Report to Congressional Committees

United States General Accounting Office

GAO

September 2001 MEDICARE

Program Designed to

Inform Beneficiaries

and Promote Choice

Faces Challenges

GAO-01-1071
Page i GAO-01-1071 Medicare Information Program

Letter 1

Results in Brief 3

Background 5

Major NMEP Activities 8

NMEP Expenditures and Funding Sources 15

Beneficiary and Plan Reaction to NMEP 18

Future Challenges for NMEP 21

Conclusions 28

Matters for Congressional Consideration 28

Agency Comments 28

Appendix I Scope and Methodology 31

Appendix II Medicare Publications that Supplement the

Medicare & You Handbook 32

Appendix III Comments From the Centers for Medicare and

Medicaid Services 34

Related GAO Products 36

Tables

Table 1: NMEP Information Outlets 9

Table 2: Number of page views for the most popular pages on

Medicare’s Internet site, October 2000 13

Table 3: Annual Average Expenditures on NMEP Activities, Fiscal

Years 1998 to 2000 16

Table 4: Funding for NMEP, Fiscal Year 2001 18

Table 5: Summary of Reaction to NMEP by Beneficiaries and

Groups Representing Beneficiaries and M+C Plans 21

Contents
Page ii GAO-01-1071 Medicare Information Program

Figures

Figure 1: Timeline of Events Preceding Start of Medicare 2001 and

2002 Benefit Years 27

Abbreviations

ACRP adjusted community rate proposal

BBA Balanced Budget Act of 1997

BBRA Balanced Budget Refinement Act of 1999

CAHPS Consumer Assessment of Health Plans Study

CMS Centers for Medicare and Medicaid Services

CSR customer service representative

FEHBP Federal Employees Health Benefits Program

FFS fee-for-service

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

HMO health maintenance organization

M+C Medicare+Choice

MCBS Medicare Current Beneficiary Survey

NMEP National Medicare Education Program

OPM Office of Personnel Management

PPO preferred provider organization

PRO peer review organization

REACH Regional Education About Choices in Health

SHIP State Health Insurance Assistance Program
Page 1 GAO-01-1071 Medicare Information Program

September 28, 2001

Congressional Committees

The Balanced Budget Act of 1997 (BBA) established the Medicare+Choice

(M+C) program to expand health plan choices available to beneficiaries.

BBA permitted Medicare participation by preferred provider organizations

(PPO), provider-sponsored organizations, and insurers offering private feefor-service (FFS) plans or medical savings accounts. It also included

provisions designed to encourage the wider availability of health

maintenance organizations (HMO), which have long been an option for

many beneficiaries. Other BBA provisions increased the significance of

each beneficiary’s selection of a Medicare coverage option by limiting

beneficiaries’ opportunities to make new selections outside of the newly

established annual open enrollment period.

In creating the M+C program, the Congress recognized that choice should

be accompanied by information that can help beneficiaries consider the

full range of their Medicare options and make appropriate selections.

Studies by us and others had found shortcomings in the limited

information available to Medicare beneficiaries and that many

beneficiaries did not adequately understand their Medicare coverage

options.1

 Study findings suggested that, at the most basic level,

beneficiaries needed information to increase their awareness that M+C

alternatives to the traditional FFS program might exist in their geographic

areas. Increasing awareness of M+C is particularly important because

individuals who become eligible for Medicare are automatically enrolled in

the FFS program and must complete a separate application if they want to

enroll in an M+C plan. Beneficiaries also needed information to help them

understand the key differences between the traditional FFS program and

M+C program. For example, M+C plans generally limit beneficiaries’

freedom to select their health care provider, but typically offer benefit

packages that are more comprehensive than the benefits available under

FFS. Finally, beneficiaries who were interested in M+C needed an

objective source of information that would help them compare specific

plans. Such information can facilitate beneficiary decision-making and

 1

For example, see Medicare: HCFA Should Release Data to Aid Consumers, Prompt Better

HMO Performance (GAO/HEHS-97-23, Oct. 22, 1996) and Frank W. Porell and others,

Factors Associated with Disenrollment from Medicare HMOs: Findings from a Survey of

Disenrollees (Boston: Health Policy Research Consortium of Brandeis University, 1992).

