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.NOV-21-1994
OFFICE TAx ANALYSIS
14:51
202 622 0236
P.01/04
DEP:z:mTMENT~IDF·qHE fFREA.~
OFFICE "OF "TAX ANALYSIS
1500 PENNSYLVANIA AVENUE, 'NW
WASHINGTON,DC 20220
Date:
Number of Pages:.....;1:;..;.+..;;;.3_ _
456-7431
TO: Chris Jennings'
Name.
FAX number
456-5585
Confirmation no.
622-1318
FROM: Gillian Hunter
Name.
Phone no.
Sender's FAX Number: (202) 622"()236
Sender's Conftrmation Number: (202)
CommentslSpeciallnstructions:
11/21/94
Location: Room 4112 MT
622~2659
Here are Eric Toder I s outlines for
Wednesday's NEC meetings.
He has approved these outlines.
UNCLASSIFIED
�NOIJ-21-1994
OFFICE TAX ANALYSIS
14:51
202622 0236
P.02/04
TAX CAP AND HIGH COST PLAN ASSE$SMENTS
I.
Background. '
A.
'Current law for employer-provided health insurance.
B.
Other tax preferences for medical expenditures.
1.
2.
II.
25 % deduction for self-employed.
Itemized deduction for medical expenses above 7.5% of adjusted gross
income.
Reasons to tighten current law treatment of employer contributions for health
,
insurance~
A. " Cost containment.
B.
Revenue.
III.
Tax cap options.
A.
Supplementals~
B.
'Co-payments and deductibles.
C.
Dollar caps.
I.
2.
. D.
Additional issues.
I.
2..
IV.
Need for basic benefit package.
'Employer vs. employee cap.
High cost plan assessment.
A.
. B.
C.
V.
Equity issues.
, Administrative issues .
1994 Senate proposals .
Similar problems in designing base.
Additional concerns.
Conclusions.
,
�NOV-21-1994
14:51
OFFICE TAX ANALYSIS
202 622 0236
P.03/04
MEDICAL SAVINGS ACCOUNTS
I.
Overview of why we are considering Medical Savings Accounts (MSAs).
A. .. On the surface they sound good even though they may have undesirable effects
that outweigh their desirable effects.
B.
Support in Congress for MSAs.
C. Need for cost-contaInment.
II.
What is an MSA?
A.
B.
C.
IlL
Description of how it works in general.
Variety of proposals.
Different designs lead to different magnitudes of effects.
What is the problem that supporters claim MSAs will solve?
A.
Bias against catastrophic plans.
1.
2.
B.
Do catastrophic plans reduce costs?
I.
2.
3.
IV.
Tax-exclusion of employer-provided health insurance.
Limited deductibility of out-of-pocket health costs.
Empirical evidence.
Catastrophic plans vs. HMO type managed care.
Total spending vs. out-of-pocket costs.
Effects of MSAs.
A.
Expansion of coverage.
B.
Cost containment.
C.
Impact on health insurance market and distributional effects.
1.
. 2.
D.
Tradeoff between cost containment and distributional effects.
1.
2.
\
\
Healthy and upper income benefit.
Less healthy and lower income lose.
Outcomes depend on participation rates.
Examples.
�NOV-21-1994" 14:52
V.
~~ALYSIS
202 622 0236
P.04/04
Ways to minimize adverse effects.
A.
Risk adjustors. '
1.
2.
B.
C.
Political feasibility.
Likely effectiveness.
Tax instead of, or in conjunction with, risk adjustors.
1.
2.
Political feasibility.
Likely effectiveness~
Other design features.
1.
2.
3.
4.
VI.
OFFICE TAX
ContributiQn limits.
Tax treatment of earnings in MSAs.
Availability of funds for nonmedical purposes and tax treatment.
Definition of medical withdrawals.
Alternatives to MSAs.
A.
B.
C.
Tax caps.
Small market and other health insurance reforms.
Subsidies, tax credits and deductions for purchase of catastrophic plans.
T
�"
\
'\.
I.
. .1
AGENDA
November 16,1994
1.
Follow-Up to Last Meeting: Coverage and Baseline Issues
II.
Insurance Reform Discussion
A.
B.
Defining the Problem
C.
III.
Insurance Reform in the Absence of Universal
Coverage
Insurance Reform Objectives and Options
Presentation of Polling Data?
�Program for Children, 1997
Federal Costs Between 1997-2005: $60-112 Billion
Percent of Federal
Subsidies
Federal Subsidy
Per Enrolled
Child Per Year
(1997 $) .
Lowest Income
(1 st Quintile)
15%
$1293
Low. Income
(2nd Quintile)
33%
$1312
Middle Income
(3rd Quintile)
40%
$·1180
High Income
(4th Quintile)
12%
$ 465
Highest Income
(5th Quintile)
0%
$ ---
100%
$ 817
Income Quintiles
Total
TOTAL COVERAGE: 4 - 6 MILLION
�Program ,for the Temporarily Unemployed
Federal Costs Between'1997-2005: $66 Billion
Income Quintiles
Percent of Federal
Subsidies
Federal Subsidy
Per Family Per
Year (1997 $)
Lowest Income
(1 st Quintile)
23%
$1256
Low Income
(2nd Quintile)
35%
$1034
Middle Income
(3rd Quintile)
28%
High Income
(4th Quintile)
12%
$ 895
2%
$ 695
100%
$1040
Highest Income
(5th Quintile) ,
Total'
,
$1025
�"Income" is defined as the adjusted gross income for families. In 1994 dollars, the breaks are:
1st Quintile:
Less than $6,517 .
2nd Quintile:
$6,518 - 17,826
3rd Quintile:
$17.827 - 31.675
I
4th Quintile:·
$31,676 - 53,630
5th Quintile:
Greater than $53,631
These breaks are' lower than convential definitions of income because they exclude transfer payments.
�THE PROBLEM
PORTABILITY
Even people with insurance can't be sure that they can keep it over
any extended period of time.
•
\.
People can't be sure that they can get insurance if they have to move or
change jobs.
•
The terms of insurance can change -- an employer can limit coverage
for serious illnesses or treatments.
ACCESS AND AFFORDABILITY
People with health problems can be denied coverage or charged very
high premiums.
.
•
Individuals with health problems who want to buy coverage may not be
able to find an insurer that is willing to sell to them at all, or at an
affordable rate.
•
Insurers and employers can impose long waiting periods for coverage.
•
People who have insurance may face unaffordable increases in their
premiums when they get sick.
•
Without coverage, people often do not get medical care when they need
it.
COMPETITION
Too much energy is spent on avoiding sick people instead of managing
health care delivery.
•
Insurers use benefit design and marketing strategies to target healthier
risks and avoid poorer risks.
•
As long as the focus· remains on risk selection, the market will not
adequately encourage organizations to efficiently manage care.
�,JNSURANCE AND' MARKET REFORMS'
Preliminary Review
, November 16, 1994
OUTLINE OF POSSmLE OBJECTIVES
OBJECTIVE 1: PORTABILITY: To improve the ability of the' currently insured
to maintain coverage.
POSSIBLE INlTIATIVES:
1. Limit the use of pre-existing condition exclusions,
2. Require insurers to renew coverage regardless of health status.
,
/
'
3. Guarantee access to insurance for new employees in businesses that offer coverage.
4. Prohibit insurers (and self-insured employer plans) from imposing caps on benefits for specific
diseases.
..
Similar provisions were contained' in .most Democratic and Republican proposals in the last
Congress.
OBJECTIVE 2: ACCESS AND AFFORDABILITY: To guarantee access to
coverage for everyone and to limit variations in premiums across
individuals and businesses (which can make coverage unaffordable
for high risks).
POSSIBLE INITIATIVES:
1. Guaranteed issue: Require insurers to make coverage accessible to everyone, regardless ofhealth
status,
2. Limit premium variations across individuals and small businesses.
Possible Options:
1. Limit Rate Variations: The extent t6 which insurers could vary their premiums due to
health status could be limited.
2. Permit Premium Variations only for age for each benefits package.
3. Pure Community Rating.
3. Integrate individual purchasers and small businesses into a single community risk pool.
�..
