Department of Health and Human Services 

OFFICE OF 

INSPECTOR GENERAL 

UNDERSTANDING MEDICAL BENEFITS: 

The Explanation of Medicare Part B Benefits 

JUNE GIBBS BROWN 

Inspector General 

APRIL 1995 

OEI-01-93-00120 
OFFICE OF INSPECTOR GENERAL 

The mission of the Office of Inspector General (OIG), as mandated by Public Law 95-452, as 

amended, is to protect the integrity of the Department of Health and Human Services’ (HHS) 

programs as well as the health and welfare of beneficiaries served by those programs. This 

statutory mission is carried out through a nationwide network of audits, investigations, and 

inspections conducted by three OIG operating components: the Office of Audit Services, the 

Office of Investigations, and the Office of Evaluation and Inspections. The OIG also informs the 

Secretary of HHS of program and managementproblems and recommends courses to correct them. 

OFFICE OF AUDIT SERVICES 

The OIG’s Office of Audit Services (OAS) provides all auditing services for HHS, either by 

conducting audits with its own audit resources or by overseeing audit work done by others. Audits 

examine the performance of HHS programs and/or its grantees and contractors in carrying out 

their respective responsibilities and are intended to provide independent assessmentsof HHS 

programs and operations in order to reduce waste, abuse, and mismanagement and to promote 

economy and efficiency throughout the Department. 

OFFICE OF INVESTIGATIONS 

The OIG’s Office of Investigations (01) conducts criminal, civil, and administrative investigations 

of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of unjust enrichment 

by providers. The investigative efforts of 01 lead to criminal convictions, administrative 

sanctions, or civil money penalties. The 01 also overseesState Medicaid fraud control units which 

investigate and prosecute fraud and patient abuse in the Medicaid program. 

OFFICE OF EVALUATION AND INSPECTIONS 

The OIG’s Office of Evaluation and Inspections (OEI) conducts short-term management and 

program evaluations (called inspections) that focus on issues of concern to the Department, the 

Congress, and the public. The findings and recommendations contained in these inspection reports 

generate rapid, accurate, and up-to-date information on the efficiency, vulnerability, and 

effectiveness of departmental programs. 

This report was prepared under the direction of Mark R. Yessian Ph.D., Regional Inspector 

General, and Martha B. Kvaal, Deputy Regional Inspector General, Boston Region, Office of 

Evaluation and Inspections. Participating in the project were the following people: 

Boston Headquarters 

Barry McCoy Thomas Noplock 

Michael Sullivan Barbara Tedesco 

Theodore Wall Winnie Walker 

For additional copies of this report, please contact the Boston regional ofice by telephone at 

617-565-l 050 or by fax at 617-565-3751. 
EXECUTIVE SUMMARY 

PURPOSE 

The purpose of this inspection is to measure the effectiveness of Medicare’s Part B benefits 

notice. 

BACKGROUND 

When a claim for medical insurance benefits is processed, Medicare sends a notice, the 

Explanation of Your Medicare Part B Benefits (EOMB), to the individual beneficiary. 

The EOMB informs the beneficiary what services were involved, how much Medicare 

paid, why Medicare made the decision it did, and what action the beneficiary can take 

next. 

The Health Care Financing Administration (HCFA) has made and continues to make 

revisions to improve the EOMB. It has used focus groups and purposive interviews to 

evaluate EOMB effectiveness, but has not used survey questionnaires to systematically 

measure beneficiary understanding. 

We mailed a self-administered questionnaire to a random sample of Medicare beneficiaries 

who had claims processed since HCFA’s last major revision of the EOMB. From the 

respondents’ answers we created an overall index and four subindexes of beneficiary 

understanding. Additionally, we collected and analyzed respondents’ opinions about how 

easy or difficult it is to understand the EOMB. 

SURVEY RESULTS 

Medicare beneficiaries appear to understand most of the information on the EOMB. 

On average, the 288 respondents we surveyed answered 72 percent of the survey questions 

correctly (k2.37 percent at the 95 percent confidence level). They answered, on average, 

19 percent incorrectly, and they did not answer 8 percent of the questions. The 

percentages do not sum to 100 because of independent rounding. 

Beneficiary understanding varies among different categories of information on the 

EOMB. It is highest with respect to basic descriptive information and lowest with respect 

to follow-up actions they could take in response to the EOMB. 

The rate of correct answers differs among our four subindexes: 

Basic Information: For questions concerning basic descriptive information on the 

EOMB, such as who and what service it is about, respondents on average answered 

83 percent correctly. 

i 
Cost Information: For questions concerning money amounts on the EOMB, such 

as how much Medicare approved or paid, they answered on average 71 percent 

correctly. 

Context Information: For questions concerning the reasons why Medicare made 

the decision it explains on the EOMB, including understanding of key terms such as 

“assignment” and “deductible,” respondents on average answered 68 percent 

correctly. 

Action Information: For questions concerning what the beneficiary could do next, 

such as appeal rights and amounts owed, they answered on average 64 percent 

correctly. 

The lower level of correct answers to questions having follow-up implications for the 

beneficiary reinforces a statement by Westat Inc., introducing the recommendations in a 

study it conducted on the EOMB in 1992. Westat urged priority for helping beneficiaries 

understand “the bottom line”-what action they should take in response to the EOMB. 

Beneficiaries regard the EOMB as no more, and no Less, difficult to understand than 

other notices they receive in the mail. 

Sixty-six percent of the 281 respondents who expressed opinions characterized the EOMB 

as being neither easier nor harder to understand than notices such as bank statements or 

utility bills. Another 17 percent thought the EOMB easier; the remaining 17 percent 

thought it harder. 

RECOMMENDATION 

It is satisfying that the rate of understanding for basic descriptive information is quite high. 

It is of some concern, however, that the rate is lower for the subindex that bears upon 

matters previously identified as most important to beneficiaries-what action(s) to take 

next. 

We recommend that HCFA build on its prior efforts and give major attention to 

informational items having follow-up implications for the beneficiary. 

As HCFA continues to revise the EOMB it should aim to facilitate beneficiary 

understanding of the following items: 

. what the beneficiary needs to pay out of pocket, 

. how the beneficiary can get more information, 

. how to appeal Medicare’s decision, and 

. what to do if there appears to be fraud or abuse. 

ii 
COMMENTS ON THE DRAFT REPORT 

We shared a draft copy of this report with, and invited comments from, the Health Care 

Financing Administration (HCFA) and the Assistant Secretary for Planning and Evaluation 

(ASPE.) We summarize their comments below, along with our responses in italics. 

The HCFA concurred with our recommendation. It stated that their Medicare Summary 

Notice initiative includes plans for a section that will explain the actions necessary for an 

appeal, and a “Customer Service Information Box” that will display important information. 

We appreciate HCFA ‘s positive response. We would be pleased to work with it in the 

future to evaluate the effectiveness of the new summary notices, perhaps as an application 

of the methodology we developed in this study. 

The ASPE, in comments accompanying its conditional concurrence with our draft report, 

stated: ” ...the report should not assert that beneficiaries appear to understand most of the 

information on the EOMB.” It went on to say: “It is easily argued that Medicare 

beneficiaries ... find [the EOMB] very difficult to interpret based solely on the information 

that fewer than 50% of them handle their own Medicare paperwork.” 