United States General Accounting Office

Washington, DC 20548
Page 2 GAO-01-1071 Medicare Information Program

spur competition among M+C plans, which could result in improved

service and benefit packages that are more comprehensive and better

reflect beneficiary preferences.

To help beneficiaries understand and consider all of their Medicare

options, BBA provisions required the Secretary of Health and Human

Services (HHS) to undertake several activities. Through the Health Care

Financing Administration (HCFA),2 which administered Medicare, the

Secretary (at a minimum) was to

• establish and operate a toll-free help line;

• annually mail to beneficiaries information about Medicare, the M+C

program, individual M+C plans, and other topics (and, throughout the

year, mail the same information to individuals shortly before they are

entitled to Medicare benefits if an M+C plan is available in their area);

• create and maintain an Internet site with information on M+C plan

options; and

• provide for educational and publicity campaigns to inform beneficiaries

about M+C plans.

HCFA established the National Medicare Education Program (NMEP) to

organize these activities.

The Balanced Budget Refinement Act of 1999 (BBRA) mandated that GAO

periodically report on HCFA’s Medicare education activities.3

 In this report

we (1) describe major NMEP activities, (2) review NMEP spending and

funding sources, (3) assess beneficiary and plan reactions to NMEP, and

(4) discuss the future of NMEP.

To conduct our study, we met and discussed NMEP with officials

representing HCFA, beneficiary advocacy groups, and health plan

associations. We reviewed materials used for various education

approaches, including the Medicare & You handbook, the contents of

Medicare’s Internet site, and the most common questions and answers for

 2

On June 14, 2001, the Secretary of HHS announced that the name of the Health Care

Financing Administration (HCFA) had been changed to the Centers for Medicare and

Medicaid Services (CMS). In this report, we will continue to refer to HCFA where our

findings apply to the organizational structure and operations associated with that name.

3

GAO reports to the Congress on Medicare education activities are required in 2001, 2004,

2007 and 2010.
Page 3 GAO-01-1071 Medicare Information Program

the telephone help line. We obtained information on the funding sources

and costs for operating the program for the first 3 fiscal years of the

program (1998, 1999, and 2000), and reviewed the results of various

assessments done by HCFA and its contractors on several aspects of the

program. Appendix I provides additional information on our methodology.

Our work was done from November 2000 through August 2001 in

accordance with generally accepted government auditing standards.

Under the umbrella of NMEP, HCFA addressed BBA requirements

regarding the promotion of informed choice primarily by establishing a

Medicare telephone help line, annually mailing to beneficiaries general

information on Medicare and summary information on M+C plans,

creating a Medicare Internet site, and organizing community outreach

efforts. The telephone help line, which received approximately 300,000

calls per month during the period of our review, is staffed by operators

who can answer common questions about Medicare, M+C, and related

topics, or direct callers to other sources for answers to less common or

more detailed questions. Beneficiaries can also call the help line to request

printed material with premium, benefits, and other detailed comparative

information on specific M+C plans or general information brochures on a

variety of topics. The Medicare & You handbook, now mailed annually to

all Medicare households, provides general information about Medicare

coverage and beneficiary rights. The 2000 and 2001 editions also contained

summary information on plan choices in a beneficiary’s geographic area.

The Internet site contains extensive and current information on a variety

of Medicare topics, including detailed information on M+C plans available

in each zip code. As a supplement to these information resources, HCFA

established a targeted community outreach program that sponsored health

fairs, media campaigns, and other local events designed to help educate

beneficiaries who might need extra assistance or information presented in

a different manner or language.

During each of the fiscal years 1998 through 2000, HCFA spent an average

of $107.8 million for NMEP, for a total of nearly $323.3 million. The funds

were spent primarily on the telephone help line, the Medicare & You

handbook and other printed material, community outreach activities, and

evaluations of NMEP activities; the Internet site involved limited

expenditures. Most of the expenditures (76 percent) were funded from

user fees collected from M+C plans, with the rest coming from other

HCFA accounts. M+C plans objected to funding three-quarters of NMEP

expenses because the vast majority of beneficiaries remained in traditional

FFS and NMEP addressed other topics in addition to choice. The BBRA

Results in Brief
Page 4 GAO-01-1071 Medicare Information Program

subsequently reduced the user fees from $95 million per year in each of

the first 3 fiscal years to approximately $17 million in fiscal year 2001. The

effect of reduced user fee revenues is partially offset by surpluses in

NMEP’s accounts remaining from previous years. Nonetheless, to sustain

NMEP activities in fiscal year 2001, $54.1 million of the $1.2 billion

Medicare operations budget will be devoted to the program, more than

double the previous annual average of $20.2 million.

