussions about joining health plans, as are physicians and friends. Media reports and other sources also provide input. A successful HCFA strategy could put a major emphasis on communicating with these advisers and potential advisers about how they can help Medicare enrollees make good decisions.
4. The most serious mistakes made by consumers result from their lack of understanding of basic information. Beneficiaries will need more information than the amount offered by salespeople. A great deal of discussion about informing Medicare beneficiaries and HCFA's potential roles focuses on the means of presenting sophisticated information and advancing the state of the art of information dissemination. In contrast, interviews with individuals who have observed some of the most egregious problems (e.g., in Florida) indicate that the greatest potential for people to get into serious difficulty comes from the failure of consumer service representatives to accomplish basic tasks. The following are among the real-world factors mentioned as accounting for consumers' lack of understanding of basic information about health plans:
5. • A failure to communicate (and for enrollees to understand) how managed care works. For example, sales presentations made in large housing complexes for elderly individuals focused their pitches on the fact that enrollees will receive many additional benefits at no cost but did not provide much other information.
   • An absence of resources for advice and comparative, objective information and assistance if information or assistance is needed, or a lack of knowledge of the existence of such resources. This is particularly important for less sophisticated purchasers, including populations who have difficulty understanding the English language.

• An individual's failure to determine whether his or her physician(s) is(are) part of a plan and a failure of salespeople to mention that an individual might want to ascertain this information before signing up.
• Not knowing that there was an appeals process when payment is turned down and not knowing that there are expedited appeals processes for urgently needed medical care.
• Not being aware that under current rules one can leave a managed care plan at the end of a month.
  
  

  It may be useful for HCFA to ensure that this kind of information and those cautions that can forestall the making of bad decisions are part of the marketing materials. HCFA has been working with the American Association of Health Plans to establish voluntary standards for good marketing practices.

5. Medicare enrollees' experiences with health plans vary markedly among states and among health plans. A recent analysis of Medicare disenrollment data by Families USA suggests that some geographic areas and health plans will have many problems (Families USA, 1997; Riley et al., 1997). In some states, the Medicare market seems to be working well: In Hawaii only 2.7 percent of Medicare HMO enrollees disenrolled in 1996, and in Minnesota only 4.2 percent disenrolled. In other states, however, Medicare enrollees disenrolled from HMOs at much higher rates in 1996:19 percent of Medicare HMO enrollees in Texas, 22 percent of Medicare HMO enrollees in Kentucky, and 25 percent of Medicare HMO enrollees in Florida. The disenrollment rates for the 10 Medicare HMOs with the highest disenrollment rates ranged from 44 to 81 percent (6 of these HMOs were in Florida), whereas the rates were 5 percent or lower for the nation's 10 Medicare HMOs with the lowest disenrollment rates. In 1996, 17 Medicare HMOs had disenrollment rates of more than 20 percent and rapid disenrollment rates (proportion of persons disenrolling in the first 3 months) of over 40 percent, figures that may be indicative of the use of misleading marketing practices.

6. Such statistics suggest that HCFA needs (1) the analytic capability to determine why these problems of both HMO performance and HCFA oversight occurred and how they could have been prevented, (2) to target geographic areas and HMOs that threaten to create the biggest problems for Medicare enrollees, and (3) a management orientation and strategy that ensure that such problems will not be replicated and multiplied on a national basis for 39 million Medicare enrollees. It will be unfortunate if public officials do not learn from past experience and apply those lessons to the new Medicare+Choice program.

   Consumer Assistance Roles

   HCFA's success in helping consumers make good choices and in creating a market that rewards good performance will not depend on the agency's actions alone. Indeed, given its current resource and role limitations, HCFA will need to have both an internal management philosophy for what it will do itself and a broader strategy for fostering new roles for other actors, including the media, physicians, employers, insurance and health commissioners, accreditation organizations, advocacy and counseling groups, and disease- and disability-oriented groups.

How HCFA chooses to define its specific functions and accountabilities for consumer assistance will involve the resolution of some of the following issues.

1. How much individual assistance will HCFA staff provide for Medicare beneficiaries? To whom will HCFA refer individuals in need of assistance? With 35 million people in the new Medicare+Choice system, the potential demand for HCFA staff to become involved in individual assistance and to become a full-service consumer assistance agency is large. The U.S. Congress seems to want HCFA to provide basic comparative information but little individual assistance and to leave the field clear for health plan salespeople to pitch their products. HCFA, however, can collaborate with and support many other groups that want to take on a consumer assistance role. To whom should HCFA plan to refer individuals who have questions that HCFA does not have the capacity to deal with or who need assistance that HCFA as a government agency is not authorized to make available? Should HCFA seek to develop a national cadre of counselors, similar to "tax aid" programs for seniors, and offer training programs for organizations interested in sponsoring such programs?*
2. How should HCFA use the media? For many reasons, HCFA's ability to achieve compliance with its regulatory requirements has often fallen short of full effectiveness: Witness the $23 billion of fraud and abuse in Medicare that occurs annually and the HMO marketing problems cited earlier. With a new consumer choice market, however, HCFA has the possibility of using press releases and press conferences to generate favorable publicity for the best health plans and negative publicity for bad health plans when quality is determined by the use of objective measures. Such rewards and penalties arising from a better-informed marketplace would likely be far greater than the results that could be accomplished by letters of commendation or admonishment.
3. How should HCFA manage health plan contracts? There is now enough of a history with Medicare HMOs to predict what major problems lie ahead, at least with certain health plans and in some parts of the country. HCFA staff need clear policy guidance about when and how to intervene with health plans and on the use of intermediate sanctions short of dismissal from the Medicare program. The creation of new management information systems for the profiling of health plan performance data (data on appeals, grievances, and disenrollments; data from HEDIS and the Consumer Assessment of Health Plans; financial data; and date from compliance visits) merits a high priority. HCFA field offices in areas with the greatest enrollment growth and problems could also enhance the agency's rapid response and consumer service capability. HCFA's contract management capabilities, policies, and practices could be some of the most important determinants of its success as a consumer service agency.