We have revised the report to recognize more clearly the possible role that another person 

might play in helping the beneficiary. However, we have retained in the finding the 

assertion about beneficiary understanding. 

Our purpose was to measure the effectiveness of the EOMB as Medicare actually uses it. 

In mailing the EOMB to the beneficiary Medicare accepts whatever informal support the 

beneficiary chooses. We accepted as representative of beneficiary understanding the 

answers returned by anyone responding on the beneficiary’s behalf just as Medicare 

accepts the informal support that friends, relatives, physicians, and representatives give 

beneJiciaries in understanding the EOMB. 

111 
TABLE OF CONTENTS 

PAGE 

EXECUTIVE SUMMARY 

INTRODUCTION ......................................... 1 

SURVEYRESULTS ........................................ 5 

0 Overall Understanding. .................................... 5 

l Subcategoriesof Information. ................................ 5 

l Comparison to Other Notices. ................................ 11 

RECOMMENDATION ...................................... 12 

COMMENTS ON THE DRAFT REPORT .......................... 13 

APPENDICES 

A: Example of an EOMB .................................... A-l 

B: Sample Selection ....................................... B-l 

c: Analysis for NonresponseBias ............................... C-l 

D: Survey Results ........................................ D-l 

E: Complete Comments on the Draft Report ........................ E-l 

F: Notes .............................................. F-l 
INTRODUCTION 

PURPOSE 

The purpose of this inspection is to measure the effectiveness of Medicare’s Part B benefits 

notice. 

BACKGROUND 

Medicare is the Federal program of health insurance for people aged 65 or older and for 

certain disabled people.’ There are two parts to Medicare. Hospital insurance (Part A) 

helps pay for inpatient hospital care and for related care by a skilled nursing facility, home 

health agency, or similar facility. Medical insurance (Part B) helps pay for a doctor’s 

services, outpatient hospital care, and a number of related medical services and supplies not 

covered by Part A.2 

This inspection addresses only medical insurance benefits under Part B. For most people, 

Medicare Part B operates as an indemnity insurance program.3 When a Medicare enrollee 

incurs an expense for medical care, the provider of service must submit a claim for 

reimbursement through one of the insurance companies that have contracted with the 

Federal government to act as carriers for Medicare Part B medical insurance.4 The carrier 

determines if the service is eligible for reimbursement and issues the appropriate payment. 

When the carrier processes a Medicare Part B claim it sends a notice, the Explanation of 

Your Medicare Part B Benefits, or EOMB, telling the beneficiary what decision Medicare 

made on the claim.5 Appendix A contains an example of an EOMB. The numbers 

correspond to the questions in our survey instrument. 

The EOMB serves two purposes. First, it serves as a formal notice to the beneficiary of 

Medicare’s decision. In doing so, it notifies the beneficiary of the right to appeal in the 

event of disagreement, and the time limit for appeal. Second, the EOMB serves as the 

explanation to the beneficiary of the reasons why Medicare made the decision it did. 

To serve these purposes the EOMB needs to convey information to the beneficiary in four 

categories: 

. Basic descriptive information about the provider, the medical service, when the 

service occurred, who was paid, and who was the beneficiary. 

. Cost and financial information about the amount of money charged to Medicare, 

approved by Medicare, paid, and applied to the deductible and coinsurance. 

. Key terms and contextual information about the reasons for Medicare’s decision. 

1 
. Action information about what the beneficiary needs to do next to obtain more 

information, appeal Medicare’s decision, pay the provider what remains due, or 

recognize potential fraud. 

In response to criticisms that the EOMB was not effective in communicating claim 

information to beneficiaries, the Health Care Financing Administration (HCFA) began a 

series of substantial revisions to the notice, starting in 1991. By late 1992 all 33 carriers 

had implemented the first set of major revisions. At that time HCFA contracted with the 

research firm Westat to evaluate the revised EOMB.6 Westat found that the revision was 

a substantial improvement over the earlier version of the EOMB. But Westat also found 

that beneficiaries could still be confused about what action they should take in response to 

the EOMB. Westat noted, particularly, that beneficiaries were confused about how much 

they still owed after Medicare made its payment. 

Westat’s methodology involved focus groups of beneficiaries and their representatives, 

along with purposive interviews of HCFA staff, carrier personnel, and Medicare advocates. 

The focus group discussions used sample EOMBs, not real claims. While HCFA was 

generally satisfied with the Westat report, it felt that a scientific evaluation was 

appropriate, using real EOMBs for a representative sample of beneficiaries. 

Since the Westat evaluation, in 1993 and 1994, HCFA has continued to add enhancements 

to the revised EOMB. At the same time the need for clear, correct, and simple 

communication with beneficiaries has come to the fore. A report by the National Academy 

of Social Insurance in June 1993 recommended that HCFA continue to review and evaluate 

the efforts that have been undertaken to improve the EOMB.7 

Customer service improvement is among the major themes to emerge from the National 

Performance Review. Along with other agencies, HCFA recently introduced new and more 

user-friendly brochures for Medicare and related programs. A more user-friendly EOMB 

remains a related goal. 

METHODOLOGY 

Data Collection 

Ours was a mail survey using a self-administered questionnaire that asked the beneficiary 

to interpret information on the EOMB. We sent the questionnaire to a simple random 

sample of Medicare beneficiaries, whose selection we describe in Appendix B. The first 

mailing included a personal cover letter seeking the beneficiary’s participation and a copy 

of their sample EOMB printed on yellow paper with the word “COPY” in red letters across 

the front, along with the questionnaire booklet. About a month after the initial mailing we 

sent a reminder letter, and about three weeks after that we sent a third letter with another 

copy of the questionnaire. 

In the cover letter we addressed the beneficiary. We recognized that many people in the 

beneficiary population do not handle their own business affairs. The cover letter and the 

2 
instructions in the questionnaire booklet invited whomever handles those affairs to respond. 

The EOMB communicates effectively if it conveys information to that person and, through 

him or her, to the beneficiary. 

In presenting our results we report them as measures of beneficiary understanding, whether 

the beneficiary answered the questions directly or through some other person. In a mail 

survey we cannot know to what extent another person may have influenced a beneficiary’s 

responses. Nor can we assume that participation by another person reflects difficulty by 

the beneficiary in understanding the EOMB; it could be a matter of convenience for the 

beneficiary. 

Our purpose was to measure the effectiveness of the EOMB as Medicare actually uses it. 

In mailing the EOMB to the beneficiary, Medicare accepts on its own terms whatever 

support the beneficiary chooses to seek. It is always possible that another person might 

play a role in helping the beneficiary understand the EOMB. We accepted as 

representative of beneficiary understanding the answers returned by anyone responding on 

the beneficiary’s behalf, just as Medicare accepts the informal support that friends, 

relatives, physicians, and representatives give to beneficiaries in understanding the EOMB. 

We believe our survey places no more limitation on beneficiary understanding than does 

Medicare’s mailing. 

We analyzed the sample for possible age and sex bias. As detailed in appendix C, we 

found no evidence for response bias. 