Reaction to NMEP has generally been positive among beneficiaries and

beneficiary advocacy groups, but representatives of M+C plans offered a

mixed assessment. One area of agreement concerned the telephone help

line. More than 80 percent of beneficiaries who responded to a HCFAsponsored survey stated that they were satisfied or very satisfied with the

help line. Beneficiary advocates and M+C plan representatives also

expressed a favorable view of the help line. Beneficiary advocates said

that the other NMEP activities were worthwhile and that funding for

Medicare education efforts should be substantially increased. In contrast,

M+C plan representatives stated that NMEP does not sufficiently

emphasize that beneficiaries have the option to choose an alternative to

traditional FFS Medicare. They expressed specific concerns about the

handbook’s length, format, and description of M+C; health plan

comparison information presented on the Internet; and HCFA’s failure to

adequately inform and involve health plans in local community outreach

activities.

NMEP activities have increased the amount and type of information

regarding Medicare, the M+C program, and specific health plans that is

available to beneficiaries and facilitated access to such information.

However, the extent to which NMEP has spurred beneficiaries to actively

consider their health plan options is unknown. What is known is that the

importance of information about options will soon increase because

beneficiaries will no longer be able to change plans on a monthly basis.

Beginning in November 2001, beneficiaries will be faced with having to

make a decision on the type of Medicare coverage they want for a full year

with limited opportunities to change their initial decision. CMS’ ability to

modify NMEP and encourage more beneficiaries to consider their

Medicare coverage options may be hampered by a combination of

statutory requirements for specific activities and short time frames each

year to prepare and distribute the necessary information. CMS recently

announced that it would fund a $30 million advertising campaign this fall

to encourage beneficiaries to use NMEP information channels to learn

more about the M+C program. At the same time, to encourage health plan

participation in the M+C program, CMS has allowed plans additional time
Page 5 GAO-01-1071 Medicare Information Program

to prepare their 2002 benefit proposals. This extension will further shorten

the time frames for NMEP activities and hinder efforts to distribute planspecific, comparative information to beneficiaries.

The BBA mandated NMEP’s beneficiary education activities at the same

time it created the M+C program in recognition that the health plan

choices must be accompanied by information that helps beneficiaries

make appropriate selections. To help ensure the success of the M+C

program, the Congress may want to consider allowing CMS more

flexibility in conducting NMEP activities, especially with regard to the

content, format, medium, and timing of information that the agency

distributes to beneficiaries. CMS reviewed a draft of this report and

generally concurred with our findings and matter for congressional

consideration.

In 1997, before the establishment of the M+C program, about 5.2 million

(14 percent) of Medicare’s 38 million beneficiaries were enrolled in HMOs

that contracted with HCFA to serve Medicare beneficiaries. At that time,

PPOs and other health insurance arrangements that had become common

in the private sector were not permitted in Medicare.4

 The HMOs that

participated in Medicare tended to concentrate in urban areas and certain

states. Consequently, about 25 percent of beneficiaries had no alternative

to the traditional FFS program. In creating the M+C program, the Congress

sought to build on, and expand, the existing HMO option. BBA permitted

new types of health plans, such as PPOs, to participate in Medicare and

included provisions designed to encourage a wider geographic availability

of health plans.5

 4

Like HMOs, PPOs typically contract with selected providers for services at a negotiated

payment rate. In contrast to traditional HMOs, PPOs generally permit enrollees to use

providers outside of the contracted network, although higher levels of coinsurance or

deductibles routinely apply to these out-of-network services.

5

In 2000, a private FFS plan—one of the newly eligible types of plans—began to enroll

Medicare beneficiaries. However, the net number of Medicare health plans has

substantially decreased since the creation of M+C. The number of beneficiaries enrolled in

M+C plans grew until 2000 when it reached 6.3 million, but then fell to 5.6 million by

January 2001, where it has remained roughly the same through June 2001. For a discussion

of some of the reasons behind these trends, see Medicare+Choice: Plan Withdrawals

Indicate Difficulty of Providing Choice While Achieving Savings (GAO/HEHS-00-183,

Sept. 7, 2000) and Medicare Managed Care Plans: Many Factors Contribute to Recent

Withdrawals; Plan Interest Continues (GAO/HEHS-99-91, Apr. 27, 1999).

