Improving the Medicare Market Adding Choice and Protections (1996) / Chapter Skim
Currently Skimming:
F Best Practices for Structuring and Facilitating Consumer Choice of Health Plans
F Best Practices for Structuring and Facilitating Consumer Choice of Health Plans
Pages 159-194
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From page 159... ...
INTRODUCTION As Medicare contemplates a system in which Medicare recipients would be encouraged to enroll in managed care plans, questions arise about the extent to which enrollees should be given a choice among different plans and how such choice should be structured to meet the needs of enrollees and to achieve objectives related to health care efficiencies. This paper reviews the experiences of private employer purchasing organizations in particular, and those of some public employee organizations as well, that have experience with consumer choice.
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From page 160... ...
In structuring a system that allows consumer choice, the "organizers of choice" -- whether they are large corporations, health purchasing groups of small private employers, or administrators of state employee benefit programs -- must make decisions about a number of fundamental issues, bearing in mind how those decisions affect the probability that the system will achieve the objectives described above. Key issues include the following: • How will health plans be selected?
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From page 161... ...
.1 For reasons such as these, the organizations described herein have adopted standardized benefit plan designs to one degree or another as a way of facilitating choice. Offering some differences in benefit levels may be desirable to accommodate different preferences and abilities to pay.
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From page 162... ...
• How will the employer's premium contribution be structured? To an employee, the price of a health plan is the difference between the premium and the amount that the employer contributes.
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From page 163... ...
To accomplish these objectives, Xerox chose a strategy to structure competition among plans based on value. This strategy includes similar health benefits across health plans, benchmark pricing, commitment to continuous quality management, information gathering and dissemination strategies to support continuous quality improvement (CQI)
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From page 164... ...
Benefit Plan Design Xerox has not specified an exact detailed standard benefit
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From page 165... ...
. Health plans are allowed to offer their richest standard plan design, but may vary benefits on items that are easy for consumers to understand and would not promote risk segmentation, such as modest copayments.
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From page 166... ...
Medicare requires that enrollees be allowed to disenroll from health plans at will; this is at odds with Xerox program rules, which allow one health plan change per year for cause. In addition, Medicare requires that enrollees be disenrolled from a health plan if the enrollee leaves the plan service area for more than 90 days.
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From page 167... ...
This report includes comparison tables representing the characteristics and performances of all health plans in the employee's geographic area across a number of dimensions, including structure, network characteristics, access to services, member satisfaction and wait times, and HEDIS qualityof-care measures. Unlike many other examples of consumer choice information, the Xerox report card explicitly states the goals for each measure.
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From page 168... ...
The changes had to be bargained with employee unions -- which cover about 45 percent of the work force -- and this constrained the degree to which the company could change the program. The health plans that are offered include several HMOs (including individual practice association [IPAs]
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From page 169... ...
Selecting Health Plans To be eligible for continued participation, plans must have or be seeking NCQA accreditation. They must also provide HEDIS data.
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From page 170... ...
Although company-specific data on the performance of participating health plans is not yet available, the company sponsored publication of a Los Angeles edition of Health Pages and made available plan-specific consumer satisfaction data based on the experience of other enrollees in participating plans. Anticipated Improvements In assessing the program to this point, company administra
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From page 171... ...
was given authorization under California's state reform legislation of 1992 to create and administer a small-group health plan purchasing cooperative, which is known as the Health Insurance Plan of California (HIPC)
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From page 172... ...
Over the past 3 years, HIPC has seen a convergence in premiums toward the low price. Plans Offered HIPC's authorizing statute required that it offer health plans with more than one delivery structure but did not specify what those structures had to be.
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From page 173... ...
Participation Rules HIPC requires participating employers and the health plans to have an open enrollment period during May of every year. In this way, HIPC facilitates consumer choice of health plans and providers by granting existing enrollees an opportunity to change health plans.
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From page 174... ...
After conducting intensive focus groups with consumers, HIPC is now making available "second generation" enrollment materials. This information provides prospective enrollees answers to questions that HIPC members frequently have asked, cross-referenced by the participating health plans.
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From page 175... ...
In 1993, the management of CBIA decided that it would also develop a health plan purchasing arrangement for small employers that would offer employees a choice of several competing managed care plans. Purchasing Role CBIA views itself as an active purchaser in the health care marketplace but would not characterize itself as a "hard" negotiator because it was most interested in forming partnerships with health plans.
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From page 176... ...
offered alongside the managed care plans would likely be subject to adverse risk selection, and in any case, the combination of several managed care networks would allow most consumers to have access to the providers of their choice. Benefits Structure To enhance consumer choice of a health plan on the basis of price, network, and quality rather than on the basis of the benefits offered, CBIA has developed a single benefit plan that all its health plans offer.