Data Analysis 

Our survey included 23 factual questions that asked for specific responses corresponding to 

information contained on the EOMB. We counted the numbers of correct and incorrect 

responses to each question, along with the numbers not answered and, for seven of the 

questions, the numbers of “Don’t know” responses. We report in Appendix D the counts 

and the associated percentages of 288 total responses. 

Six other questions asked either the beneficiary’s opinion or preference in dealing with 

EOMB-related matters. For these we recorded the respondent’s selection among the 

multiple choices. We report these counts, and the associated percentages of respondents 

who expressed an opinion, in Appendix D. 

At the end of the questionnaire we invited additional comments. These we analyzed for 

common threads, and for positive or negative characterization of the understandability of 

the EOMB. 

We coded and checked all of the responses and entered them into a database file. We used 

a personal computer to develop the counts and percentages that are reported in Appendix D. 

Additionally, we created an overall index of understanding for each beneficiary based on 

the number of questions answered correctly, incorrectly, or not answered. In calculating 

3 
this index we combined the raw number of incorrect answers with “Don’t Know” answers 

and report the sum under the heading “Incorrect”. This index, along with four subindexes 

calculated similarly to measure beneficiary understanding of specific categories of 

information, forms the basis for our analysis of the respondents’ collective understanding 

of the EOMB. 

We completed our review in accordance with the Quality Standards for Inspections issued 

by the President’s Council on Integrity and Efficiency. 

4 
SURVEY RESULTS 

Medicare beneficiaries appear to understand most of the information on the EOMB. 

On average, the 288 respondents we surveyed answered 72 percent of the survey questions 

correctly (+2.37 percent at the 95 percent confidence level). They answered, on average, 

19 percent incorrectly, and they did not answer 8 percent of the questions. The 

percentages do not sum to 100 because of independent rounding. 

Two beneficiaries had the lowest score for the overall index; they answered 4 percent 

(1 out of 23 questions) correctly. Two other beneficiaries answered all 23 questions 

correctly. Among individual questions, the lowest rate of correct answers was 43 percent 

for a question about understanding the words “Your total responsibility” on the EOMB. 

The highest rate of correct answers was 94 percent for a question about the Medicare 

number. 

Beneficiary understanding varies among different categories of information on the 

EOMB. It is highest with respect to basic descriptive information and lowest with respect 

to follow-up actions they could take in response to the EOMB. 

The rate of correct answers differs among our four subindexes: 

Basic Information: For questions concerning basic descriptive information on the 

EOMB, such as who and what service it is about, respondents on average answered 

83 percent correctly. 

Cost Information: For questions concerning money amounts on the EOMB, such 

as how much Medicare approved or paid, they answered on average 71 percent 

correctly. 

Context Information: For questions concerning the reasons why Medicare made 

the decision it explains on the EOMB, including understanding of key terms such as 

“assignment” and “deductible,” respondents on average answered 68 percent 

correctly. 

Action Information: For questions concerning what the beneficiary could do next, 

such as appeal rights and amounts owed, they answered on average 64 percent 

correctly. 

The lower level of correct answers to questions having follow-up implications for the 

beneficiary reinforces a statement by Westat Inc., introducing the recommendations in a 

study it conducted on the EOMB in 1992. Westat urged priority for helping beneficiaries 

understand “the bottom line”-what action they should take in response to the EOMB. 

5 
INDEXES 

Table I below summarizes the survey results for our overall index and four subindexes of 

beneficiary understanding. 

TABLE 1 

BENEFICIARY UNDERSTANDING 

for the 

EXPLANATION OF MEDICARE PART B BENEFITS 

Overall Index 

information identifying the EOMB: 

Provider, service, dates, claim and 

Medicare numbers, and who was paid. 

Includes 5 survey questions that ask for 

information about the money amounts 

on the EOMB: amounts charged, 

applied to deductible 

information necessary to understanding 

the reasons for Medicare’s decision on 

the claim: Explanatory notes and 

Includes 6 survey questions that ask for 

information bearing on actions the 

beneficiary could take in response to the 

Shading for Sublndex Pie Charts: 

SOURCE: OIG Mail Survey, September 1994 

6 
QUESTIONS 

Basic 

The subindex of basic descriptive information includes seven questions that address what 

service was provided, by whom, and when. Three respondents answered none of these 

questions correctly; 119 answered all 7 correctly. Table 2 below summarizes the results 

for the subindex and the individual questions. 

TABLE 2: BASIC DESCRIPTIVE INFOIUWATION 

SURVEYRESULTS FOR BASIC SUBINDEX OF 7 QUESTIONS (AVERAGEPERCENT): 

SURVEY RESULTS FOR THE 7 INDIWDUAL QUESTIONS: 

Question Subiect of Question Percent 

Number Correct Incorrect No Answer 

1 Date of EOMB 

2 Claim ControI Number 

3 Who Provided the Services on the EUMB 

4 What Kinds of Services Were Provided 

5 When the Services Were Provided 

12 Who Was Paid 

23 Medicare Number 

63 32 5 

84 10 6 

90 5 5 

82 11 7 

82 8 11 

86 6 6 

94 3 2 

,NOTE: Percentages may not sum to 100 becauseof independent rounding. 

OURCE: OIG Mail Survey, September 1994 

The highest rates of correct answers to basic questions occurred for the Medicare number 

(that identified the beneficiary) and the provider of service (that identified the provider.) A 

few of the “incorrect” respondents chose to ignore the provider listed on the EOMB and 

wrote in the names of their regular physicians-whom they identified as such. The small 

number of these, together with the circumstance that many sample EOMBs listed 

laboratories or other impersonal providers, suggests that the respondents truly derived their 

answers from the EOMB copies we sent them, as we requested in the cover letter. 

In contrast, the answer to our question on the claim control number could only be obtained 

by a careful reading of the EOMB. Yet 84 percent of the responses to this question were 

correct. Respondents can recover specific and very technical information from the EOMB. 

The rate of correct answers for who was paid, 86 percent, was above average for the 

questions in the subindex. This may reflect the direct statement (added in 1994 and placed 

just beneath the summary box) whether or not the provider accepted assignment. 
cost 

The subindex of cost and financial information includes five questions that address the 

money amounts charged to, approved by, and paid by Medicare. Nineteen respondents 

answered none of these questions correctly; 84 answered all 5 correctly. Table 3 below 

summarizes the survey results for the subindex and the individual questions. 

m COST INFORMATION 

SURVEYRESULTS FOR COST SUBINDEX OF 5 QUESTIONS (AVERAGEPERCENT): 

URVEY RESULTS FOR THE 5 INDIWDUAL QUESTIONS: 

The highest rates of correct answers to individual cost questions occurred for the amounts 

charged to Medicare and approved by Medicare. These amounts were displayed 

prominently in the summary box at the upper right hand area of the EOMB. They were 

also clearly labeled. In their comments, some respondents expressed approval for this 

mode of displaying information. A few went on to suggest that a slightly expanded 

summary box could convey almost all of the information that ordinarily interests a 

beneficiary on the EOMB. 

The rates of correct answers to the questions about deductible and copayment amounts, 

59 and 47 percent, were among the lowest in the survey. The “No Answer” rates for these 

two questions, 13 and 18 percent, were among the highest in the survey. The word 

“copayment” or “coinsurance” did not appear directly on the EOMB. The word 

“deductible” might appear only in a separate message telling the beneficiary that the 

deductible had already been met. For these questions, respondents had to figure out the 

answers on their own, rather than associate a clearly labeled amount on the EOMB with 

the subject of the question. 