Most Democratic, and a number of Republican proposals in the last Congress contained provisions
that would assure access and limit premium variation. Many proposals permitted age variation.
..
Most Republican proposals and Democratic proposals contained provisions to integrate the
individual and small group markets. However, some proposals permitted small businesses and small
business associations to Ophout of the insured market through self-insurance.
OBJECTIVE 3: ENCOURAGE COMPETITION: To restructure the market to
promote competition among insurers based on efficiency and
serviCe and to reduce opportunities for risk selection by insurers.
POSSIDLE INITIATIVES:
1. Standardize benefit packages.
Benefits could be standardized to a single package, or to several packages (with some more
comprehensive than others). Standardization of a defined set of benefits makes it easier tor
applicants to compare premiums across insurers, which increases competition. It also limits the·
ability of insurance companies to avoid sick people through the design of their benefits packages.
..
Most Democratic proposals in the last Congress provided for a standard benefit package. Most
Republican proposals required that a standard benefit package be offered, but permitted insurers to
offer other benefit packages as well.
2. Promote establishment of purchasing cooperatives for individual purchasers and small businesses.
Possible Options:' The Federal government could:
1. Provide administrative funding and technical assistance.,
2. Require the establishment (e.g., by states) of cooperatives.
3. Enact uniform standards for cooperatives.
4. Make FEHBP -..: the health program for Federal employees -- available to other businesses
and individuals.
..
Most Democratic and Republican proposals in the last' Congress authorized or encouraged
formation of purchasing cooperatives. A variety of proposals to provide coverage through FEHBP
were offered by both parties.
2
�TOP 10 RESPONSES FROM KAISER POLL
1. Priority issue for Congress? (Open-ended .question) -
Number one answer -- 40% health care· (table 2a)
2. Who should take the lead -- President or Congress?
56% Congress vs. 18% President (table 3)
3. Incremental or Major?
41% incremental vs. 25% major -- (Democrats still at 45% for major) (table 5)
4. States or Federal Government take lead?
54% states vs. 32% Federal (table 8)
(Pollsters say completely switched in last 2 years)
5. If incremental, who should be covered first?
40% kids, 24% workers who are uninsured, 9% low income (table 10)
6. What is the largest Federal expense today?
Top three choices: Defense, Foreign Aid, Welfare (table 18-1)
7. After being told how many Federal dollars go to Social Security, Medicare, and Medicaid,
support for cuts in these programs to reduce the deficit?
10% say yes vs. 65% look elsewhere (table 16)
8. Support for reducing spending on Social Security to reduce the deficit?
17% say yes (table 15b)
9. Support for reducing "Medicare for the elderly" to reduce the deficit?
8% say yes (table 15b)
10. Support for reducing "Medicaid for the poor" to reduce the deficit?
17% say yes (table 15b)
�SMALL GROUP INSURANCE REFORM
State-by-State Analysis
•
40 states require Portability
•
34 states have set General Rating Limits
•
18 states have set Tight Rating Limits
•
42 states require Guaranteed Renewal
•
34 states require Guaranteed Issue
•
20 states have established Reinsurance Programs
�INDIVIDUAL INSURANCE MARKET REFORM
Stat~by-State
Analysis.
•
12 states require Portability
•
11 states have set Rating Limits
•
9 states require Guaranteed Renewal
•
8 states require Guaranteed Issue
•
4 states have established Reinsurance Programs
�·.
SMALL GROUP INSURANCE REFORM
,
Portability
General Rating
Limits
AK
X
AZ
X
State
I
Guaranteed
Renewal
Guaranteed
Issue
Reinsurance
X
X
X
X
X
X
X
X
X
X
Tight Rating
Limits
AL
AR
CA
X
CO
X
CT
X
X
X
X
X
X
X
X
X
X
X
X
X
X
DE
X
X
X
X
X
FL
X
X
X
X
X
ID
X
X
X
X
II.,
'X
X
X
X
X
X
GA
HI
IN
IA
X
X
KS
X
X
KY
X
LA
X
ME
X
MD
MA'
X
X
X
X
X
,X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
-
X
X
i
MI
I
X
X
X
MS
X
X
X
MO
X
X
X
X
MT
I
MN
X
X
X
X
NE
X
X
X
X
X
X
X
X
NV
NH
X
X
�I
State
Portability
NJ
Guaranteed
Renewal
Guaranteed·
Issue
Reinsurance
X
X
X
X
X
X
X
X
.Tight Rating
Limits
X
X
X
X
X
X
X
NM
General Rating
Limits
NY
X'
X
"0':·"
NC
X
X
ND
X
X
X
OH
X
X
X
OK
X
X
X
X
X
OR
X
X
X
X
X
X
X
X
X
X
X
X
..
PA
Rl
X
X
SC
X
X
.
X
SD
X
TN
X
X •
X
X
X
TX
X
X
X
X
X
VT
X
X
X
VT
X
VA
X
WA
X
X
X
X
X
X
X
X
X
X
WV
X
WI
X
X
X
X
WY
X
X
X
X
X
TOTALS
40
34
42
34
20
. Source: Blue Cross and Blue Shield ASSOCiatIOn 7/94
18
�.
.'
I
: ..
INDIVIDUAL INSURANCE MARKET REFORM
General Rating
Limits
Guaranteed
Renewal
Gual'anteed
Issue
Reinsurance
X
X
X
X
X
X
X
X
X
X
X
State
Portability
CA
X
ID
KY
LA
ME
X
X
X
MN
X
X
X
NH
X
X
X
X
NJ
X
X
X
X
X
NY
X
X
X
X
X
SC
'X
X
VT
X
X
X
X
WA
X
X
X
X
TOTALS
12
11
9
8
X
ND
Source: Blue Cross and Blue Shield Association 7/94
4
I
�i.·
~.
AGENDA
I.
Opening Remarks
II.
Discussion of Strategic Political Policy Questions .
III.
General Presentation of Deficit Coverage and Financing Ranges
IV.
Communications Strategy
�NEC/DPC MEETING
•
The purpose of today's meeting is to begin to discuss and focus our attention on what health reform
options we believe we should present to the President for his consideration. This is the first of a
series of meetings with principals who will be playing the primary role in determining these options.
•
We obviously must conduct our evaluation within the context of what we believe to be the realistic
political, economic, and policy environment that we face following Tuesday's election results ..
,
•
Having said this, if we have any desire for any health investment or cost containment· option to be
included in the budget (or, for that matter, if we simply want to keep our optionS open), it is clear
that our work must proceed in a timely manner in order to have a full and complete review of the
options available. Today we will hopefully start the process of narrowing the infinite number of ..
options that are possible, so that our respective staffs can better serve us and the President.
•
Once again, before we start in earnest, we want to thank you for the assistance you and your staff
have provided to this effort. To date, we have been quite successful in coll1pleting some preliminary
staff groundwork and the information discussed and circulated has been carefully and professionally
handled.
•
As we proceed forward, there will be an intensified -interest in our work by the media, the Congress,
the outside interest groups and others. As a result, we are going- to have· to bend over backwards to
guard against leaks. (In this regard, sometime during this meeting, we'd like to discuss and seek
advice on how we -- as a group -:-- want to characterize our work and progress outside this room).
•
Failure to protect ourselves against leaks and/or characterize meetings inappropriately or
inconsistently is likely to severely hamper if not eliminate the possibility of providing the President
with the best and most broadly-based policy options.
•
. We cannot afford to have the Congress or the outside interest groups reach the false conclusion that
anything other than preliminary. discussions are taking place. A belief to the contrary. has every
potential to be devastating to our relationships with them and our ability to produce a politically and
policy-sound health reform strategy and package.
•
We have asked Chris to develop a brief, first-cut health policy options presentation that we hope ..
will help focus and give context to today's discussion.
•
Prior to turning to him, however,we believe it is important that you evaluate these options within the
context of the following questions regarding our health care goals, policy philosophies, and overall
strategy:
�1)
Legislative Strategy. Should our health policy recommendations be driven by a
"positioning" or an "enactment" strategy? How can we best integrate our
political/budget/policy priorities with the new Republican Congressional Leadership?
(Pat, et al)
2)
Budget Strategy. Should we integrate our health policy inside or outside the President's
budget proposal?
