N.A.S.I. Study Panel Releases Report on
Market-Oriented Reforms in Medicare

The National Academy of Social Insurance (NASI) has released the final report of its Medicare and Markets study panel. The report, entitled "The Role of Private Health Plans in Medicare: Lessons from the past, looking to the future" (November 2003), explores the role of market-oriented reforms and private health plans in Medicare.

The report starts from the premise that, in order to evaluate the benefits of private health plans in Medicare, there must be an objective analysis of Medicare's current performance under both the original fee-for-service (FFS) program and the Managed Care Options (Medicare+Choice program). The panel's findings and recommendations are important to the on-going debate about Medicare reform.  Recommendations of the panel include:

• "The Medicare program should incorporate an annual limit on out-of-pocket spending for Medicare covered services."
  
  

• "The Medicare program should provide Medicare beneficiaries with access to outpatient prescription drug coverage to protect them against large out-of-pocket expenses."
  
  

• "Beneficiaries must be assured that original Medicare is available in all areas and will remain so over time."
  
  

• "Medicare supplemental polices should be community-rated, with greater freedom to switch among plans. To prevent adverse selection, consideration should be given to restrictions on the number of times beneficiaries can switch between FFS Medicare and M+C plans, or on the number of plans that are available on a community-rated basis."
  
  

• "Medicare should conduct competitive pricing demonstrations to pay private health plans."
  
  

• "The performance monitoring systems (CHPS, HEDIS) used by CMS to measure access to care under original Medicare and M+C should include new measures related to chronic illness, as well as increased sample sizes of disabled enrollees."
  
  

• "CMS should modify the Medicare conditions of participation for hospitals to require mandatory reporting of events that result in death or serious harm. CMS should also develop the capacity to identify beneficiaries admitted to low-volume hospitals for procedures where outcomes are sensitive to the volume of procedures performed. CMS should be encouraged to consider a system that could prospectively screen such admissions."
  
  

• "CMS should develop and implement a payment system for health plans that incorporates explicit incentives for improving quality of care. Parallel incentives should be established for FFS providers."
  
  

• "CMS should measure and assess disparities in preventive care, primary care, essential medical and surgical procedures, and follow-up treatment on a regular basis. Disparities based on race, ethnicity, socio-economic status and gender should be studied in both original Medicare and M+C. Aggregate measures should be reported on an annual basis. Plan-specific measures should be used whenever possible to encourage improvement at the local level."
  
  

• "CMS should help beneficiaries better understand that they are enrolled in Medicare regardless of whether they receive care through original Medicare or an M+C plan, and the conditions under which they can disenroll from M+C and return to original Medicare."
  
  

• "Mechanisms should be developed to ensure greater consumer, political, and managerial accountability that more effectively stimulates learning between original Medicare and M+C."
  
  

• "Congress should create a more stable environment for the M+C program by refraining from legislating frequent changes in the program's structure and payment rates."

The panel, convened in 2001, looked broadly at its mission and set as its goal strengthening Medicare overall, including both the fee-for-service system and private health plans. Panel members represented a cross-section of views on health care reform and on the role of markets in the creation, extension, and stabilization of services under the Medicare program. Panel members included experts in health care delivery, health economics, social policy, and advocacy.

The study panel was chaired by Mark Schlesinger, of Yale and Rutgers Universities. Panel members were: Alfred Chiplin, Jr., Center for Medicare Advocacy, Inc.; Deborah Chollet, Mathematica Policy Research, Inc.; Robert Crane, Kaiser Permanente, Institute for Health Policy; Brian Dowd, University of Minnesota; Carroll Estes, University of California, San Francisco; Rashi Fein, Harvard University; Ann Barry Flood, Dartmouth University; Barbara Gagel, Independent Consultant; Mark Pauly, University of Pennsylvania; Mark Peterson, University of California, Los Angeles; and Gary Young, Boston University.

NASI Project staff for the panel included Kathleen M. King, Study Director and Director of Health Security Policy; Virginia Reno, Vice President of Research, Reginald Williams II, Research Assistant, and contractor Nederah Pourat, University of California, Los Angeles.

Copies of the study panel report and recommendations, as well as an executive summary, are available from NASI: www.nasi.org; 202-452-8097. (Financial support for the work of the panel was provided by the Robert Wood Johnson Foundation.)