8 
SURVEY RESULTS FOR THE 5 INDIVIDUAL QUESTIONS: 

Question Subiect of Question Percent 

Number Correct Incorrect No Answer 

9 “Notes” on the EOM3 64 22 8 

26 Understanding of “Assignment” 75 22 3 

27 Understanding of “Deductible’+ 84 14 2 

28 Understanding of “Copayment” 68 28 5 

29 Understanding of “Your Total 43 53 4 

Responsibility” 

NOTES: Percentages may not sum to 100 because of independent rounding. 

Context 

The subindex of context information and key terms includes five questions that address the 

reasons for Medicare’s decision and beneficiary understanding of some key Medicare 

terms. Ten beneficiaries answered none of these questions correctly; 62 answered all 

5 correctly. Table 4 below summarizes the survey results for the subindex and the 

individual questions. 

TABLE 4: CONTEXT INFORMATION AND KEY TERMS 

SURVEY RESULTS FOR CONTEXT SUBINDEX OF 5 QUESTIONS (AVERAGE PERCENT): 

SURVEY RESULTS FOR THE 5 INDIWDUAL QUESTIONS: 

Question Subiect of Question Percent 

Number Correct Incorrect No Answer 

9 “Notes” on the EOM3 64 22 8 

26 Understanding of “Assignment” 75 22 3 

27 Understanding of “Deductible’+ 84 14 2 

28 Understanding of “Copayment” 68 28 5 

29 Understanding of “Your Total 43 53 4 

Responsibility” 

NOTES: Percentages may not sum to 100 becauseof independent rounding. 

Percent Incorrect includes the following percentages answering “Don’t Understand”: 

Question 9: 0; Question 26: 14; Question 27: 3; Question 28: 17; Question 29: 4. 

OURCE: OIG Mail Survey, September 1994 

sbadillgKey: cana 

The lowest rate of correct answers for any of the 23 survey questions, 43 percent, occurred 

for the context question concerning understanding of the words “Your total responsibility.” 

The highest rate of correct answers for a context question, 84 percent, occurred for the 

question concerning the respondent’s understanding of the word “deductible.” The “NO 

Answer” rate of 2 percent for this question was the lowest for all the questions in the 

survey. 

At least as measured by percent correct, beneficiary understanding of the “deductible” was 

substantially higher for the general definition of the term (84 percent) than for the actual 

deductible amount on the sample EOMB (Question 13 had 59 percent correct.) Similarly, 

measured understanding of the general term “copayment” at 68 percent correct was higher 

than that for the actual amount on the EOMB, (Question 14 had 47 percent correct.) 

But note that, for both deductible and copayment, the “Incorrect” rates are the same for 

general questions 27 and 28 and specific questions 13 and 14. The gain in “Correct” rates 

in going from general to specific reflects a decrease in “No Answers.” 

9 
Action 

The subindex of beneficiary actions includes six questions addressing how to obtain more 

information, how to appeal, and what is still owed. Eleven respondents answered none of 

these questions correctly; 37 answered all 6 correctly. Table 5 below summarizes the 

survey results for the subindex and the individual questions. 

TABLE 5: BENEFICIABY ACTION R’WOBMATION 

SURVEYRESULTS FOR ACTION SUBINDEX OF 6 QUESTIONS (AVERAGE PERCENT): 

SURVEY RESULTS FOR THE 6 INDIVIDUAL QUESTIONS: 

Question Subiect of Question Percent 

Number Correct Incorrect No Answer 

6 What To Do If A Service Was Not Received 53 38 10 

15 Total Providers Can Coffect 54 30 17 

16 Amount You Add To Medicare’s Payment 69 16 16 

20 Who To Contact With Questions 78 12 10 

21 How To Appeal 81 x5 4 

22 Closing Date for Appeat 52 32 16 

NOTES: Percentages may not sum to 100 becauseof independent rounding. 

Percent Incorrect includes the following percentages answering “Don’t Understand”: 

Question 6: 7; Question 15: 0; Question 16: 0; Question 20: 0; Question 21: 2; Question 22: 0. 

OURCE: OIG Mail Survey, September 1994 

A higher-than-average percent of respondents correctly answered the questions about who 

to contact for additional information (78 percent) and how to file an appeal (81 percent). 

Only 52 percent correctly answered the question concerning the closing date for filing an 

appeal. Some respondents showed a grasp of the rules for appeal by writing “six months” 

or the like. Yet they bypassed a clearly stated specific date to answer with a general rule 

that derives from a source other than the EOMB. 

About half the respondents, 54 percent, answered with the correct total amount the provider 

can collect for the services on the sample EOMB. But 69 percent answered with the 

correct total amount they needed to add to Medicare’s payment to meet their total 

responsibility. Most of the claims in the sample were assigned and one might easily guess 

the “Your 20%” or “Your total responsibility” amount without understanding why. 

A relatively low 53 percent of respondents correctly answered what the EOMB tells them 

to do if Medicare paid for a service they did not receive. The EOMB was less effective at 

conveying this information than the answers to most of our other questions. One 

respondent commented that it was necessary to spend 25 minutes and read through all the 

information on the back of the form to find out what to do. 

10 
Beneficiaries regard the EOMB as no more, and no less, difficult to understand than 

other notices they receive in the mail. 

Sixty-six percent of the 281 respondents who expressed opinions characterized the EOMB 

as being neither easier nor harder to understand than notices such as bank statements or 

utility bills. Another 17 percent thought the EOMB easier; the remaining 17 percent 

thought it harder. 

One of the opinion questions on our survey invited respondents to rate the EOMB in 

comparison to other notices they receive in the mail, such as bank statements and utility 

bills. About 98 percent of the respondents (281/288) answered this question. As shown in 

Figure 1, a clear majority considered the EOMB about the same as other notices for ease 

of understanding. We estimate the precision of this survey result as f7 percent at the 

95 percent confidence level. 

Figure 1: 281 Respondents Compare the Ease of Understanding 

Medicare’s EOMB to Other Mailed Notices (Utility Bills, etc.) 

SAME (fM%) 

Source: 010 Mail Survey, September 1994 

Those who thought the EOMB was easy to understand said things such as: “In my opinion 

your explanations are precise and easy to understand,” or “It is good now. Leave it alone.” 

On the other hand, those who thought the EOMB now was not easy to understand offered 

comment such as: “The more I read about Medicare the more confused I get,” or “The 

explanations are over-done to the point of confusion. Please simplify our lives a bit, not 

complicate them.” 

11 
RECOMMENDATION 

It is satisfying that the rate of understanding for basic descriptive information is quite high. 

It is of some concern, however, that the rate is lower for the subindex that bears upon 

matters previously identified as most important to beneficiaries-what action(s) to take 

next. 

We recommend that HCFA build on its prior efforts and give major attention to 

informational items having follow-up implications for the beneficiary. 

As HCFA continues to revise the EOMB it should aim to facilitate beneficiary 

understanding of the following items: 

. what the beneficiary needs to pay out of pocket, 

. how the beneficiary can get more information, 

. how to appeal Medicare’s decision, and 

. what to do if there appears to be fraud or abuse. 