3)
Deficit Reduction. Do we have a desire/need to dedicate any of the savings or revenues
associated with health reform for deficit reduction as opposed to coverage expansions? If so,
can we begin to think about parameters of the amounts and budget year timeframe (Le., short
term and/or long term deficit reduction goals) that we would like to be considered?
4)
Coverage Expansion. To what extent -- if any -- do we desire or need to advocate for.
coverage.·expansions?
5)
Revenue Options. In the new political environment, what -- if any -- revenues can be
even contemplated for consideratio'n for coverage expansion?
6)
Medicare 'Savings. Within the context of deficit reduc;tion, how many -- if any -
Medicare dollars should be on the table?AIe there some categories of cuts that can/should
be put on or off the table or prioritized in any way (e.g., extenders, hospitals, physicians,
beneficiaries)? . If we are talking about anything significant in terms of Medicare cuts, do we
have to consider expansions of benefits for the Medicare population?
7)
Cost Containment. Do we have public or private cost containment objections beyond
medicare?
8)
Government Role. Should there be a driving philosophy about the role of Government
,relative to any of these options? For example, can we consider public (i.e., medicaid) .
coverage expansions understanding, if we do not, significant Federal insurance reform will be
necessary if we opt for private subsidy approaches?
.
9)
FederaVState Strategy. Should any health care reform strategy be a substantially Federal
driven/administered initiative OR should we give more latitude to the states?
10)
Linkage to other Administration Priority Issues. Should we link our health policy options
to other Administration policy priorities, such as welfare reform?
Obviously, the politics and numbers will significantly drive our policy decisions. As such, it is extremely
helpful to us (and to Chris, as well as all principals' staff) to get a sense of where we are headed on the
above mentioned issues. Please keep them in mind as you evaluate the policy options that Chris will now
present.
Start Presentation by Chris ....
�HEALTH CARE STRATEGIC QUESTIONS
1)
Legislative Strategy
2)
Budget Strategy
3)
Deficit Reduction
4)
Coverage Expansion
5)
Revenue Options
6)
Medicare Savings
7)
Cost Containment
8)
Government Role
9)
Federal/State Considerations
10)
Linkage to other Administration Priority Issues
�--;,~
~
BUDGET DEFICITS AND ESTIMATED CBO SCORING OF PREVIOUSLY PROPOSED MEDICARE SAVINGS
Fiscal Years, Dollars in Billions
1995-2004
1995
1996
1997
-168
-184
-194
1998
1999
2000
2001
2002
-219
-235
-251
-264
-274
. -231
-257
-287
-319
-355
19951999
1995
2004
-285
-397
2003
2004
;;0:0:':';":":~::;::::::0;+
DEFICIT (Adminstration
Estimates)
DEFICIT (CBO Midsession
Estimates)
-192
-162
-176
-193
-197
Extensions of OBRA 1993
Baseline Savings
0.0
0.1
0.4
0.6
3.1
6.0
8.7
11.9
15.9
19.4
10.2
66.1
Extensions of OBRA 1993
Savings Policies
0.2
1.0
1.2
1.6
2.3
2.9
3.7
4.7
5.7
6.9
9.0
30.2
0.2
1.1
1.6
2.2
5.4
8.9
12.4
16.6
21.6
26.3
19.2
96.3
0.0
1.6
3.3
2.7
3.2
3.7
5.0
6.3
7.8
9.7
14.4
43.2
TOTAL OBBA + ADDITIONAL
BIPARTISAN MEDICARE
SAVINGS
0.2
2.7
4.9
4.9
8.6
12.6
17.3
22.8
29.5
36.0
33.6
139.5
MITCHELL ITI MEDICARE
SAVINGS
2.5
8.1
13.9
17.5
25.1
.33.6
42.2
53.2
66.2
SO.l
67.1
342.3
Medicare Sayingl'l Options:
Extensions Subtotal
Additional Bipartisan
Medicare Savings and
Receipt Proposals
,
-I,
-
�,:;'
"
1,"
~
. .'
,Coverage Options and,their:Costs
/
Billions of Net Subsidy Dollars~1996.2005
Coverage Options
I
Welfare to Work
.1.",
X
I
I
I
I
I
Unemployed
I X I
I
I,
I
I
Kids Only
I X I X I
I
I
I
120
I
I'
I
30-60
150
)(
I
I
200
310
410
450-815
,
Working Families
I
I
I
'I
Broad, Low Income Voucher
I
I
I
I
State FMAP FlexibilitY
I 1U ?? ' I ?? ' I ?? I 1?, I ??
I X I X
X
'" I
,X
I
??
All options assume a 1/1/97 start date. The options have been estimated as if they are independent, ,
stand alone options. For example, if Welfare to Work, Unemployed, and Kids Only programs were to be
implemented simultaneously, ttie total. cost would substantially exceed $60 billion but would not reach
$180 billion because the programs are somewhat overlapping.
'
Net Subsidy Dollars 'represents gross subsidy cost minus any Medicaid savings and state maintenance
of effort requirements.
' "
Each column shows the amount of funding required for different coverage proposals, and does NOT,
include the cost of any Other Options (detailed beiow}.,· .
Other Options
Total Cost
1996~2000
Self-Employed Deduction
.
4-15
1~
"
9-36
'1n_i? .
Medicare Drug
20-75
21
Long Term Care.
100'
The self-employed deduction options range from permanently extending the current 25% deduction from 1!1/94 to
one that also permanently increases the, deduction to 100% on 1/1/95. "
The high end of the long term care options is the capped entitlement in the Mitchell bill. and the range includes
other related policies.
,
'
, The Medicare drug benefit is the one in the Mitchell bill. Beginning 1/1/99. beneficiaries pay a deductible"
and 20% copayment up to a $1275 yearly out-of-pocket limit. 25% of this program is financed by an increase
in the Part B premium.
'.-
:.
�':.,.. '"
',:, ..... :.
'
,,"
.'
,
"'.-
"
,
...
,
,'
.,' .
.
.,
~f
•
-',':
..
•
~
Previously Propos~d Sources ofFunding
1996~2000
'.
Medicare· Total
1996-2005 ..
Medicare
Total
Ways,& Means Tobacco Tax ($O.4?per pack)' .
0
24
0
56
W&M Tobacco + OBRA '93-1
10
34
66
122
W&M Tobacco + OBRA '93-1 + OBRA '93-11
20
44
96
152
·W&M Tobacco +' OBRAs + Additional Medicare Savings
34
58
139
195
W&M Tobacco + OBRAs + Additional Medicare Savings
+ Net Mainstream Medicare Savings
73
97
256 .
312
W &M Tobacco + OBRAs + Additional Medicare Savings'
+ Net Mainstream Medicare +' Previously Bipartisan
Support(!d Revenue Options
..
..73
256
353-411
Medicar~ Savings iIi Previous Proposals
104-128 .
.
. ,
1995-2000
1995-2004
House Ways & Means
120
490
Health. Security Act
118
376
Mitchell
103 .
348
Dole
43
160
�TABLE 2.