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From page 177... ...
For example, CIGNA has a fitness benefit contained in its benefit plan, but a prospective enrollee will not become aware of that benefit until he or she enrolls in the health plan. Participation Rules CBIA requires participating employers to conduct an open enrollment period for 1 month each year, from November 1 to December 1.
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From page 178... ...
Each employee selects his or her choice of health plan, benefits option, and primary care physician and indicates these choices on a standardized enrollment form. All enrollment forms are then processed by CBIA, and the results of the enrollment process are transmitted electronically by CBIA to the participating health plans.
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From page 179... ...
This uncertainty arises because CBIA has strong ties to employers and agents but limited exposure to individual employees. To address this issue, CBIA is considering revising its communications materials to ensure that individual employees are knowledgeable about the consumer-choice element of its health plan offering.
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From page 180... ...
CHIP has contracted with four HMOs, each of which offers CHIP's three standardized benefit plan designs: a basic HMO plan, a standard HMO plan, and a POS option on the standard HMO plan. Employers purchasing through CHIP select the benefit plan design, and the employees choose from among the four health plans.
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From page 181... ...
Failure to accommodate for these differences could leave CHIP open to adverse risk selection, which could destroy the viability of CHIP overall. CHIP's approach was to standardize those characteristics that could be standardized across market segments -- benefit plan design, health plan offerings, enrollment, and other administrative services -- while separating employers into three different risk pools for rating purposes.
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From page 182... ...
Enrollees who want more detailed information about the health plans and their participating providers, or who have questions about CHIP itself, are encouraged to call CHIP's tollfree customer service line. Health plans participating in CHIP have agreed to withhold up to 2 percent of premiums.
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From page 183... ...
There was concern that since local government participation was voluntary, the pool would attract the higher-risk groups. Therefore, ETF opted to maintain separate risk pools for local governments and state employees, while still offering the same benefit plan designs and health plan choices to both groups.
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From page 184... ...
These include policy development, selecting and negotiating with health plans, tracking funds flow, consumer information devel
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From page 185... ...
Consolidated Consumer Choice Materials Enrollees covered through the ETF make their choice of health plans on the basis of a consolidated booklet of information about the program and all of its participating plans. This single document contains all of the different kinds of information that a consumer needs to understand the program, review the covered benefits, and choose among the health plans offered.
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From page 186... ...
The summary plan descriptions for each health plan offered are standardized and are two pages long. Each plan submits one page of text (subject to ETF approval)
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From page 187... ...
Characteristics of Systems That Facilitate Choice In general, all of the organizations studied do four things to facilitate consumer choice. First, they create a level field for comparison among health plans by requiring plans to provide comparable, comprehensive health benefits, providing objective and reliable information, and hosting a structured open enrollment period during which consumers make choices.
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From page 188... ...
• When consumer information about health plans is combined in a single document and in side-by-side comparison tables, it encourages enrollees to make an active choice. In some cases, purchasing groups have put information about each health plan into a separate document (e.g., separate sheets in a pocket folder)
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From page 189... ...
Kaiser believes that the greater percentage of women physicians in its panel provides a marketing edge. Many purchasers have chosen to require health plans to submit the information for consumer choice materials by using common definitions and methodologies, such as HEDIS.
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From page 190... ...
Whether they use benefits managers, benefits counselors, 7This problem is likely to be reduced in magnitude in the future because many people who become eligible for Medicare will already be in managed care plans. They will be familiar with that form of delivery, and in many cases their plan will also participate in Medicare, so they will not even need to change health plans.
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From page 191... ...
When thinking about consumer choice for an elderly population, confusion resulting from the number of health plan options can become a critical issue. A second reason to limit the number of participating health plans is to maintain a reasonable span of control for the purchaser.
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From page 192... ...
It is important to note that when individual health plans are able to define the benefits offered, they have an incentive to offer a set of benefits that will attract healthy enrollees and deter enrollees with ongoing or expensive medical needs. Wisconsin ETF moved to a standard benefit plan design for its HMOs because it wanted to eliminate this kind of risk segmentation by health plans, as well as facilitate choice.
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From page 193... ...
• How will health plans be held accountable for performance? Although the ability of enrollees to "vote with their feet" creates a marketplace system of accountability, all of the purchasers examined here also use negotiated performance guarantees, common measures of plan performance, and an ob
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From page 194... ...
• Should consumer information only compare plans with each other or should plans also be compared against benchmarks or standards? Relative plan comparisons provide useful information for selecting among alternatives; however, several purchasers (notably Xerox and Southern California Edison)
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