Background
Page 6 GAO-01-1071 Medicare Information Program

Medicare’s experience with HMOs has demonstrated that choice, and the

ensuing competition among plans for market share, can produce

important advantages for some beneficiaries. At a minimum, all HMOs

were required to provide the services covered by Medicare’s traditional

FFS program. In addition, HMOs that received Medicare payments that

exceeded their costs of providing Medicare-covered benefits and normal

profits had to use the excess to reduce beneficiary fees or provide

additional benefits—such as coverage for prescription drugs or routine

physical examinations.6

 HMOs frequently exceeded program requirements

and further reduced beneficiary fees or augmented their benefit packages

to help retain existing members and attract new ones. As a result, nearly

all Medicare beneficiaries enrolled in an HMO received a more

comprehensive benefit package than those who remained in traditional

FFS. For example, the average Medicare HMO in 1999 spent approximately

$660 per member (an amount equivalent to 11.5 percent of its Medicare

payment) on beneficiary fee reductions or benefit enhancements that were

not required by Medicare.

Medicare’s HMO experience has also demonstrated that some

beneficiaries need information and help understanding their choices if

they are to select the option that best meets their needs. A 1998 study

found that many Medicare beneficiaries are unfamiliar with managed care

concepts.7

 Nearly one-third of the study respondents who belonged to

Medicare HMOs did not understand basic differences between HMOs and

FFS. A similar percentage of FFS respondents were uninformed. The

authors concluded that only 16 percent of those beneficiaries who had

some basic knowledge of HMOs knew enough to make an informed

selection between FFS and HMOs. Misunderstandings about managed care

concepts—such as the need to obtain referrals for specialty care and a

limited choice of providers—may partly explain why some beneficiaries

disenroll from HMOs shortly after becoming members. In 1998 we

reported that the percentage of new members who left their HMOs within

3 months of enrolling was 10 percent or higher at 21 of 194 Medicare

 6

Before BBA provisions took effect in 1998, in addition to reducing fees or adding benefits,

an HMO could place the excess payment amount in an escrow account to be used to

reduce fees or augment benefits in future years, or accept a reduced Medicare payment.

BBA eliminated the option of accepting a reduced Medicare payment, but otherwise the

requirements remain the same.

7

Hibbard, et. al. “Can Medicare Beneficiaries Make Informed Choices?” Health Affairs

(Nov/Dec. 1998, vol. 17, no. 6).
Page 7 GAO-01-1071 Medicare Information Program

HMOs in 1996.8 Lack of a basic understanding of HMO processes can also

hinder a beneficiary’s ability to obtain care through a health plan.

According to a study by HHS’ Office of Inspector General, many

beneficiaries who were denied services by their HMOs and subsequently

disenrolled did not know they could appeal the HMOs’ decisions.9

Information that helps beneficiaries to compare specific Medicare health

plans is important because covered benefits, fees, and consumer

satisfaction can vary substantially among health plans. In our 1998 report,

we found a wide variation in one potential indicator of beneficiary

satisfaction—the plans’ disenrollment rates—among HMO plans that

operated in the same market. For example, in Houston, Texas, the highest

disenrollment rate was nearly 56 percent while the lowest rate was 8

percent. Many beneficiaries select a health plan based upon information

contained in the plan’s advertisements and marketing materials. However,

in 1996 we found that it was difficult to use this literature to compare

various benefit packages because plans’ benefit descriptions were not

required to follow a common format or use standard terminology.10 At that

time there was no widely available, objective source of information to help

beneficiaries compare their Medicare options. We recommended that

HCFA compile comparative information and make it available to

beneficiaries. In response to our report, HCFA agreed that beneficiaries

needed more information and outlined several initiatives designed to help

beneficiaries understand Medicare and compare their FFS and managed

care plan options.

In establishing the M+C program, the Congress included provisions

designed to help Medicare beneficiaries become better informed health

care consumers. BBA mandated that HCFA take an active role in

educating beneficiaries about Medicare and the M+C program. The law

specifically mandated that the agency compile and distribute comparative

information about M+C plans. To complement these mandated education

 8

Medicare: Many HMOs Experience High Rates of Beneficiary Disenrollment

(GAO/HEHS-98-142, Apr. 30, 1998).