12 
COMMENTS ON THE DRAFT REPORT 

We shared a draft copy of this report with, and invited comments from, the Health Care 

Financing Administration (HCFA) and the Assistant Secretary for Planning and Evaluation 

(ASPE.) We summarize their comments below, along with our responses in italics. 

The HCFA concurred with our recommendation. It stated that their Medicare Summary 

Notice initiative includes plans for a section that will explain the actions necessary for an 

appeal, and a “Customer Service Information Box” that will display important information. 

We appreciate HCFA ‘s positive response. We would be pleased to work with it in the 

future to evaluate the effectiveness of the new summary notices, perhaps as an application 

of the methodology we developed in this study. 

The ASPE, in comments accompanying its conditional concurrence with our draft report, 

stated: ” ...the report should not assert that beneficiaries appear to understand most of the 

information on the EOMB.” It went on to say: “It is easily argued that Medicare 

beneficiaries ... find [the EOMB] very difficult to interpret based solely on the information 

that fewer than 50% of them handle their own Medicare paperwork.” 

We have revised the report to recognize more clearly the possible role that another person 

might play in helping the bene$ciary. However, we have retained in the finding the 

assertion about beneficiary understanding. 

Our purpose was to measure the effectiveness of the EOMB as Medicare actually uses it. 

In mailing the EOMB to the beneficiary Medicare accepts whatever informal support the 

beneficiary chooses. We accepted as representative of beneficiary understanding the 

answers returned by anyone responding on the beneficiary’s behalf just as Medicare 

accepts the informal support that friends, relatives, physicians, and representatives give 

beneficiaries in understanding the EOMB. 

13 
APPENDIX A 

EXAMPLE 

of an 

EXPLANATION OF MEDICARE PART B BENEFITS 

(EOMB) 

Front of EOMB .......................................... A-2 

Back of EOMB ........................................... A-4 

NOTE: The numbers written on the example correspond to 

questions on the survey instrument. 

A-l 
THIS IS NOT A BILL 

Explanation of Your Medkare Part B Benefits 

JAMES T KIRK 

1701 W WARP DR 

APARTMENT 8C 

ALDEBARAN US 22222-2003 

Your Medicare number is: 123-45-6789A 

Details about this notice (Seethe back for more information,) 

Control number 0246-8135-79024 

WI-FA-00001 

Summary of this notice dated March 31, 1994 

Total charges : $280.00 

Total Medicare approved: $171.21 

We are paying you: $137.57 

Your total responsibihty; $196.89 

Your provider did not accent assignment 

BILL SUBMITTED BY: ENTERPRISE MEDICAL GROUP 

Mailing address: 1722 STARLIGHT DR VULCAN US 33333 

See 

Medicare Notes 

m Services and Service Codes Charge Approved Below 

JEAN-LUC PICARD M.D. 

Ott 16, 1993 1 Biopsy, abdominal mass [49180-511 $ 140.00 $ 53.01 b,c Ott 16, 1993 1 Biopsy of urethra [53200] { 140.00 + 118.20 d,e Total 280.00 $ 171.21 a 

Your provider(s) did not accept assignment. We are paying you the amount that we owe you. See#4 on the back. 

Notes: 

a This information is being sent to Medicaid. They will review it to see if additional benefits can be paid. 

b The approved amount is less because this service was performed with another surgery on the same day. 

c Your doctor did not accept assignment for this service. Under Federal law, your doctor cannot charge more than $ 60.96. 

d The approved amount is based on the fee schedule. 

e Your doctor did not accept assignment for this service. Under Federal law, your doctor cannot charge more than $ 135.93. 

IMPORTANT: If you have questions about this notice, call US Medicare Carrier Part B at 999-555-1212, 

or toli free at l-800-555-4567 or visit us at 1717 W. Broadway, Downtown, US 11111. 

You will need this notice if you contact us. To appeal our decision, you must WRITE to us before September 30, 1994 

at Medicare Part B, P.O. Box 9999, Downtown, US 11111. See#2 on the back. 

A-2 
WI-F4-00002 

Page 2 of 2 

Control number 0246-8135-79024 

More details about this notice 

Here’s an explanation of this notice: 

C$;y2$al charges, Medicare approved 

The 80 % ‘Medicare pays 

Medicare owes 

Plus interest for delayed processing 

Net payment after interest 

We are paying you 

Of the total charges 

Less amount exceeding charge limit 

Your total responsibility 

JAMES T KIRK 

Your Medicare number is: 123-456789A 

$ 171.21 See #4 on the back. 

34.24 We pay 80 % of the approved amount; you a 20 % . $ 136.97 You have already met the deductible for i-3 9 3. 

$ 136.97 

+ 0.60 Processing of these services exceeded set time limits. 

$ 137.57 

$ 137.57 Please cash the enclosed check as soon as possible. 

$ 280.00 

83.11 You are not responsible for this amount which is in excess of the 

Medicare limiting charge. 

See note(s). 

$ 196.89 The provider may bill you for this amount. 

If you have other insurance, the other insurance may pay 

this amount. 

IMPORTANT: If you have questions about this notice, caii US Medicare Carrier Part 3 at 999-555-1212, 

or toil free at l-800-555-4567 or visit us at 1717 W. Broadway, Downtown, US 11111. 

You will need this notice if you contact us. To appeal our decision, you must WRITE to us before September 30, 1994 

at Medicare Part II, P-0. Box 9999, Downtown, US 11111. See#2 on the back. 

A-3 
Important hfimnation You Should Know 

About Your Medicare Part B Benefits 

This part of the notice answers some questions about receiving Medicare 

mF

aymeqts. If you have other 

questions, see your copy of The Medicare Handbook or call us for more ormatlon. 

1. What should I do if I have questions about this 

notice? 

If you have questions about this notice, call, write, or 

visit us and we will tell vou the facts that we used to 

decide what and how m&h to pay. Turn to the front 

of this notice; our address and phone number are on 

the bottom of the page. 

2. Can I appeal how much Medicare paid for these 

services? 

All Medicare payments are made on the condition that 

you will pay Medicare back if benefits are also paid 

under insurance that is primary to Medicare. 

Examples of other insurance are employer group health plans, automobile medical, liability, no fault or 

workers’ compensation. Notify us immediately if you 

have filed or could file a claim with insurance that is 

primary to Medicare. 

4. How can I reduce my medical costs? 

If you do not agree with what Medicare approved for 

these services, you may appeal our decision. To make 

sure that we are fair to you, we will not allow the 

same people who originally processed these services 

to conduct this review. 

However, in order to be eligible for a review, you 

must write to us within 6 months of the date of this 

notice, unless you have a good reason for being late 

(for exam le, if you had an extended illness which 

kept you K om being able to file on time). 

Turn to the front of this notice; the deadline date and 

our address are on the bottom of the page. It may 

help your case if you include a note from your doctor 

or supplier (provider) that tells us what was done and 

why. 

If you want help with your appeal, or if you have 

questions about Medicare, you can have a friend or 

someone else help you. There are also groups, such as 

legal aid services, who will provide free advisory 

services if you quali?. In additio?, volunteers at 

Medicare peer counselmg programs m your area can 

also provide you with assistance. If you would hke 

more information on how to get in touch with a 

counselor, contact us at the address or phone numbers 

on the bottom of the front page of this notice. 