ESTIMATED CBO SCORING of SELECTED, PREVIOUSLY PROPOSED MEDICARE SAVINGS
Fiscal years, dollars in billions
1995
1996
1997
1998
1999
2000
2001
2002
2003
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-0.1
0.0
-0.1
0.0
0.0
-0.3
-0.1
0.0
-0.4
0.0
0.0
-0.4
-0.2
0.0
-0.6
-1.2
0.1
-0.5
-0.2
-1.3
-3.1
-1.8
0.1
-0.5
-0.2
-3.6
-6.0
-1.9
0.1
-0.6
-0.2
-6:1
-8.7
-2.0
0.1
-0.6
-0.2
-9.2
-11.9
0.0
-0.3
0:1
0.0
0.0
0.0
0.0
-0.2
0.0
-0.4
0.1
0.0
0.0
-0.3
-0.5
0.1
0.0
-1.0
0.0
-0.5
0.1
0.0
-0.1
-0.7
0.0
-1.2
"0.2
' -0.7
0.0
-1.6
-0.8
-0.5
0.1
-0.1
-0.3
-0:8
0.0
-2.3
-1.3
-0.6
0.2
-0.1
-0.4
-0.8
0.1
-2.9
-1.9
-0.6
0.2
-0.1
-0.4
-0.9
0.1
' -3.7
-2.7
-0.7
0.2
"0.1
-0.5
-1.0
0.1
-4.7
-3.6
-0.7
0.2
-0.1
-0.5
-1.1
0.1
-5.7
Additional Medicare Savings and Receipt Proposals
Extend HI Tax to All State & Local Employees
Income-Related Part B Premium ($90K/$115K)·
4/
Eliminate MVPS Upward Bias
1/
Part B Offset
Subtotal
,0.0
0.0
0.0
0.0
0.0
-1.6
'0.0
0.0
0.0
-1.6
-1.6
-1.7
0.0
0.0
-3.3
-1.5
-1.2
0.0
0.0
-2.7'
-1.5
-1.5
-0.2
0.1
-3.2
-1.4
-1.8
-0.6
0.2
-3.7
-1.4
-2.5
-1.4
0.4
-5.0
-1.3
-3.0
-2.6
0.7
-6.3
-1.2
-3.7
-3.9
1.0
-7.8
[TOTAL
-0.2---2.7
-4.9
-4.9
-8.6
-12.6
-17.3
-22.8
-29.5
~1.1 1! ~:;6~2~t~ 1~::5:;;~
-2.2
0.1
-0.6
-0.3
-12.9
-15.9
Extensions of OBRA 1993 Savings Policies
Hospital PPS Update (MB-O.5%, 1997-2004)
1995 Physician Update -3% (-0% primary care)
1/
Part B Offset
ASC Payment Update Freeze (1996-1999)
2/
Lab Payment Update Freeze (1996-99)
3/
Reduce Hospital Capital (-7.31%/-10.41%)
Hl Interactions
Subtotal
2004
Extensions of OBRA 1993 Baseline Savings
Extend OBRA93 Medicare Secondary Payer
Part B Offset
Reduce Routine Cost Limits for HHAs
Extend OBRA93 SNF Update Freeze
Permanent 25% Part B Premium - Gross savings
Subtotal
-----
-----
·~0.7
~0.1
-3.0
0.2
-1.7
-0.8
-4.9
-10.2
~36.oli~i
-2.4
-2.5
0.6
-0.3
-0.9
-3.7
0.2
-9.0
-15.2
-5.6
1.4
-0.8
-2.9
-7.8
0.7
-30.2
-7.6
-6.2
-0.8
0.2
-14.4
-4.6
-0.8
0.2
-11,4
0.6
4.2
-12.6
-19.9
-14.2
3.6
-43.2
-33.6-139.51
NOTES:
1/ Savings aSSume implementation of proposals in 1995. Savings would need to be recalculated for 1996 effective dates. FY 1995-2004 savings would be decreased.
2/ OBRA 1993 eliminated the update for ASC payment rates in 1994 and 1995. Proposal shown would extend freeze through 1999. OACT(9/14/94).
3/ OBRA 1993 eliminated the update for dinicallab payment rates in 1994 and 1995. Proposal shown would extend freeze through 1999.0ACT (9/14i94).
4/ Proposal would establish income thresholds at $90,000forsingie filers and $115,000 for joint filers (HSA and Senate Finance proposal).
\.
~1.8
49.3
-66.1
�·
\
General Caveats for Savings Proposals
Estimates ~re derived from earlier proposals, new estimates will differ for several reasons:
o
o
o
10 year estimates will include an additional year, 2005 "
. Medicare and Medicaid baselines will be reestimated by both CBO and
OMB
CBO will score cost-shifting impacts from Medicare price reductions, this
will have the effect of raising subsidy estimates and lowering federal tax
revenues .
Revenue Caveats
,
The range of revenue estimates is dependent upon the scope and nature of the subsidy
program, as wen as the design features of the revenue provisions involved.
,.
�SENT8Y:*crox Tclccopicr 7021 :1'-18-94
15:58
;
2022456351"
94567431:# 2
\
,
J
o
Maklng Medicare User Friendly For Beneficiaries
A single, easy-to-read monthly statement of 0.11 Medicare claims will replace
our current claim by claim communications with beneficiaries.
Recognizing the diversity of Medieare beneficiaries, we will be testing a
Spanish Medicare claims information to improve our outreach to Medicare's
lIispanic popull1llon.
o
Simplifying Medicare for
ProvJcl~n
Before billing Medicare for major jnpatielll ho~pital services. physicians are
required to sign n, document certifying that have illueeu provided the services
for which the hospital- is submitting a bill. We ph.l.n to eliminate this
requirement in order to lessen the administrative burdeD ou physicil111S.
We are revising the conditioDs of participation for hospitn,1s, end stage renal
disease facilities, and home health agencies to make them more easily
under!\tandable, outcomes-based, and less process-oriented.
Providing organizations which nper~te HMOs with greater fle.:\:ibility in
operatin2 other health benefit plans.
We have beguu to H!visc. the clinical laboratory survey criteria to eliminat.e
excessive surveying and to Jessen the burden on laboratories and States.
o
Improving the Quality of Health Care
Our new quality improvement program.focuses on bringing typical care up Lo
the standards of best practices rather than searching for abberations l1nd
punishing providers.
We Rre developing "quality indicators" for nursing homes and home health
services to change the way we monitor quality of care from a series of process
standards to a focus on outcomes of patient cue.
o
Eliminating Fraud and Abuse
Working with carriers and intermediaries, we are developing advanced
computer systems to detect frnudulcnt patterns of billing in all types of I.:li:lim1J•.
We are undertaking an education program to inform employees and
benefic.iaries of their responsibility to report suspicious pra.ctices.
�SENT BY:Xcrox Tclceopicr 7021 ;11-18-94
15:58
2022456351'"
94567431:# 3
We have initiated stricter staudl1rd~ for suppliers und~r Medic.are and -
Medicaid and nre working with States to trace repeat offendors. We are
actively coordinating the enforcement activities of carrier fraud units, HeF A
staff, the Inspector General's Office and the Deparlment of Justice in areas
where high rates of fraud are suspected.
u
Promoting Emciency In Contracting
We have developed a streamlined contract renewal process in our quality
improvement program and our kidney dise.ase networks. These new
procedures will permit expedited renelolu\1 of contracts for those eon tractOrs
who consistently perfoIID well.
o
Simpllt;1ng Medicare Bfllinx
The Medicare Transaction Systenl (MTS). 1i uniform. national system for
processing Medicare claims will replace the uiverse existing system!; and
signifieantlysimplify administrative operations fol' beueficiaries, providers, and
Medicare.
�SENT BY:Xerox Teleeopicr ?021 :11-1S-94
15:59
2022456351"
9456?431:# 4
Ellmlnat" Fraud and Abuse
Detection
We have consolidated payment of durable medical equipment iULo four carriers in
order to enable us to foc.us claims review on this problem area, Que:: of the four
has re::~ponsibil1ty for analyzing patterns within all DME claims to highlight
problem ctrt:as.
Working with carriers Hnd intermediaries, we ue deve.loping advanoed computer
systems to detect fraudulent patterns of bi11ing in aU types of claims. This will
enable us to intervene early when problems are suspected.
It problem areas suoh as South Florida. we are combining Medicare claims with
those from Medicaid to provide a more robust data base on which t.o dete.ct
unusual patterns. We plan to expand to include private claims with the
cooperation of several existing carriers.
We are undertaking an education program to inform employees aud beneficiaries
of their responsibiHty to report suspicious practioes.
State surveyors who visit home hMlth age.ncies and nursing homes will be trained
in detecting aud reporting evidence of fnmd. They will also be provided with
information froUl clailll~ analysis which indicates quality problems.
Prexention a.nd Enforcement
We have initiated stricter standards fo)' suppliers under Medicare and Medicaid
and are working with States to trace repeat offelldor~ who create new
organizations in order to continue in the progrwll.
We are developing methods to ensure that both suppliers and providen; who have
engaged in fraudulent activities will not be able to move to another state aut!
resume practice.
We are actively coordinating the enforcement activities of carrier fraud units,
HCFA staff, the Inspector Genera]'s Office and the Dp.partment of Justice in
areas where high rates of fraud tife suspected.
