| <font size="-1" , face="Arial" ,"Helvetica">National
Bipartisan Commission on the Future of Medicare |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Program Design | ||||
| Overview | ||||
| 1) Structure | Traditional fee-for-service (FFS) coverage. One large government operated plan. Full choice among providers who are participating in Medicare FFS and accepting new patients. | Beneficiaries potentially have a choice between health maintenance organizations (HMOs), point of service (POS) plans, provider sponsor organizations (PSOs), preferred provider organizations (PPOs), and private FFS plans (could include medical savings accounts [MSAs]) if those plans are offered. | Most beneficiaries are in a few large FFS/PPO plans. Approximately 300 plans participate. 10 national plans (run by 7 insurers) are available. | Beneficiaries choose between HMOs and two state-run/self-funded PPOs. About 20 plans participate per year. |
| 2) Demographics | In 1998, there were over 33 million aged enrollees, 5 million disabled enrollees, and 99,000 under 65 ESRD enrollees in Part A (Part B enrollment is slightly less). The aged category includes over 65 disabled and ESRD beneficiaries. | As of December 1998, 6.8 million beneficiaries of the 33 million were enrolled in Medicare+Choice plans. ESRD beneficiaries must remain in FFS unless they enroll in Medicare+Choice before they are diagnosed with ESRD. | 9 million FEHBP participants, 1.2 million retirees. That figure includes active workers, spouses, dependents, and survivors. | Over 1 million participants. 2/3 are state employees and their dependents. 1/3 are municipal/school employees and their dependents. As of October 1998, 108,340 CalPERS participants were Medicare beneficiaries. |
| 3) Geographic coverage | All 50 states, territories, etc. All localities. | Risk and cost based managed care plans are available in mostly metropolitan areas. There is limited availability in rural areas. In January 1999, Alaska, South Dakota, Utah, and Wyoming will not have any managed care plans. Mississippi will have one managed care plan, but it is only available to dual military and Medicare eligible beneficiaries. | All 50 states, territories, etc. All localities. Every employee in every location, including rural areas, has at least 10 managed FFS plans (offered by 7 insurers), e.g., in 1999, West Virginia has 20 plans (10 national plans offered by 7 insurers, 7 specific city plans, 6 specific group plans and Nebraska has 19 plans (10 national plans offered by 7 insurers, 3 specific city plans, and 6 specific group plans). Metropolitan areas with high HMO penetration have up to about 25 plans. | Two self-funded PPOs and four employee association PPOs are available statewide. HMO choices vary by county with more choices available in urban areas. |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Administration | ||||
| 4) Program administrator | The Health Care Financing Administration (HCFA) pays for services using statutorily defined benefits. HCFA interprets statutory requirements and provides regulatory and policy guidance, which are administered by regional carriers and intermediaries. HCFA also certifies providers for participation. For many operational functions, e.g., processing claims, HCFA contracts with carriers and intermediaries. | HCFA contracts with plans and monitors their performance, educates beneficiaries about Medicare+Choice, and conducts open enrollment periods which include disseminating information to employees and retirees. Plans are paid according to a statutory formula. | The Office of Personnel Management (OPM) solicits proposals from plans, negotiates benefits and premiums with those that respond, and runs annual open enrollment periods which include disseminating information to employees and retirees. Personnel offices in individual federal agencies handle enrollment and information needs. | The California Public Employees’ Retirement System (CalPERS) Board specifies benefits, solicits proposals from plans, vigorously negotiates with those that respond, and runs annual open enrollment periods which include disseminating information to employees and retirees. |
| 5) Selection of the administrative board | The administrator of HCFA is appointed by the President and confirmed by the Senate. Medicare FFS is administered by HCFA’s career civil service staff and regional carriers and intermediaries. | The administrator of HCFA is appointed by the President and confirmed by the Senate. Medicare+Choice is administered by HCFA’s career civil service staff. | The director of OPM is appointed by the President and confirmed by the Senate. FEHBP is administered by OPM’s career civil service staff. | Mix of members. Some elected by beneficiaries. Some appointed by the Governor or specified in statute (e.g., the state treasurer is a member). |
| 6) Plans operated by the board/administrator | HCFA administers the traditional FFS Medicare program. Many operational functions are contracted to private sector entities. | None. | None. | The CalPERS Board oversees two self-funded preferred provider organizations (PPOs). |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Regulation | ||||