9

Beneficiary Perspectives of Medicare Risk HMOs 1996, Office of Inspector General,

Department of Health and Human Services, (OEI-06-95-00430, March 1998).

10Medicare: HCFA Should Release Data to Aid Consumers, Prompt Better HMO

Performance (GAO/HEHS-97-23, Oct. 22, 1996). In Medicare+Choice: New Standards

Could Improve Accuracy and Usefulness of Plan Literature (GAO/HEHS-99-92, Apr. 12,

1999), we reported that health plans’ literature was frequently misleading. Almost half of

the health plans we reviewed distributed incorrect benefit descriptions.
Page 8 GAO-01-1071 Medicare Information Program

activities, HCFA took steps to make it easier for beneficiaries to use health

plans’ marketing materials to compare benefit packages. Health plans are

now required to make available a summary of benefits that follows a

common format and uses standard terminology.

Future changes in the Medicare program will heighten the importance of

informed decisions. Historically, beneficiaries have been able to change

health plans or switch between a health plan and the FFS program on a

monthly basis. However, starting in November 2001, beneficiaries

generally will make choices only during an annual open enrollment period

for the following year. Each November, beneficiaries must decide whether

they want to enroll in a particular M+C plan, change from one M+C plan to

another, or return to the traditional FFS program. They will then be

“locked in” to that choice for the following calendar year.11 Some

proponents of this provision believed that constraining enrollment

opportunities into a few weeks each year would encourage concentrated

health plan advertising that would help make beneficiaries more aware of

the M+C program and available health plans. The extent to which this will

occur is uncertain. However, it is clear that the lock-in provision will

magnify the consequences and importance of each beneficiary’s decision.

Changes in the beneficiary population may add to the demand for

information. A recent Kaiser Family Foundation survey found that 69

percent of Americans under age 65 want more private plans in Medicare.12

The same survey found the opposite among those over age 65—only 31

percent want greater choice of private plans, while the rest are content

with Medicare as it has been. These findings suggest that future

beneficiaries may be more interested in a private health plan option,

increasing the need for information.

To fulfill BBA’s beneficiary education requirements, HCFA established a

NMEP that included four major approaches for delivering information to

beneficiaries (see table 1). A new telephone help line (1-800-MEDICARE)

 11In general, a beneficiary may change his or her selection only once outside of the open

enrollment period. In 2002, such a change must be made within the first 6 months of a new

benefit year. In any year thereafter, such a change must be made within the first 3 months.

12Post-Election Survey: The Public and the Health Care Agenda for the New

Administration and Congress, Kaiser Family Foundation-Harvard School of Public Health,

January 25, 2001.

Major NMEP

Activities
Page 9 GAO-01-1071 Medicare Information Program

handled about 3.9 million calls in 2000. The Medicare handbook, now titled

Medicare & You, was expanded to contain comparative information on

M+C plans and is now mailed annually to all households with a Medicare

beneficiary (about 34 million). Prior to 1998, the Medicare handbook did

not contain information on specific managed care plans and was generally

mailed only to newly eligible beneficiaries or those who requested a copy.

A Medicare Internet site (www.medicare.gov) was established to provide

more detailed information on M+C plans and other topics. Community

outreach efforts were implemented to inform beneficiaries who might face

language or cultural barriers or otherwise need special assistance. Finally,

to help ensure that its education efforts operated effectively, the agency

sponsored a number of internal and external evaluations.

Table 1: NMEP Information Outlets

Information outlet Description

Telephone help line

(1-800-MEDICARE)

Allows beneficiaries to obtain information through an

automated system or to speak directly to a customer

service representative.

Medicare handbook

(Medicare & You) and other

published materials

The handbook describes Medicare FFS, M+C,

supplemental coverage options including private policies

known as Medigap, and other topics. Contains limited

comparative information on the M+C plans available in

each beneficiary’s geographic area. Other printed

materials contain more detailed information about specific

topics.

Internet site

(www.medicare.gov)

Lists by zip code the available M+C plans and provides

detailed comparative information on each plan. Also

contains comparative information on Medigap policies and

nursing homes, in addition to general information about

Medicare and other topics.