�SIMPLIFYING MEDICARE FOR BENEFICIARIES 1
Integrated Discharge Planning
This proposal would establish linked discharge planning/preparation and
continuity of care requirements for hospitals· (possibly modifying the existing
hospital requirements), SNFs/NFs, and HHAs. The purpose is to smooth a
beneficiary's transition from one setting to another. This effort is consistent
with the ongoing effort to field testa uniform needs assessment instrument.
Coordinated Open Enrollment for Medicare Managed Care and Medigap.
With certain exceptions, beneficiaries would be able to enroll in HMOs and
CMPs with Medicare contracts and in Medigap plans only during an annual
coordinated open enrollment period. Enrollment would be through a third
party designated by the Secretary. Beneficiaries enrolling in HMOs and
CMPs would be "locked in" until the next open enrollment period, with some
flexibility possible for the first lock in period. Newly entitled individuals and
individuals who move into an area would be entitled to a special enrollment
period. The Secretary would develop materials comparing all managed care
and Medigap plans. Medigap plans would be prohibited from underwriting
enrollments, and the current six-month pre-existing condition exclusion
period would be eliminated.
Lifetime Reserve Days
Under current law, Medicare beneficiaries have 60 lifetime reserve days for
hospitalization which they can use after they have exhausted the 90 day
benefit period for inpatient hospitalization. This proposal would replace
these reserve days with an increase in the number of days in the regular
. benefit period. The details of this proposal are being studied by the HCFA's
Office of the Actuary ..
Minor statutory modification would be required for these
init
ives.
1
2
�SIMPLIFYING MEDICARE FOR PROVIDERS
Facility Conditions
We are revising the 'conditions of participation for hospitals, end stage renal
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understandable, outcomes-based, and less process-oriented.
HMO Organizational Structure and Services
This regulation will provide organization's which operate HMOs that are
federally qualified under Title XIII of the Public Health Service Act with
greater flexibili'ty in operating other health benefit plans. It would also
authorize, with certain limitations, federally qualified HMOs to offer out-of
plan physician services and require a reasonable deductible for those
services. Further, this regulation would permit the HMO to use assets of the
parent organization to meet fiscal soundness and insolvency protection
requirements.
3
�STREAMLINING BILLING AND PAYMENT
The Medicare Transaction System
Problem: At present, Medicare and its providers must cope with 14 different
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Information flow from Medicare to providers, and vice versa, is unnecessarily
slow and complex .
. .Solution: HCFA has awarded a contract for the development, testing, and·
implementation of a new Medicare Transaction System (MTS). This uniform,
national system for processing Medicare claims will replace the diverse
existing systems and significantly simplify administrative operations for
beneficiaries, providers, and Medicare. Implementation of the MTS will
begin in 1996 and will be complete in 1998. Benefits that will flow from the
new system include:
•
•
•
•
•
•
Improved service for beneficiaries
Improved service for providers
Improved management of program expenditures
Greater uniformity in coverage and payment decisions
Enhanced capability to identify fraud
Improved coordination of benefits
The capabilities of MTS could go beyond claims submission . An on-line
bulletin board function could provide instant access to Medicare bulletins and
alerts, fee schedules, directories, Medicare Manuals and other useful
information.
MTS is being developed for the Medicare program; we are committed to
timely implementation; At the same time, we acknowledge that MTS will
have implications well beyond Medicare. By virtue of Medicare's size and
scope, MTS may shape the environment for information transaction in
Medicaid, public health, other government programs, and private industry.
In the development of MTS, we must be sensitive to the needs of all
industry participants, and must ensure that providers and payers are not
caught between incompatible systems.
Therefore, it is our intention to establish an advisory committee to HCFA,
pursuant to the Federal Advisory Committee Act, to advise HCFA on data
standards issues necessary to impleme,nt MTS. To assure that the evolution
of MTS is compatible with broader DHHS information activities, oversight of
this committee will be ve~ted in the DH.~S information system steering
4
�committee, jointly chaired by ASPE and OGC. This steering committee was
created to coordinate information system issues department-wide. The
HCFA MTS advisory committee will be jointly chaired by a HCFA representa
tive and by one of the cochairs of the Steering Committee, ex officio .
. Additional Regulatory Initiatives
• Eliminating Pre-Billing Attestation Requirement: HCFA is eliminating pre
billing requirements for attestation by physicians of diagnoses and major
procedures performed in the hospital.
• Providing Uniform Identification Numbers to all Providers: HCFA is leading
an effort involving other Federal payers of health services, including the
Departments of Veterans' Affairs and Defense, to provide unique provider
identification numbers to all providers of Medicare services. Having uniform
provider numbers for all government health programs will make it easier for
physicians to complete billing forms.
• Simplifying the "Important Message from Medicare": HCFA plans to
simplify the content of this message and to simplify the way hospitals
distribute it.
• Utilize Title XIII for Medicare Contract Termination: Create a process for
expedited termination of contracts with HMOs or CMPs fo~ serious quality
problems. Some legislative action would be required.
5
�STREAMLINING FOR STATES AND LABORATORIES: MODIFYING REQUIREMENTS
UNDER THE CLINICAL LABORATORIES IMPROVEMENT ACT (ClIA)
Problem: Current ClIA requirements are burdensome on laboratories and State
survey agencies and the current survey guidelines create additional \
dirricuitles Tor me State survey agencies.
Solution: Reduce the burden on States to survey clinical laboratories and develop a
more flexible approach to surveying small laboratories.
• ClIA Program: Categorization of Tests and Personnel Modification: In this
final rule with comment period, we are revising our regulations to allow
midlevel practitioners and dentists to perform tests in the "physician
performed" microscopy subcategory of moderate complexity procedures~
Laboratories with this certificate would be exempt from routine inspection,
reducing the burden on approximately 10,000 laboratories. HCFA will
expand the exemption of microscopy tests from inspection, potentially
doubling the number of laboratories exempt under this provision. This rule
will also grandfather individuals currently employed as testing personnel and
general supervisors performing high complexity testing reducing the burden
to rural and underserved areas.
• ClIA deeming notices that will reduce the number of surveys that will have
to be performed by States: ClIA approval of the College of American
Pathologists, the Joint Commission on Accreditation of Health Care
Organizations, and the American Society for Histocompatibility and
Immunogenetics.
• Categorization and Certification Regulations for" Accurate and Precise
Technology" Tests: This controversial proposal would create a new
subcategory of moderate complexity procedures called "accurate and precise
technology" tests. This provision would reduce the burden of having to
comply with all of the "moderate complexity" testing requirements and
require only 5% routine surveys. These tests would only have a minimum
amount of error which is controlled by the laboratory. The NPRM is now
being prepared for clearance in the Department.
• Flexible Surveys for Small Laboratories: HCFA has devised a flexible
survey which takes into account the fact that laboratories vary tremendously
in test volume and the degree of difficulty of the tests they perform. It will
reduce administrative costs by $20 million in the first two years of the
program. About 1,000 laboratories that are low volume or perform only
simple screen tests will only be survey~~ once every four years~
6
�STREAMLINING THE PRO AND ESRD NETWORK PROCUREMENT PROCESS
Problem: In the past, the procurement process in contracting with Peer Review
Organizations and End Stage Renal Disease Networks (hereafter referred to
as Quality Improvement Programs (QIPs) has been both time and labor
;n1'onC:;\lo fr.r hr.1'h "r.\/ornrn",n1'
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. Solution: HCFA has developed a streamlined procurement process for
noncompetitive renewal of QIP contracts. HCFA has also worked with the
QIPs to develop pricing principles and contract provisions based on a
common understanding of the Statement of Work.
Contractors certify that they will perform the work as stated in the
Statement of Work. This approach allows HCFA and the QIPs to forego the
development and evaluation of technical proposals for noncompetitively
renewed contracts. The government and the QI Ps can then focus their
energies on the negotiation of the business agreements. Benefits derived
from this approach include:
• reduced acquisition processing time;
• significant cost savings realized by both the QIPs and the government in
the procurement process;
• improved understanding of contract expectations;
• greater uniformity in QIPs' contact execution;
• elimination of technical proposal review for contractors who have met the
renewal criteria; and
• improved administrations and management of program expenditures.