| 7) Regulation of plans | Plans do not participate. | Federal statute and HCFA regulations set requirements regarding financial solvency, enrollees’ grievances and appeals, and quality of care. Most plans have to follow state HMO or insurance standards relating to solvency, quality, the patient appeals process, etc. No limitation on the number of plans. | Federal statute and OPM set requirements for plan participation such as those for financial solvency. State laws also govern most HMOs. No limit on the number of HMOs. If an employee sponsored plan leaves the program it may re-enter. One national plan slot is available. | State statute and the CalPERS Board set general requirements for plans to participate. State Department of Corporations and HMO laws also govern plans. There is no limit on the number of plans in CalPERS. |
| 8) Exclusion and/or termination of plans | No plans in Medicare FFS. | In order to exclude plans, HCFA must prove patterns of fraud or abuse in areas such as, marketing, quality of care, failure to have appropriate grievance and appeals procedures, etc. | OPM usually does not terminate plans. It may do so if a plan’s enrollment level drops below 300 participants; OPM will make exceptions to that rule. | The Board may take action (e.g., freeze enrollment, or terminate a plan) if board members are not satisfied with the plan’s premium bid or performance. |
| 9) Regulation of providers | Standards are set by statute and regulation. All providers have to meet state licensure requirements and are subject to survey and certification processes. | Standards are set by statute and regulation. Plan providers are generally subject to the same requirements as FFS providers, such as, all providers have to meet state licensure requirements. | Plans set requirements for providers. All providers have to meet state licensure requirements which are often similar to HCFA’s standards. Plans may have to follow state insurance standards relating to solvency, quality, etc. | Plans set requirements for providers. All providers have to meet state licensure requirements which are often similar to HCFA’s standards. Plans have to follow the designated state agency’s (currently the Department of Corporations) standards relating to solvency, quality, the patient appeals process, etc. |
| 10) Regulation of provider payments | Federal statute sets the requirements and formulas for setting payment rates–administered pricing. | HCFA sets payment rates for plans based on formulas in the federal statute. Plans negotiate provider payment rates which range from fee schedules to capitation payments to providers. | Plans set provider payment rates using their own policies which range from fee schedules to capitation payments to providers. Plans’ agreements/contracts with providers generally say how payments are determined. | Plans set provider payment rates using their own policies which range from fee schedules to capitation payments to providers. Plans’ agreements/contracts with providers generally say how payments are determined. |
| 11) Selection, exclusion, and/or termination of providers | All qualified providers who ask must be allowed to participate. While HCFA has the authority to exclude providers for various reasons, including conviction for fraud, patient abuse, and patterns of overuse of service, relatively few providers are excluded in a given year. | Plans select providers to be in their networks. Plans may terminate providers for any reason allowed in their contracts with providers. The BBA added provider participation requirements (e.g., right to appeal if excluded from a network). | Plans select providers to be in their networks. Plans may terminate providers for any reason allowed in their contracts with providers. | Plans select providers to be in their networks. Plans may terminate providers for any reason allowed in their contracts with providers. |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Eligibility | ||||
| 12) Beneficiary eligibility determination | Set by
federal statute. Beneficiaries must be fully or currently insured under Social Security (S.S.) and age 65 or older, receiving S.S. cash disability payments for 24 months, or suffering permanent kidney failure. Individuals age 65 or older who do not have 40 quarters under S.S. are permitted to buy-in to Part A by paying its actuarial value. Individuals with between 30-40 quarters under S.S. pay a reduced premium. The Social Security Administration (SSA) makes determinations. No early retirement provisions. |
Same as FFS. | Must be employed by or retired from the Federal Government or a dependent, spouse, or survivor of a federal employee or retiree. OPM, through federal agencies, makes determinations for employees, retirees, and dependents. | Must be employed by or retired from the State of California, or certain local governments in the state, or a dependent of one of these employees or retirees. Eligibility requirements are set by state law. |
