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What is medicare choice

what is medicare choice

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Testimony on Medicare+Choice Implementation by Michael Hash

Deputy Administrator

Health Care Financing Administration

U.S. Department of Health and Human Services

Before the Senate Finance Committee

July 30, 1998

Chairman Roth, Senator Moynihan, Committee members, thank you for inviting us here today to talk about our efforts to implement the Medicare+Choice program and educate beneficiaries about the many new options that will be available to them. This marks the greatest change in Medicare in the program's 33 year history, and we are eager to proceed in a thoughtful and responsible manner.

We have made substantial progress in implementing the Medicare+Choice program and the many other changes enacted through the Balanced Budget Act of 1997. We have completed 189 of this historic law's more than 300 individual provisions affecting our programs. Since our new administrator was confirmed last November, we have published 64 regulations, including major Balanced Budget Act provisions such as the Medicare+Choice regulation. We have approved Children's Health Insurance Plans to cover a projected two million additional children for nearly half the states. We have issued 65 program guidance letters to state Medicaid and child health officials, 49 of which are related to the Balanced Budget Act.

In addition to our Balanced Budget Act efforts, we have been working closely with state insurance regulators in monitoring enforcement of important Health Insurance Portability and Accountability Act provisions. We delivered 10 official Reports to Congress. We have made major strides in improving program integrity. And we made essential progress in aggressively addressing the Year 2000 issue for Medicare and Medicaid information systems.

The Medicare+Choice program provides important new opportunities for beneficiaries. They will have more options than ever before. They can receive care through plans run by providers rather than insurers. They can choose plans that cover prescriptions and other services not included in traditional Medicare. They can be offered the entire range of options in the private sector today, and choose a plan that matches their own personal values. This is an historic step forward for the Medicare program. We take our responsibility to help

both plans and beneficiaries understand these new opportunities very seriously.

We have accomplished a great deal to implement the Medicare+Choice program, including publication of all Balanced Budget Act-mandated Medicare+Choice regulations.
  • In September 1997 we issued 1998 plan payment rates based on the new methodology in the Balanced Budget Act which breaks the previous link to local fee-for-service spending, and establishes a minimum payment amount. This new methodology applies to existing Medicare HMOs as well as to the new types of Medicare+Choice plans. In March we issued the 1999 plan payment rates.
  • In April we published a regulation establishing the definition of a Provider Sponsored Organization.

  • In May we published a regulation identifying the solvency standards for Provider Sponsored Organizations, which had been developed through a careful and well balanced negotiated rule making process with broad representation from interested parties.

  • In May we published details of how Provider Sponsored Organizations can obtain a federal waiver from state licensure requirements to participate as a Medicare+Choice plan.

  • In May we held the first meeting of the Medicare Competitive Pricing Advisory Commission, chaired by General Motors Health Care Initiative Executive Director James Cubbin. This Commission will recommend key design features of a Medicare managed care competitive pricing initiative.

  • In June we published the remaining Medicare+Choice regulations which detail requirements for plans and incorporate important new protections for beneficiaries and providers. New types of plans, including Provider Sponsored Organizations (PSOs), Preferred Provider Organizations (PPOs), and Private Fee-For-Service plans (PFFS). Plans can now submit applications to participate in the Medicare+Choice program.

  • In July we began a "train-the-trainers" program for 700 individuals across the country in our education partner organizations. The goal is for them to teach others in their organizations and communities how to help beneficiaries understand their new options.

  • We have launched a consumer-friendly Internet site,, where beneficiaries can find direct comparisons of the benefits and costs of plans available in their community.

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