Community outreach efforts Sponsors local health fairs and media campaigns to

educate beneficiaries who may not be reached by other

NMEP activities.

Source: HCFA

HCFA phased in a Medicare telephone help line (1-800-MEDICARE)

beginning in November 1998. First available in five states (i.e., Arizona,

Florida, Ohio, Oregon, and Washington), the help line was expanded to

cover all states in March 1999. As publicity about the help line increased

and more beneficiaries became aware of its existence, the number of calls

grew from an average of 27,000 calls per month shortly after the line went

nationwide to an average of 326,000 calls per month in calendar year

Medicare Telephone Help

Line
Page 10 GAO-01-1071 Medicare Information Program

2000.13 Even with the substantially increased call volume, most

beneficiaries had no trouble getting through. According to a HCFAsponsored study, during 2000 92 percent of calls were answered within 30

seconds.

About 60 percent of Medicare help line callers speak directly to a

customer service representative (CSR). The most common reason why

beneficiaries call is to request a copy of Medicare & You or another

publication. Beneficiaries also frequently ask how to apply for Medicare or

get a replacement Medicare card, or ask questions about Medicaid,

Medicare coverage and claims payment, or M+C plans. CSRs attempt to

answer beneficiaries’ questions by following a prepared script. Because

beneficiaries call with a wide variety of questions, about half the time the

information required is not contained in the script. In those instances the

CSR transfers the caller to an appropriate third party, typically a Medicare

claims processing contractor (37 percent of the transferred calls); the state

Medicaid office (19 percent); the Social Security Administration (16

percent); State Health Insurance Assistance Programs (SHIP) that support

counselors who answer beneficiary questions about Medicare, Medigap,

and Medicaid (10 percent); or other entities including M+C plans (18

percent).14

The remaining 40 percent of callers obtain the information they seek

through the help line’s automated system. The automated system

processes requests for publications and provides answers to frequently

asked questions.

HCFA produced and distributed a variety of printed materials to help

beneficiaries understand the Medicare program and the options available

to them. The most widely distributed document is the Medicare & You

handbook. However, the agency also produces more than two dozen

 13There were an average of 416,000 calls per month in the peak months of September

through January and 281,000 calls per month in the off-peak months. Some of the call

volume increase between 1998 and 2000 occurred when HCFA merged an existing

automated telephone line with 1-800-MEDICARE. The automated telephone line, which

typically received about 67,000 calls per month, recorded and processed beneficiary

requests for Medicare publications. According to CMS officials, the number of calls to 1-

800-MEDICARE continues to increase.

14Percentages based on calls received for the week of 9/3/00 to 9/9/00.

Medicare Handbook and

Printed Materials
Page 11 GAO-01-1071 Medicare Information Program

educational booklets and brochures on specific topics, including Medicare

managed care. (Appendix II contains a list of these publications.)

Prior to the enactment of BBA, HCFA annually produced a Medicare

handbook but generally distributed it only to newly eligible beneficiaries

and other individuals who requested a copy. Every few years HCFA mailed

a current copy of the handbook to all beneficiaries. The intervals between

mailings varied and depended partly on the extent to which the Medicare

program had changed since the last mailing. However, in response to BBA,

HCFA changed its handbook distribution practices. BBA required that

beneficiaries receive comprehensive written information about the

Medicare FFS program, the M+C program, and available options prior to

Medicare’s newly established annual open enrollment period each

November. To fulfill this requirement, HCFA began annual mailings of the

Medicare handbook in 1998.15

The Medicare & You edition for 2001 contains between 80 and 92 pages,

depending on the geographic area for which it is intended.16 The

document’s length is due, in part, to BBA provisions that require the

annual mailing to describe Medicare FFS program benefits, cost sharing,

and liability for uncovered services; grievance and appeal rights;

supplemental coverage options; the process for enrolling in M+C plans;

and the potential effects on beneficiaries enrolled in M+C plans that

withdraw from the program or reduce geographic service areas. Another

reason for the length is that HCFA-sponsored research indicated that the

handbook must use a large type size and limit the amount of text on each

page to make it readable for the majority of the Medicare population. The

handbook is designed as a reference guide and contains instructions and

telephone numbers for obtaining additional information.