| 13) Beneficiary enrollment process | Set by
federal statute. Automatically enrolled in FFS unless beneficiaries elect to select a Medicare+Choice plan. |
Set by
federal statute. Beneficiary may enroll/disenroll monthly. Annual commitment required 2003 and beyond with an option for one change during the first 3 months of the year. Annual enrollment period run by HCFA. |
Beneficiaries’ enrollment remains in effect for at least one year unless they disenroll. | Set by state
statute. Must remain for at least one year in the plan selected during the annual enrollment period run by CalPERS. |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Premiums and Cost-Sharing | ||||
| 14) Establishment of the total premium | No overall premium other than the Part B premium. Per capita expenditures are based on entitlement to Medicare benefits. | Combination of factors including Medicare+Choice payment, actuarial value of supplemental benefits, and market competition. | Overall premium set by competition among plans and negotiation between plans and OPM. | Overall premium set by competition among plans and intense negotiation between plans and the CalPERS Board. |
| 15) Establishment of the government contribution | Set by
federal statute. Part A and Part B services are paid for on a fee-for-service basis, with some limits on specific benefits. Beneficiaries pay 25% of Part B costs (as set in law) and cost sharing payments. 75% of Part B costs are paid through income and other taxes in the form of general revenue. |
Set by
federal statute. Contribution is based on the larger of HCFA’s estimate, on a per county basis, of what 95% of average FFS costs would be in 1997 (known as the average adjusted per capita cost [AAPCC]), but no less than the $367 per beneficiary per month floor, increased each year by the greatest of: 1) 2 percent, 2) The estimated increase in Medicare costs, or 3) A phase in of a blend of 50% of expected national and 50% of expected local increases in Medicarecosts if budget neutral. |
The formula
is set by federal statute. The government contributes 72% of the "weighted average premium", not to exceed 75% of any plan’s premium. The government contribution thus grows at the same rate as average premium growth. |
Set by state
statute. The State of California negotiates with state employee unions. The contribution is sometimes as high or higher than the plans’ premiums. The state contribution for State of California retirees is established by a statutory formula. Other public agencies establish their contribution levels through various methods. |
| 16) Explicit
adjustments for: Geographic variation Risk adjustment Age |
Prices for most services incorporate geographic adjustments (e.g., wage indices). | Adjusted for geographic variation, risk, age, Medicaid, institutional, and work status. HCFA is currently creating a health based risk adjustment. | No explicit adjustments to the government contribution. Bidding by regional plans combined with the maximum government contribution requirements results in implicit geographic adjustments. | No explicit adjustments. Allow different rate increases in urban/rural areas. |
| 17) Establishment of beneficiary premiums | Aged and
disabled beneficiary premiums are set at 25% of average Part B expenditures of aged
beneficiaries. Set by federal statute. |
Beneficiaries
pay the Part B premium and any additional premiums plans may charge that are subject to
federal requirements. Beneficiaries’ overall contributions vary by the plan chosen. Set by federal statute. |
Plan premium minus the government contribution. Employees’ premiums thus vary by the plans chosen. The overall percentage is set by federal statute. (Row #13/FEHBP describes the government contribution.) | Plan premium minus the employer contribution. (Row #13/CalPERS describes the contribution.) The high level of state contribution leads to many employees having zero premium plans. When premiums are less than the employer contribution, employees are paid the difference. |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Benefits | ||||
| 18) Standardized benefits/services | Specific types of benefits are set by federal statute, sometimes including the amount and duration. HCFA’s regulations and guidelines apply the statutory provisions. Services must be generally recognized as safe and effective, medically necessary and appropriate for the beneficiary. Coverage determinations for newly developed services are generally made by regional claims processing contractors, although HCFA can make national determinations. | Must cover the same benefits/services as FFS. If a plan’s Medicare profit rate is higher than its commercial profit rate, the plan must offer supplemental benefits that are actuarially equivalent to the difference. (This is generally referred to as the adjusted community rate [ACR] process.) Set by federal statute. | Benefit types but not benefit levels are