4. *

   Currently, the Health Insurance Information, Counseling and Assistance (ICA) programs operate in 50 states. ICA counselors provide beneficiaries with information about the Medicare program and other public and private health insurance options for the elderly. ICA programs differ from state to state, but most are volunteer-based service delivery programs run by paid professional staff. ICA programs are funded by HCFA, with some states providing supplementary funding. Although these programs are generally highly regarded, by themselves they may not be sufficient to respond to all the new information challenges generated by the new Medicare+Choice program.

A variety of other participants will play a role in helping Medicare beneficiaries determine the plan that they should select.

As stated before, the media offer an important avenue for getting information to Medicare beneficiaries and for warning about potential problem plans. If it decides to use a media-oriented strategy, HCFA should consider background sessions with members of the national media supplemented with briefings in key market areas. Perhaps Health and Human Services Secretary Donna Shalala could appear in national ads announcing the best and worst plans.

One individual with whom a prospective Medicare enrollee is likely to discuss possible enrollment in a managed care plan and from whom an opinion is likely to be valued is his or her physician. Indeed, physicians could provide a patient with important insights into whether a plan would be a good choice, how easy it is to for the physician to work with the plan, and other factors. Thus, it may be that HCFA should make special efforts to ensure that physicians are well informed about the managed care options in each area.*

Employers that offer retiree health benefits can also be a lead source of information and advice for eligible individuals. HCFA may also be able to work with some employer purchasing alliances and cooperatives so that they can assist Medicare-eligible populations.

Some of the new Medicare rules with which health plans must abide are similar to recent state patient protection laws. Part of HCFA's strategy could be to coordinate with state insurance commissioners and the National Association of Insurance Commissioners in identifying problem health plans, in providing individuals with assistance, and in using coordinated actions to bring health plans into compliance. In the past, managed care has seen fly-by-night operators and marketing firms moving from state to state as they stay "one step ahead of the sheriff." State health departments may also need to be involved with quality-of-care abuses. Joint efforts and "watch lists" might lessen future problems.

Under the new statute, private-sector accreditation rather than HCFA approval is the primary means of keeping poor-quality plans out of the market and protecting Medicare beneficiaries. It is important that accreditation agencies do their job well. HCFA—as well as consumer organizations—needs to scrutinize the performance of accreditation agencies and insist that they

not relax their standards under pressures from health plans that are avidly pursuing the economic potentials of the Medicare market. HCFA may also be able to find ways to use accreditation agencies as a part of a rapid-response capability when problems are encountered to assess situations and remove health plan accreditation. Nevertheless, accreditation organizations do not have the resources or backing of their health plan sponsors for a more intensive role in analyzing the quality of services for the Medicare population.

A number of organizations are or could become involved in assisting elderly and disabled individuals eligible for Medicare to understand their choices and offer them a source of objective advice and counseling, as well as advocacy and assistance in dealing with managed care plans. Among these groups are state and local agencies on aging, chapters of the American Association of Retired Persons (AARP), and HCFA-funded state health insurance consumer advisory programs. Although AARP has conflicting interests because of its business relationships with Medigap insurance and health plans, AARP chapters may be useful purveyors of information and advice.

The Medicare population is distinguished by variations in nearly all characteristics: from age span (disabled young adults to seniors who are more than 100 years old) to health and disability status. It also has a high concentration of individuals with chronic conditions and disabilities. Medicare enrollees with specific health problems are likely to have different and much more specific questions than senior citizens who are in good health. An individual in the former group will want to know a good deal about a plan's specialists, therapies, protocols, formularies, referral procedures, quality indicators, and outcomes that are specifically related to his or her health condition. Such information goes well beyond what is likely to be available in HCFA's general publications and databases. Thus, HCFA may want to encourage disease- and disability-oriented groups to develop their own checklists and report cards for patients with specific concerns so that such information can be readily available.

The Medicare population has many individuals who have other special needs and who require attention for managed care to work well for them. Non-English-speaking populations are an example, as are patients with Alzheimer's disease, American Indians, and individuals who are deaf or blind. HCFA may be able to learn from Medicaid experiences and standards for serving the individuals who make up some of these populations. New York's Medicaid waiver, for example, requires health plan information to be available in the primary language of groups that make up more than 5 percent of the population of a service area, as well as counselors who speak languages that an individual can understand. Among the non-English-speaking languages spoken in different boroughs of New York City are Spanish, Chinese, Creole, Russian, Yiddish, Indian (Asian), Italian, Arabic, Hebrew, and Vietnamese (United Hospital Fund, 1997). Finally, some populations are vulnerable due to a diminished ability to make decisions. Outreach efforts for such people may require the use of contracted agents.

For many people who are chronically ill and have special needs, Medicare needs to supplement its customer service efforts with actions that can reduce predictable problems for them. It needs to use purchasing standards and report cards on performance to help ensure that health plans do not underserve these groups and to ensure that individuals with special health problems have valid ratings on how well health plans serve people like them. It needs to use better risk adjusters so that plans will not have strong financial incentives to demarket and discriminate against these individuals. Finally, HCFA, along with private advocacy groups, needs to watch for the problems of high cost associated with these populations.

HCFA faces a challenging new future as a consumer service agency. The major tasks at hand, if they are to be performed well, exceed its current capabilities. To be successful, HCFA will need to learn rapidly, define its own role, develop effective strategies, and work closely with many partners in serving Medicare's 39 million elderly and disabled beneficiaries.

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