Although this approach has been implemented for the QIPs, it has
implications for any contract that can be noncompetitively awarded. This
collaborative planning model can be used in developing and extending our
partnerships with other contractors and agents.
7
�QUALITY IMPROVEMENT INITIATIVES
Transforming Medicare Peer Review
Problem: Until recently, HCFA through its contractors (Peer Review Organizations
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(OIPs)), monitored quality mainly through a detection program. This was
accomplished primarily through the intensive review of individual case
records (physician or provider records) that had been selected as part of
random samples and outlier focused samples. This created a focus on "bad
actors" rather than quality improvement.
Solution: HCFA is reinventing Medicare's quality assurance programs. This
changed approach is called the Health Care Ouality Improvement Program
(HCOIP). The change in name reflects both the profound changes that have
taken place and will continue and emphasizes the mission rather than the""
organizations that carry out the mission. Over the next five years we expect
HCOIP to become a broader term for the integrated quality management
system that is emerging as part of the Health Care Financing
Administration's strategic planning.
As part of HCOIP local cooperative projects, OIPs work with the local health
care community-to identify and interpret scientifically sound parameters of
practice to measure the quality of care. These parameters of care are often
based on practice guidelines developed by the Agency for Health Care Policy
and Research as well as other authoritative clinical bodies.· OIPs use
statistical quality surveillance to examine variations in both the processes
and outcomes of care. OIPs share these data with providers and physicians
and work cooperatively with them to interpret and apply findings. HCOIP
gives OIPs and HCFA a chance to demonstrate that health care provided to
Medicare beneficiaries can be measurably improved. HCOIP is based on the
principle that OIPs can do more to improve the quality and cost effectiveness
of care by bringing typical care into line with best practices than by
inspecting to identify erred treatment in individual cases.
Key HCOIP Objectives:
• Build a community of those committed to improving quality.
• Monitor and improve quality of and access to care.
• Communicate with beneficiaries and providers of care so as to promote
informed health choices.
• Protect beneficiaries from poor care.
• Create supporting infrastructure to make these achievements possible.
8
�Using Quality Indicators (QI) in the Medicare/Medicaid Survey and
Certification Program
Problem: At present, the only way in which the Secretary can determine whether
or not providers meet Federal health care and safety requirements is through
l::Ih("lr.intpn~h/P J p'J(npn~ivp
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point in time.
Solution: HCFA has published a notice of proposed rule making to develop Ols' for
use in the nursing home survey and certification process and is preparing a
notice of proposed rulemaking on Ols for home health agencies. Ols are
tested, validated and reliable data-driven "markers" of outcomes of care or
processes of care that have been shown to be predictors of outcomes of
care. Ols include standards of performance that give performance meaning
to the indicator. For example, the rate of use of physical restraints in
nursing homes is a "quality indicator., 01 data is collected, analyzed and
shared with providers, the State survey agencies, HCFA, and beneficiaries.
The ability of HCFA and the States to use 01 data in the survey and
certification process and the provider to use 01 data for internal quality
improvements depends at the outset on our ability to require standard
assessment a':ld reporting of the critical 01 data, the implementation and
maintenance of a State and national data system and the development of a
reliable complete data base of inform'ation reported by the facilities on
individual clients.
The benefits of developing and implementing a quality indicator system
include:
use in the survey and certification process by State and Federal regulators "
• use in internal quality improvement activities by the provider
• use by beneficiaries to inform themselves as they make critical choices for
health care
• use by professional, researchers, social and health policy experts to inform
care practices and policy
• use by payment policy experts to help inform payment policy in the future.
It
The Ols currently developed cover all domains of care, and the data will
routinely be collected as a regular part of providing care to people rather
than as a separate data collection burden.
9
�Department of Health and Human services (DHHS) Regulatory
Initiatives options
The attached package is in'response to your request for initia-'
tives the Department of Health and Human Services (DHHS) could
pursue to advance needed changes in health care delivery, apart
from any major legislative effort. These initiatives focus on
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~~~ti~g -~~~t ' TU;~d~Y·;·- s~;~~t~ry sh~i~i~- wiii- ~~k; ; -f~~~i . and
more complete presentation of DHHS options. Example of the
initiative to be discussed include:
=.
• Consumer Protection in Managed Care. One distortion of
the debate on health care reform was the perception that the
Administration's plan would have forced people into HMOs,
where their patient-doctor interaction would be replaced by
impersonal decisionmaking. People felt that while the
Administration was concerned about guaranteeing coverage,
there was less concern about the quality of that coverage.
One important goal of the Administration should be reposi
tioning itself to make clear its intent to protect American
health care consumers from shoddy business practices. The
Administration can do this by developing a Consumer Bill of
Rights, implemented in federal regulation of Medicare and
Medicaid HMOs and the HMO Act, which would include provi
sions requiring HMO to:
-- maintain an internal grievance system, including
expedited appeals in specified situations;
-- provide consumers with information about the HMO's
utilization review procedures and practice guidelines;
-- meet utilization review guidelines, such as time
limits •
• Integrated Discharge Planning. DHHS,would establish
linked hospital, home health agency, and nursing facility
discharge and continuity of care requirements, to smooth the
beneficiary's transition between settings.
• Simplify the "Important Message from'Medicare," to make
the information more accessible to beneficiaries.
• Reinvent the Medicare Peer Review Program. Historically,
the Medicare Peer Review program has monitored quality
primarily through a detection program, involving intensive
review of individual case records. DHHS is now transforming
this program to promote quality, rather than merely identify
problems. Under the Health Care Quality Improvement
Program, DHHS will work with local health care communities
to identify sound practice par.ameters to improve the quality
of care. DRRS will rely on analysis of large number of
�cases, and will share data with providers and work with them
to apply findings .
• The Medicare Transaction System. At present, Medicare and
its provider must cope 'with 14 different claims processing
systems, operated by 79 insurance companies at 62 sites.
The Medicare Transaction System will allow for a uniform,
hational system Eor processing ~edicare claims, and will
simplify administrative operations for beneficiaries and
providers •
. .•. Clinical Laboratory Improvement Act Flexibility. Current
CLIA regulatory requirements are burdensome on laboratories
and State survey agencies. DHHS would modify these
.
regulations to reduce the burden on states and ·implement a
more flexible approach to surveying small laboratories.
Most of these initiatives can be accomplished through regulatory
actions; in a few cases, some statutory modification would be
required. Materials for next Tuesday's meeting will include a
more detailed description of these proposals, and the status of
their development in DHHS.
Beyond this package, DHHS is exploring additional options
including regulatory revision of Medicare's home health payment
policy. Some of these options are well underway. ,For example,
DHHS recently published a regulation strengthening and simplify
ing nursing home quality standards, to clarify DHHS policy and
promote consumer protection (see attached press release).
FinallYI these regulatory initiatives are in addition to the
legislative proposals DHHS is preparing as part of the annual
budget cycle. This year, the DHHS legislative proposals will
include a major program integrity initiative (modifying
administration of the "fraud and abuse" program), as well as
additional streamlining and administrative simplification
proposals.
�o
MaJdng Medicare User Friendly For Beneficiaries
A Ringle, easy-to-read monthly statement of all Medicare claims will replace
our current claim by c.laim communications with beneficiaries. '
Recognizing the diversity of Medk.are be:neficiaries, we will be testing a
Spanish Medicare claims information to improve our outreach to Medicare's
IIispanic populiltion.
o
Simplifying Medicare for Pro\'iden
Before billing Medicare for major inpatient ho~pital services. physicians are
required to sign a document certifying that have illdced provided the services
for which the hospital is submitting a bill. We .ph.l.n to eliminate this
requirement in order to lessen the administrative burden on pbysit:il:l.ll~.
We are reviSing the c~nditions of participation for hospitals, end stage renal
disease facilities, and home health agencies to make them more easily
underst.lmdable., outcomes-based, and less process-oriented.
Providing organizations which operate HMOs with greater fJe:lCibility in
operatin2 other health benefit plans.
We have begun to revise the clinical laboratoIY survey criteria to eliminat.e
excessive surveying and to lesseu lltt: burden on laboratories and States.
o
Improving the Quality
ot Health Care
Our new. quality improvement program focuses on bringing typical care up Lo
the standards of best practices rather than searching for abberalious I:I.UU
punishins providers.