set by federal statute. OPM does require that some specific services be covered or excluded. Core benefits include, hospital, surgical, in-hospital medical, ambulatory patient, supplemental, obstetrical, and prescription drug benefits. The benefit package is updated and further specifics are negotiated via the annual "call letter" and plan contract negotiations with OPM. | HMO plans (about 11) have standardized benefits set by the Board. Those benefits include in and outpatient hospital visits ($0 copay), physician visits ($5), immunizations ($5), prescription drugs ($5) and several others. Two self-funded PPOs’ benefits vary greatly. (One PPO has generous benefits. The other PPO is more competitive with CalPERS’ HMOs.) Four employee association PPOs’ benefits also vary considerably. The PPOs must offer core benefits defined by CalPERS, but they submit specific benefit designs for review by CalPERS administrators. |
| 19) Plans’ variation and flexibility of benefits: | No variation allowed by statute. Changes require statutory or regulatory changes. Some regional carrier discretion/interpretation of covering new services is permitted. HCFA tests new benefits under its demonstration authority | Plans are required to cover FFS benefits. Supplemental benefits and cost sharing can be changed annually by plans, subject to review by HCFA. There are limits on plans’ cost sharing. Plans may place limits on supplemental benefits. | Legislation requires some specific services to be covered or excluded. Plans may vary supplemental benefits, cost sharing, and coverage specifics annually. Those variations are subject to OPM review and approval. Benefit design changes are often the subject of negotiation between plans and OPM. | Private HMO plans have standardized benefits. (HMOs compete on quality and access.) Self-funded PPOs’ and employee association PPOs’ benefits vary considerably. CalPERS defines benefits for HMOs, defines core benefits for PPOs, and approves specific PPO benefit design. |
| 20) Process of updating benefits | Congress and the President must amend Medicare statute to add new categories of benefits (e.g., several preventive service benefits were added through the BBA). HCFA tests the cost-effectiveness of new benefits under its demonstration authority. | Benefits must expand to include any additions to FFS benefits and plans can modify supplemental benefits each year on Jan. 1. | Benefit changes can be negotiated by plans and OPM. The changes are initiated by the annual OPM call letter and are subject to OPM review and approval at the start of each contract year. | Benefit changes for the HMOs are set by the CalPERS Board at the start of each contract year. CalPERS must review and approve specific benefit designs submitted by the PPOs. |
| Medicare Fee-for-Service (FFS) | Medicare+Choice | Federal Employees Health Benefits Program (FEHBP) | California Public Employees' Retirement System (CalPERS) | |
| Quality | ||||
| 21) Utilization review requirements | Claims processors are responsible for reviewing services, except those in hospitals, for medical necessity; professional review organizations (PROs) are responsible for hospitals. Beneficiaries are required to be provided an external review. | Plans must establish programs to review service use. Beneficiaries are required to be provided an external review. | Plans can establish programs to review service use. Beneficiaries are required to be provided an external review. | Plans can establish programs to review service use. Beneficiaries are required to be provided an external review. |
| 22) Quality control requirements | Institutional providers are required to have internal quality review programs. Claims processors are authorized to review services for quality. PROs review institutional providers for quality. | Plans are required to have internal quality assurance and quality improvement programs and are subject to quality review by PROs. HCFA requires plans to report on their performance on some of the Health plan Employers Data and Information Set (HEDIS) measures and to participate in Consumer Assessment of Health Plans (CAHPs) customer satisfaction survey. Certain standards may be met through certification by a private accrediting body. | Enrollees receive quality indicators of plan performance based on their ratings annually. Plans are rated based on coverage, access to care, choice of doctor, etc. National Commission on Quality Assurance (NCQA) and Joint Commission on Accreditation of Health Care Organizations (JCAHO) accreditation is encouraged and reported to enrollees. HEDIS will be used in 1999. For FFS/PPO plans profit margins are adjusted based on quality performance. For HMO/POS plans, starting in 1999, 1% of premiums may be withheld based on performance. | NCQA accreditation is encouraged and reported to enrollees. Quality indicators of plan performance results, based on HEDIS measures and member satisfaction, are sent to every enrollee annually. |
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