3. How much does Medicare pay? 

Many providers have agreed to be part of Medicare’s 

participation program. That means that they will 

always accept the amount that Medicare approves as 

their full payment. Write or call us for the name of a 

participating provider or for a free list of participating 

providers. 

A provider who accepts assignment for covered 

services can charge you only for the part of the 

annual deductible you have not met and the 

copayment which is 20 percent of the approved 

amount. 

If you are treated by one of these doctors, you can 

save money. See The Medicare Handbook for more 

information about how you can reduce your medical 

costs. 

Generally a doctor who has not accepted assignment 

may not charge more than 115 percent of the 

Medicare approved amount for services provided in 

1993 or later. This is known as the limiting charge. Contact us if assignment was not accepted, and you 

think your doctor charges more than the limiting 

charge. 

Some states have laws that could further reduce your 

medical costs. Please see The Medicare Handbook 

published in 1993 or later for more information. 

The details on the front of this notice explain how 5. How can I use this notice? 

much Medicare paid for these services. See your copy 

of The Medicare Handbook for more information 

about the benefits you are entitled to as a beneficiary 

in the Medicare Part B program. If you need another 

copy of the handbook, call or visit your local Social 

Security Office. 

Medicare may make adjustments to your payment. We 

may reduce the amount we pay for services by a 

certain percentage (Balanced Budget Law). If your 

provider acceptgd assignment, you are not liable to 

oav the amount of this reduction. We nav interest on 

iohe claims not paid within the required time. 

You can use this notice to: 

0 

0 

0 

Contact us immediately if you think 

Medicare paid for a service you did not 

receive; 

Show your provider how much of your 

deductible you have met; 

Claim benefits with another insurance 

company. If you send this notice to them, 

make a copy of it for your records. 

Keep this notice for your records 

Health Care Financing Administration 

A-4 
APPENDIX B 

SAMPLE SELECTION 

Our purpose was to measure the effectiveness of the EOMB, so it would be reasonable to 

select a random sample from some population of EOMBs. Unfortunately, no database of 

EOMBs exists. Claims for medical insurance benefits result in EOMBs, so we selected our 

sample from a population of claims. 

We selected claims from HCFA’s Common Working File that met the following 

conditions: 

. The last date of service was on or after May 1, 1993. This ensures that the EOMB 

was issued after all the carriers had implemented HCFA’s major revisions that were 

the subject of the Westat report. 

. The last date of service was on or before December 3 1, 1993. The provides an Smonth sample that is large enough to average out most seasonal variations. 

Implicitly, we also had a condition limiting the selection to claims that had been processed 

by the carriers and reported to HCFA by March 3 1, 1994. This was the most recent data 

available at the time of selection. 

Following discussions with HCFA we placed no restrictions on the type of claim selected. 

Any claim, paid or denied, assigned or nonassigned, physician or nonphysician for any 

beneficiary and for any amount, anywhere in the country was eligible for selection. 

Also following discussions with HCFA we planned to report the results to a precision of 

5 percent at the 95 percent level of confidence. Since the key questions in our survey were 

binary we made the conservative assumption that responses would be evenly divided 

between correct and incorrect. These criteria imply a sample size of about 400. 

Based upon OIG’s past experience in conducting mail surveys with beneficiary populations 

we anticipated a response rate of about 7.5 percent. In order to realize 400 responses this 

implies a sample size of about 540. But not all claims result in EOMBs, some are 

suppressed by the carriers. Following discussions with HCFA we estimated about 

20 percent of EOMBs would be suppressed. So we selected a sample of 675 claims in 

order to send out 540 questionnaires and realize 400 responses. 

When we requested EOMB copies from the carriers we found that the EOMBs for 

163 (24 percent) of the claims had been suppressed. Carriers have discretion to suppress 

the EOMB for claims that do not admit beneficiary appeal or require follow-up action. 

Examples include assigned laboratory claims paid at 100 percent, or claims for Medicaid 

B-l 
recipients. We did not mail questionnaires to beneficiaries who had not received an 

original EOMB during regular claim processing. 

Also, we did not mail questionnaires to beneficiaries who were recorded as deceased in the 

Enrollment Database at the time of sample selection. The following table summarizes the 

sample: 

I/ TABLE B-l: SURVEY MAILING II 

NUMBER DESCRIPTION OF CLAIMS 

675 Entire random sample 

163 Claims with EOMB suppressed 

512 Sample with EOMB sent originally 

61 Deceased beneficiaries among 5 12 sent EOMB 

451 Recipients of the survey questionnaire 

The next table details our experience with the 451 surveys we mailed to beneficiaries. 

(/TABLE B-2: MAILING RESULTS II 

NUMBER DESCRIPTION OF CLAIMS 

451 Recipients of the survey questionnaire 

288 Timely responses, 07/Ol/94-09/23/94 

9 Late responses, after 09/23/94 

4 Postal Service returns, undeliverable 

11 18 1 Contacted OIG, could not respond II 

132 No contact, no response 

We completed our mail survey with 288 responses, a 64 percent response rate. We 

counted as a respondent anyone who returned a questionnaire with at least one question 

answered. One respondent answered only 2 questions, 150 respondents answered all the 

questions, and 259 respondents answered at least 75 percent of the questions in the survey. 

Overall, the 288 respondents answered 7659 out of 8392 questions in the survey (29 per 

respondent, a 92 percent answer rate), and 131 (45 percent) offered comments. 

B-2 
Answer rates for individual questions varied from a low of 81 percent (231/288) to a high 

of 98 percent (283/288). Taking the low value of 231 as the sample size, we can 

conservatively estimate the measured precision of the survey results for categorical 

questions as slightly better than 7 percent, at the 95 percent confidence level. 

The several indexes of understanding which we discuss in the text are continuous rather 

than categorical variables. We give the precision of these index results in the table below. 

TABLE B-3: PRECISION FOR INDEXES 

INDEX MEAN PRECISION 

VALUE 

Overall 72 f2.37% 

Basic 83 f2.57% 

cost 71 +3.20% 

Context 68 +3.06% 

Action 64 +3.02% 

NOTES: Index values for percent correct answers. 

Number of respondents = 288 

Precision at 95 percent level of confidence (t = 1.96). 

B-3 
APPENDIX C 

ANALYSIS FOR NONRESPONSE BIAS 

In a survey based upon a random sample we need to consider the possibility that bias may 

be introduced through self-selection by the respondents. To determine whether significant 

differences exist in this survey we compared the two groups, respondents and 

nonrespondents, by age and sex. We found no difference between the groups for either 

variable at the 95 percent confidence level. 

Analysis by Age 

Calculated at July 1, 1994, the average age for beneficiaries who responded to the survey, 

either on their own or through a representative, was 73.5 years. By comparison, the 

average age for nomespondent beneficiaries in the sample was 75.4 years, and the average 

age for the entire sample of 451 beneficiaries was 74.2 years. 

We tested the significance of age differences between respondents and nonrespondents by 

using the t-test procedure in the SAS program package. The calculated t value was 1.8 1, 

which is not statistically significant at the 95 percent confidence level. We conclude that 

there is no difference between respondents and nomespondents by age at the 95 percent 

confidence level. 