We are developing "quality indicators" for nursing homes and home henlth
services to change the. way we monitor quality of care from a series of process
standards to a focus on outcomes of patient care.
o
Eliminating Fraud and Abuse
Working with carriers and' intermediaries, we are dc;vc::loping advanced
compu ter systems to detect frQudulent patterns of billing in all types of duinu.
We are undertaking an education program to inform employees and
bene.fidaries of their rellponsibility to report suspicious practices.
�We have initiated stricter standards for suppHers under Medic.are and
Medicaid and nrc working with Stales to trace repeat offendors. We. are
actively coordinating the cnforcemenlll.ctiviLic:~ of carrier fraud units, ReF A
staff, the Inspector General's Office and the Depaflt.u~nt of Justice in areas
wbere high rates of fraud are suspected.
o
Promoting Efficiency 1n ContractIng
We have developed a streamlined contract renewal process in our quality
impruvement program and our kidney dise.ase· networks. These new
procedures will permit expedited renewal of contracts for those contractors
who consistently perform well.
o
Simplifying Medicare Billing
The Medicare Transaction System (MTS).
Ii uniform, national system for
processing Medicare damn will replace the diverse ex.lstlng systems and
sisnificantlysimplify administrative operations for belleficiaries, providers, and
Medicare.
�Klimlnate Fraud and Abuse
Detection
We have consolidated payment of durable medical equipment into four carriers in
order to enable us to foeus claims review on this problem area. Oue of the four
has re:sponsibility for snA.lyzing patterns within all DME claims to highlight
problem ilreas.
Working with carriers l:lDd intermediaries, we are developing advanoed computer
systems to detect fraudulent patterns of billing in all types of claims. This will
enable us to intervene early when problems are suspected.
It problem areas suoh as South Florida, we are combining Medica.re claims with
those from Medicaid to provide a more robust data base on which to de.ted
unusual patterns. We plan to expand to include private claims with the
cooperation of severa] existing carriers.
We are undertaking an education program to inform employees aud beneficiaries
of their responsibility t.o report suspicious practioes.
State surveyors who visit home health agencies and nursing homes will be trained
in detc:cting alld reporting evidence of fraud. They will also be provided with
information froul clauus analysis which indicat~s quality problems.
Prevention and Enforcement
We have initiated stricter standards for
supplier~
under Medicare and Medicaid
t\nd are working with States to trace repeat offelldor~ who create new
organizatioDs in order to continue in the prognml.
We are developing methods to ensure that both suppliers and providers who have
engaged in fraudulent activities will not be able to move to another state alld
r(::;ume practice.
We arc actively coordinating the enforcement activities of carrier fraud units,
HCFA staff, the Inspector Genera]'s Office and the Department of Justice in
areas where high ratc:s of fraud ttre :;uspected.
�.\
o
Making Medfcar~ User Friendly For Beneficiaries
A single., easy-ta-read monthly statement of all Mcdicare claims will replace
our current claim by claim communications with beneficiaries.
Recognizing the diversity of M p.dic.are be.nei"iciaries, we will be testing a
Spanish Medicare claims information to imprcwe. our outreach to Medicare's
IIispanic POPUhltioD.
o
SImplifying Medicare for Provhltrli
Before billing Medicare for major illpalieul hO:ipital services. physicians are
required to sign n document certifying that have ilHlced provided the services
for which the hospital is submitting a bill. We pl!1D to eliminate this
requirement in order to lessen thc administrative burden 011 pbysil:i!1llS.
We (Ire revising the conditions of participation for hospitals, end stage renal
ciise!l!;e. facilitit::s, and home health agencies to make them more easily
undersfSlndable, outcomes-based, and less process-oriented.
Providing organizations which oper(lte. HMOs with greater flexibility in
operatin2 other health benefit plan5i..
We have begull to revise: the clinical laboratory survey criteria to eliminate
excessive surveying and to lessell the: burden on laboratories and States.
o
Improving the Quality of Health Care
Our new quality improvement program focuses on bringing typical care up lu
the standards of best practices rather than searching for abberaLiolls IillU
punishing providers.
We Rre de.veloping "quality indicators" for nursing homes and home health
services to change the. way we monitor quality of care from a series of process
standards to a focus on outcome~ of patient cue.
o
Eliminating Fraud and Abu!lt!
Worlcing with carriers and intermediaries, we are ueveloping advanced
computer systems to detect fraudulent patterns of billing jll all types of d!1im~.
We are undertaking an education program to inform employees and
beneficiaries of their responsibility to report suspicious practices.
�We have initiated stricter staudards for suppliers under Medicare and
Medicaid and nrc working with Stales to trace repeat offendors.. We are
actively coordinating the enforcement activiLies of carrier fraud units, HCFA
staff, the Inspector General's Office and the DepaJ'llllcnt of Justice in areas
where high rates of fraud are suspected.
u
Promoting Efficiency In Contracting
We have developed a streamlined contract renewal process in our quality
improvcment program and our kidney dise.ase networks. These new
prcx:edureli will permit expedited renewRI of contracts for those contractors
who consistently perform well.
.
o
SimpJlfylng MedJcare BlJllnK
The Medicare Transaction Systenl (MTS), a uniform, national system for
processing Medicare claims will replace Lhc diverse existing system" Rnd
significantly6implify administrative operations for beueficiaries, providers, and
Medicare.
�Ktimlnate Fraud and Abuse
Detection
We have consolidated payment of durable medical equipment iulo four carriers in
order to enable us to foc.us claims review on this problem area. Que of the four
has responsibility for aMlyzing patterns within all DME claims to highlight
problem lucas.
Working with carriers l:ind intermediaries, we lire developing advanoed computer
systems to detect fraudulelll patterns of bi1ling in aU types of claims. This will
enable us to intervene early Whc:.ll problems are suspected.
It problem areas Guoh
South F1orida, we are combining Medicare claims with
those from Medicaid to provide a more robusl data base on which to de.teet
unusual patterns. We plan to expand to include private claims with the
coope.ration of several existing co~riers.
IlS
We are undertl'lking an education program to inform employees awl beneficiaries
of their .responsibility to report suspicious practioes.
State surveyors who visit home health age.ndes and nursing homes will be trained
in detecting auu reporting evidence of fnHld. They will also be provided with
information £ro111 clawl:) analysis which indicate~ quality problems.
Preventiog and Enforcement
We have initiated stricter standards for suppliers under Medicare and Medicaid
are working \v:itb States to traee repeat offelldofll who create new
organizations in order to oontinue in the progrwll.
Rnd
We are developing methods to ensure that both suppliers and pl·oviden.i who have
engaged in fraudulent activities will not be able to move to another state auu
resume practlce.
We are actively coordinating the enforcement activities of carrier fraud units,
HCFA staff, the Inspeclor General's Office and the Department of Justice in
areas where high rates of fraud lire suspected.
�..
Health Care Qs and As - November 8, 1994
Q. Congress failed to enact your health care plan last year and expectations are that
with a more conservative Congress next year, it will even be more difficult to pass health
care reform legislation. Will you produce a modified approach, perhaps something that
will garner more Republican support - or will you introduce something that can be used
as a campaign issue in 1996?
A. There have not been any decisions made on how we will approach health care next year.
The only decision made is that we are not going to give up the battle. Another million
Americans lost their health insurance last year and costs continue to escalate. We cannot
walk away just because the road to reform is difficult.
We obviously want health care to be handled in a bipartisan fashion. We always have. We
tried repeatedly during the last session to work with Republicans. They threatened to
filibuster in September and it put health care reform on the shelf for now. But I think there
is a good opportunity to provide people with the health security that they want - with quality,
affordable health care and private insurance coverage. And it is an opportunity that can be a
reality if we work together.
Q. The Republicans, with massive special interest help, successfully labeled your plan as
government-run and stated it would lead to rationing and massive job losses. Will the
Administration do something to help change this public perception? Will it abandon
alliances, move at a slower pace, back away from universal coverage?
A. Again, no decisions have been made. We will obviously try to better explain to the
American people that we are talking about preserving what is good in our system and fixing
what isn!t working. And when we talk about preserving what is good, we mean preserving
the private insurance system. Providing Americans with private health insurance that can!t be
taken away jf a loved one gets sick or a job is lost.