Analysis by Sex 

The percentage respondents and nonrespondents by sex is: 

We used the chi-square test to look for a difference between respondents and 

nonrespondents by sex. The computed chi-square value of 2.6 is not statistically 

significant at the 95 percent confidence level. We conclude that there is no difference 

between respondents and nonrespondents by sex at the 95 percent confidence level. 

C-l 
APPENDIX D 

UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

. The number of responses, or survey instruments returned with at least one question 

answered, equals 288. The number of answers varies from question to question. 

. On the survey questionnaire we referred to the notice that was the subject of this 

study, the “Explanation of Your Medicare Part B Benefits”, or EOMB, simply as 

“Your Explanation.” Appendix A contains a sample EOMB with answers to the 

survey questions marked. 

. Most (23 out of 30) survey questions asked for specific information given on the 

beneficiary’s sample EOMB, a copy of which was included with the mailing. We 

recorded and give here the numbers of correct and incorrect answers. For these 

questions we also give percentages of all the (288) responses correct, incorrect, and 

not answered. And for the seven of these questions that allowed a “Don’t Know” 

answer, we give the numbers and percentages for that option. 

Questions 10, 17, 18, 19, 24, and 25 asked for the beneficiary’s opinion or 

preference. We recorded and give here the numbers for each choice. For these six 

opinion questions we give percentages excluding the respondents who did not 

answer the question. 

Question 30 invited comments. We give here the numbers who did and did not 

comment. 

. The sum of individual percentages may not equal 100 due to independent rounding. 

D-l 

l 
UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

QUESTION NUMBERS PERCENTAGES 

I , 

IDENTIFYING YOUR EXPLANATION 

1. Please write in the date of your Explanation. 

Correct 180 63 

Incorrect 93 32 

No Answer 15 5 

2. Please write in the first control number on your Explanation. 

Correct 243 84 

Incorrect 29 10 

I I 

No Answer 

WHAT YOUR EXPLANATION SHOWS 

3. Who provided the health care services described on your Explanation? 

Correct 

Incorrect I 13 I 5 

No Answer 15 5 

4. What kinds of health care services did they provide? 

Correct 236 82 

Incorrect 31 11 

No Answer 21 7 

5. When did they provide the health care services? 

Correct 235 82 

Incorrect I 22 I 8 

No Answer 

D-2 
UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

QUESTION NUMBERS PERCENTAGES 

r I 

6. What does your Explanation ask you to do if Medicare paid for a service you did 

not receive? 

Correct 152 

Incorrect 89 

Don’t Know 19 

No Answer 28 

WHAT ARE THE COSTS ON YOUR EXPLANATION 

7. Please write in the total amount of money that Medicare 

services on your Explanation. 

Correct 

Incorrect 

No Answer 

8. Please write in the total amount 

services on your Explanation. 

Correct 

Incorrect 

No Answer 

243 

16 

29 

of money that Medicare 

259 

4 

25 

53 

31 

7 

10 

was charged for all the 

84 

6 

10 

approved for all the 

90 

1 

9 

THE NOTES ON YOUR EXPLANATION 

9. Your Explanation may include some Notes that tell you how Medicare decided the 

amounts to approve for each service. 

Please mark the one box that most closely describes how Medicare decided the 

approved amounts on your Explanation. 

Correct 200 69 

Incorrect 64 22 

Don’t Know 1 0 

No Answer 23 8 

D-3 
-- 

UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

I QUESTION NUMBERS PERCENTAGES 

I 

10. How strongly do you agree or disagree with the statement that the Notes on your 

Explanation are clear and easy to understand? 

Strongly Agree 

Somewhat Agree 

Somewhat Disagree 

Strongly Disagree 

No Notes 

No Answer 

WHAT MEDICARE PAID 

130 49 

106 40 

13 5 

14 5 

25 

11. Please write in the total amount of money that Medicare paid for all the services on 

your Explanation. 

Correct 223 77 

Incorrect 39 14 

No Answer 26 9 

12. Who did Medicare pay for the services on your Explanation? 

Correct 249 86 

Incorrect 17 6 

No Answer 16 6 

WHAT MEDICARE DID NOT PAY 

13. Please write in the amount Medicare applied to the deductible for the services on 

your Explanation. 

Correct 169 59 

Incorrect 82 28 

No Answer 37 13 

D-4 
-- 

UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS A 

IIQUESTION I NUMBERS 1 PERCENTAGES I/ 

14. Please write in the amount of the copayment for the services on your Explanation. 

Correct 134 47 

Incorrect 101 35 

No Answer 53 18 

WHAT YOU OWE 

15. Please write in the total amount the health care providers are entitled to receive for 

the services on your Explanation. 

Correct 155 54 

Incorrect 85 30 

No Answer 48 17 

16. Please write in the total amount you need to add to Medicare’s payment in order to 

pay your total responsibility (even if other insurance will pay some or all of it 

for you). 

Correct 198 69 

Incorrect 45 16 

No Answer 45 16 

17. Your Explanation may contain a calculation of your total responsibility. If your 

Explanation has a calculation, how strongly do you agree or disagree with the 

statement that it is clear and easy to understand. 

Strongly Agree 

Somewhat Agree 

Somewhat Disagree 

Strongly disagree 

No Calculation 

No Answer 

116 50 

88 38 

19 8 

8 3 

0 0 

57 

D-5 
-- 

-- 

UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

QUESTION NUMBERS PERCENTAGES 

USING YOUR EXPLANATION 

18. Who usually takes care of your Medicare Explanations and other health care paper 

work? 

I Do It Myself 

A Friend or Relative 

Health Care Providers 

Someone Else 

Don’t Know/Understand 

No Answer 

121 45 

71 27 

42 16 

28 11 

4 2 

22 

19. What do you usually do with your Explanation when you get one from Medicare? 

Read Myself 

Someone Explains 

Try, No One Helps 

Keep for Later 

Discard 

Don’t Know/Understand 

No Answer 

APPEALING MEDICARE’S 

183 66 

70 25 

7 3 

14 5 

0 0 

4 1 

10 

DECISION 

20. Who does your Explanation ask you to contact if you have a question about your 

Medicare benefits? 

Correct 225 78 

Incorrect 34 12 

No Answer 29 10 

D-6 
-- 

UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

QUESTION NUMBERS PERCENTAGES 

I 1 

21. What does your Explanation tell you to do to appeal Medicare’s decision, if you do 

not agree with it? 

Correct 234 81 

Incorrect 36 13 

Don’t Know/Understand 6 2 

No Answer 12 4 

22. What is the latest date you could appeal Medicare’s decision on your Explanation? 

Correct 150 52 

Incorrect 93 32 

No Answer 45 16 

SOME GENERAL INFORMATION 

23. Please write in your Medicare number. 

Correct 

Incorrect 

No Answer 

24. How do you prefer 

Phone 

Write 

Personal Visit 

No Answer 

272 94 

10 3 

6 2 

to contact Medicare? 

231 84 

29 11 

15 5 

13 

D-7 
-- 

II UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS II 

/IQUESTION 

25. How do you rate Medicare’s Explanation 

mail, such as bank statements and utility 

Easier to Understand 

About the Same 

Harder to Understand 

No Answer 

SOME MEDICARE DEFINITIONS 

I NUMBERS 1 PERCENTAGES /I 

compared to other notices you get in the 

bills. The Explanation is: 

48 17 

185 66 

48 17 

7 

26. Please mark the one box that best matches what you understand by Medicare’s 

word “Assignment.” 

Correct 216 75 

Incorrect 23 8 

Don’t Understand 41 14 

No Answer 8 3 

27. Please mark the one box that best matches what you understand by Medicare’s 

word “Deductible.” 

Correct 

Incorrect 

Don’t Understand 

No Answer 

241 84 

33 11 

9 3 

5 2 

28. Please mark the one box that best matches what you understand by Medicare’s 

word “Copayment.” 

Correct 195 68 

Incorrect 31 11 

Don’t Understand 48 17 

No Answer 14 5 

D-8 
II 

II UNDERSTANDING MEDICAL BENEFITS 

SURVEY RESULTS 

IIQUESTION I NUMBERS PERCENTAGES 

I 

29. Please mark the one box that best matches what you understand by Medicare’s 

words “Your total responsibility.” 

Correct 

Incorrect 

Don’t Understand 

No Answer 

COMMENTS 

30. We’d appreciate your 

understand. 

Comments Made 

No Comments 

123 43 

142 49 

11 4 

12 4 

suggestions on ways to make Medicare Explanations easier to 

131 45 

157 55 

D-9 
APPENDIX E 

COMPLETE COMMENTS ON THE DRAFT REPORT 

Comments from the Health Care Financing Administration ................ E-2 

Comments from the Assistant Secretary for Planning and Evaluation ......... E-4 

E-l 
FROM 

June Grbbs Brown 

Inspector Genera1 

Bruce C. Vladec 

Administrator 

DEPAHTMENT OF HEALTH PLHUhlAN SERVICES Health Care financq Admmtstrat~on 

The Admtrwstrator 

Washtngton. D.C. 20201 

TO June Grbbs Brown 

Inspector Genera1 

FROM Bruce C. Vladec 

Administrator 

SUBJECT Office of Inspector General Draft Report: “Understanding Medical 

Benefits: The Explanation of Medicare Part B Benefits” 

(OEI-01-93-00120) 

We reviewed the subject report which presented results. from the survey OII beneficiary 

understanding of the Expianation of Medicare Part B Benefits. Our comments are 

attached for your consideration. 

Thank you for the opportunity to review and comment on this report. Please advise US 

if you would like to discuss our position on the report’s recommendation. 

Attachment 

E-2 
Comments of the Health Care Financing Administration fHCFA)1 

on Office of Inspector General (OIG) Draft Report: 

“Understanding Medical Benefits: 

The Exuianation of Medicare Part B Benefits” 

JOEL01-93-001201 

OIG Recommendation 

HCFA shouid build on its prior efforts and give major attention to informational items 

having followup implications for the beneficiary. As HCFA continues to revise the 

Explanation of Your Medicare Part B Benefits it should aim to facilitate beneficiary 

understanding of the following items: 

0 What the beneficiary needs to pay out of pocket, 

0 how the beneficiary can get more information, 

0 how to appeal Medicare’s decision, and 

0 what to do if there appears to be fraud or abuse. 

HCFA Resuonse 

HCFA concurs. We have begun our initiative to redesign all beneficiary notices into 

one, easy to read, Medicare Summary Notice (MSN). As part of the MSN initiative, 

HCFA consulted with Medicare beneficiaries who provided us with feedback on the 

current beneficiary notices. 

In response to our beneficiaries’ comments, we plan to incorporate into the MSN a 

section that will explain the actions necessary to request an appeal. For clarity, we will 

include a special “Customer Service Information Box” that will display important 

information. To help us combat fraud. we will revise the fraud language to include 

examples of fraudulent activities and provide instructions if our beneficiaries suspect 

fraud. 

The improvements described reflect our current plans and ideas. However, we wiI1 

solicit more beneficiary input once we complete the draft design. 

Additionally, we are currently reviewing the HCFA publications with regard to 

beneficiary information. 

E-3 
i 

DEPARTIYIENToFHEALTHLHUMANSERVICES Offkeof the Secretary 

washlngron. O.C. 20201 

TO: June Gibbs Brown 

Inspector General 

FROM: Assistant Secretary for 

Planning and Evaluation 

SUBJECT: OIG Draft Report: "Understanding Medical BetifLss" - CONDITIONlG CONCURRENCE WITH COMMENTS 

This inspection was intended to measure benef&ciary understanding of Medicare's Explanation of Your Medicare Part B Benefits 

(EOMB). It follows changes in the EOMBmade by HCFA in response to recommendations from a Westat Inc. study in 1992. It 

indicates that HCFA'S continuing efforts to improve the EOMB are 

producing a more “user-friendly" form. 

Throughout the report OIG refers to "communicating claim

information to beneficiaries," when the survey was not limited to

beneficiaries. The report notes that "[OIG] recognized that many 

[beneficiaries] do not handle their own business affairs" and 

invited whoever handled those affairs to respond. The survey 

results indicate that fewer than 50% of those surveyed.take care 

of their own Medicare Explanations. Therefore the report should 

not assert that "beneficiaries appear to understand 

most of the information on the EOMB." 

It is easily argued that Medicare beneficiaries, in Spite Of 

improvements to the EOMB, still find it very difficult to 

interpret based solely on the information that fewer than 50% of 

them handle their own Medicare paperwork. Further, given this 

information, it would be useful to analyze the data based on 

whether the respondent was the beneficiary or another person. 

look forward to seeing these data in the revised report. 

Jg im 

David T. Ellwood 

Prepared by: C. Colladay, 690-7770 

E-4 

I 
APPENDIX F 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

NOTES 

The statutory basis for Medicare is located at Title XVIII of the Social Security 

Act, as amended, 42 U.S.C. 1395 ff. The implementing regulations are at 42 CFR 

Part 400 et seq. 

An elegant summary of the structure .and operation of Medicare is contained in The 

Medicare 1994 Handbook, published by the Health Care Financing Administration 

and provided to all beneficiaries. 

Major exceptions include beneficiaries who join a health maintenance organization, 

those entitled to Medicaid, and those with medical benefits through the Department 

of Veterans Affairs. 

The provider of service is always required to submit the claim to Medicare (to the 

carrier). The provider may choose to receive payment directly from Medicare for 

its portion of the amount due (accept assignment of the Medicare payment). Or the 

provider may choose to have Medicare make payment to the beneficiary (not accept 

assignment) and look to the beneficiary for full payment. 

In other words the EOMB sets the stage for administrative finality. Because some 

claims present no issue for appeal, Medicare suppresses the EOMBs on these. 

Assigned laboratory claims paid in full are a common example. Currently Medicare 

suppresses the EOMB for about 20 percent of Part B claims. 

Evaluation of Revised Medicare EOMB, Final Report on Beneficiary 

Understanding. Report submitted by Westat, Inc. to the Health Care Financing 

Administration under contract 500-92-0006, dated March 3 1, 1993. 

Medicare Claims Handling: The Consumer Perspective. Report of a Study Panel of 

the National Academy of Social Insurance, Washington, DC, April 1993. 

F-l