Special interests spent hundreds of millions of dollars to scare and mislead the public. Yet, in
spite of their success in creating confusion, the American people still overwhelmingly believe
that we must act to provide health security to American families and make health care more
affordable.
Q. Reports from senior White House officials last week stated that you were removing
the First Lady and Ira Magaziner as the leaders in developing health care legislation
and replacing them with Carol Rasco and Bob Rubin. Is this move a recognition that
last year's process was a failure?
A. First, let me state that reports that the First Lady will not be involved in health care are
ridiculous. The First Lady will play an active role in policy strategy and development and
�she will remain the Administration's public advocate on health care. At my request, Ira will
also remain involved in health care.
We are entering a different phase in the health care debate. The last two years were spent
doing an enormous amount of research and policy development. We are now entering a
phase that will allow us to move health care through the same policy process that we use for
other major domestic policy issues. The Domestic Policy Council (DPC) and the National
Economic Council (NEC) will coordinate our future health reform efforts.
Q. You have repeatedly slated that any Medicare savings would be used for health care
reform. Are you saying that if you decide to put forward a scaled-back plan, you will
. not consider using Medicare savings for deficit reduction?
A I do believe that Medicare savings should not be used outside the context of health reform.
As everyone knows, we have worked hard to successfully control the deficit. But we will .
watch the deficit balloon Oilt of control if we do not take steps to control escalating health
care costs. That's why controlling costs has been and will continue to be one of the primary
goals of health care reform.
.
Q. Given the difficulty in enacting a bill with universal coverage last year, will you
pledge once again, in a more conservative Congressional environment, to veto a bill that
does not achieve universal coverage?
A We still believe that every American deserves health care coverage. Our goal is universal
coverage. And we're going to do everything possible to assure that Americans have health
care coverage when they need it. And we're going to do everything possible to control
escalating health care costs.
The American people still overwhelmingly support universal coverage. We must continue to
work toward achieving what the American people want and deserve.
Q. There is speCUlation that the Administration will be presenting recommendations to
Congress on health care reform and that these recommendations will be part of the
budget. Are you going to submit a new plan and, if yes, have you given thought to what
these recommendations will include?
A We have not had a chance to think exactly about where we will go or even in what form
any such proposal would be presented. Could recommendations be submitted as part of the
budget? Yes, but it is also possible they won't be part of the budget.
. i
,
,
,
�Draft November 8,1994
OPTIONS FOR DELIVERING EXPANDED COVERAGE
Providing financial assistance alone does not assure that a target population have access to
coverage. Health plans in many states are able to deny coverage or cbarge higher premiums to
people with poor health status. Therefore, initiatives to expand coverage must address how the
subsidized population would receive benefits.
Delivery Options:
Expanded coverage can be delivered to targeted populations through:
•
•
•
Reformed private insurance market
Private health plans that bid to provide coverage
Existing public plans
The delivery option can be set nationally or states could be given flexibility.
Private Insurance Market
. Because of barriers to access and price discrimination in the health insurance market
marketplace, significant reforms are needed before the private insurance market can be
used to deliver subsidized coverage. In addition, the market for children-only coverage is
extremely limited or nonexistent in most places, so a functioning market for childrens'
policies would need to be encouraged.
Family Coverage
To deliver subsidized coverage to families through the private insurance market,
comprehensive insurance reforms would be needed, including policies that at least:
Guarantee access to coverage (e.g., assure acceptance of all applicants);
Limit premium discrimination based on health status (e.g., move toward
community rating);
Define a risk pool (e.g., individual purchasers and firms with less than 100
workers);
Establish a standard benefit package;
Eliminate pre-existing condition and other coverage limitations.
�Children-Only Coverage
To deliver subsidized coverage for a children-only program through private health
insurance (in states without comprehensive reform), a different set of problems must
be addressed, because the current market for this type of coverage is extremely
limited. Standards would be needed to:
Assure that a sufficient number of plans offer children-only coverage;
Assure that coverage is provided to all applicants without price discrimination
based on health status;
Define benefits and the way premiums are set;
Assure that premiums charged are reasonably related to the costs of providing
benefits. (Without a current market, and assuming that most purchasers would be
subsidized, health plan premiums/may not, at least initially, be set at competitive
levels)..
Contracts with Private Health Plans
.The federal governmentor states could contrac,t with private health plans to deliver
subsidized coverage to targeted populations. For example, the federal government could
use FEHBP to contract with private health plans to cover targe populations ..
Terms of contracting would define benefits and how coverage is made available.
Coverage could be offered through a single contracting health plan or through multiple
plans that meet conditions or participation. In an FEHBP option, health plans that
provide services to federal employees could also offer coverage to target populations.
Without insurance reforms, movement between the subsidized program and the private
insurance market may not be possible for participants with health problems. Some
continuation provisions or special portability protection may be needed.
Expand Existing Public Programs
Subsidized coverage could be provided to targeted popUlations by expanding Medicaid or
Medicare.
Eligible populations could be offered a separate benefit package or existing program
benefits.
Without insurance reforms, movement between the subsidized program and the private
insurance market may not be possible for participants with health problems. Some
continuation provisions or special portability protection may be needed.
�Dole Medicare Savings (not
additive)
MEDICARE SAVINGS IN OTHER PROPOSALS:
Mitchell FY95-99:
Mainstream FY95-99:
Gephardt FY95-99:
Mitchell FY95-2004:
Mainstream FY95-2004:
Gephardt FY95-2004:
...
�",
POSSmLE USES OF FUNDS
~
Fiscal Years, Dollars in Billions
1995-2004
1995
1996
1997
1998
1999
2000
2001
2002
·2003
1995':'
1999
2004
:·:~·~·E~:·~·:~·;~;:~::~:K~:~: ~~.
DEFICIT REDUCTION
NA
NA
NA
NA
etc
KIDS
Private Insurance
Through age 5
Full to 185% of poverty
Phased to 300% of poverty
0
0
NA
NA
etc
KIDS
Private Insurance
Through age 18
Full to 185% -of poverty
Phased to ~OO% of poverty
0
0
NA
NA
etc
UNEMPLOYED
Private Insurance
Six months only
Full to 100% of poverty
Phased to 250% of poverty
Unemployement· comp. included
0
0
NA
NA
etc
UNEMPLOYED AND KIDS
Private Insurance
Kids:
Through age 18
Full to 185% of poverty
Phased to 300% of poverty
.Unemployed
[Same as above]
0
0
NA
NA
etc
WELFARE TO WORK
0
0
NA
NA
etc
UNEMPLOYED AND KIDS AND
WELFARE TO WORK
0
0
NA
NA
etc
SELF-EMPLOYED DEDUCTION
Quick phase-in to 100%
SELF- EMPLOYED DEDUCTION
Slower phase-in to 100%
LONG TERM CARE?
STATE FLEXmILITY?
,.
1995
2004
�
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Chris Jennings
Health Securities Act
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<a href="http://clinton.presidentiallibraries.us/items/show/36173" target="_blank">Collection Finding Aid</a>
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The Health Security Act (HSA) was an effort by the Clinton Administration to provide universal health care in the form of a comprehensive national health care bill which emphasized managed care and called for the creation of regional health care alliances. This series contains material which provides a detailed analysis of the Health Security Act. A chronological subseries within this file focuses on legislative strategies to enact the HSA, as well as efforts on the part of the Clinton Administration and its supporters to counter intense opposition to the legislation from opponents in Congress and powerful interest groups. This file also contains material which examines in detail the alternatives to the Health Security Act, particularly single-payer plans and a compromise proposal from a bipartisan group of moderates in Congress called the Mainstream Coalition. This series contains memoranda, correspondence, reports, press releases, briefing papers, statistical data, graphs, legislative drafts, publications, and news clippings related to the Health Security Act.
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November 1994 HSA [4]
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Chris Jennings
Health Securities Act
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Box 42
<a href="http://clintonlibrary.gov/assets/Documents/Finding-Aids/Systematic/JenningsHSA.pdf" target="_blank">Collection Finding Aid</a>
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647904-november-1994-hsa-4.pdf
647904