Although every Medicare handbook describes both the traditional FFS

program and the M+C program, the handbooks issued in geographic areas

served by M+C plans also contain a section with comparative information

tailored to those areas. These supplemental sections, which range in

length from 24 to 36 pages, list every M+C plan that operates in the area

 15HCFA first pilot tested the handbook in 1998 by sending it to beneficiaries living in

Arizona, Florida, Ohio, Oregon, and Washington. Beneficiaries living in other states

received a short brochure containing general information.

16CMS publishes versions of the handbook in Spanish, Braille, and large print formats.

Audio tape versions are also available.
Page 12 GAO-01-1071 Medicare Information Program

along with the plan’s telephone number, the geographic areas it serves, the

monthly premium it charges, and whether it provides coverage for

prescription drugs. Beneficiaries are directed to call either the plan or

Medicare’s telephone help line or to log onto Medicare’s Internet site to

obtain more detailed information about a specific plan. The supplemental

section also contains two quality indicators for each plan the percentage

of members who rated their care as the best possible and the percentage

of female members who received a mammogram during a 2-year period.

The results for each plan are compared with all M+C plans operating in the

same state. The mammogram percentages are also compared with FFS

program beneficiaries in the same state. Finally, the section lists the

percent of each plan’s Medicare members that disenrolled from the plan

during the previous year.

Medicare’s Internet site (www.medicare.gov) provides considerably more

detailed information about the traditional FFS program and M+C plans

than the Medicare & You handbook. Established in March 1998, the site

includes a Medicare Health Plan Compare page that can generate a list of

M+C plans available in a specific zip code, county, or state. It also provides

detailed information on each plans’ benefit package, including cost-sharing

requirements and coverage for 36 categories of services, such as physician

visits, inpatient hospital, doctor and hospital choice, outpatient

prescription drugs, physical exams, and vision services. In addition,

Medicare Health Plan Compare contains plan quality indicators, such as

the percentage of plan members who received an influenza vaccination,

and consumer satisfaction indicators, such as the percentage of plan

members that disenrolled within the last 2 years. The amount of planspecific information contained in Medicare Health Plan Compare far

surpasses that made available about Federal Employees Health Benefits

Program (FEHBP) plans on the Office of Personnel Management’s (OPM)

website. Medicare’s Internet site also includes a Medigap Compare page

with detailed information on policies that supplement FFS Medicare, and a

Nursing Home Compare page with detailed information on nursing home

costs, features, and quality. The site also provides a wide array of

information on Medicare coverage, benefits, eligibility, enrollment, and

participating physicians, as well as information on getting help with

medical expenses and state prescription drug assistance programs.

In October 2000, the Medicare Health Plan Compare page was viewed

about 629,000 times (see table 2). The number of individuals who viewed

this page was likely less than 629,000 because this figure counts repeat

Medicare Internet Site
Page 13 GAO-01-1071 Medicare Information Program

views by individuals during a single session or subsequent sessions. All the

pages combined were viewed a total of 3.1 million times during the month.

Table 2: Number of page views for the most popular pages on Medicare’s Internet

site, October 2000

Page category Page views

Medicare Health Plan Compare 628,904

Publications 536,141

Nursing Home Compare 440,346

Medicare Home Page 411,683

Medicare Basics 189,204

Search Tools 182,401

Source: HCFA – Medicare Site: Content Categories, October 2000, SurfAid Analytics, January 29,

2001.

HCFA’s Regional Education About Choices in Health (REACH) initiative

sponsored a wide array of activities—such as health fairs and public

service announcements—designed to reinforce other NMEP efforts and

educate beneficiaries who might need extra assistance or information

presented in a language other than English or in an alternative manner.

REACH activities, conducted in conjunction with local community and

business groups, were intended to meet the needs of the local community

and its beneficiary population. By involving local groups and customizing

its activities, HCFA intended to better communicate with beneficiaries

from diverse cultural backgrounds or who lack proficiency in English, as

well as those who may have difficulty reading printed material or

obtaining information through other means.

REACH-sponsored community health fairs are designed to provide

beneficiaries with information about Medicare-covered services, M+C

plans, supplemental insurance policies, and other potential sources of

additional coverage such as Medicaid. The health fairs are intended to

provide beneficiaries with sources of information on Medicare-related

questions. REACH also funds public service announcements on radio and

television and in local newspapers. To help reach certain beneficiary

populations, some announcements are made through media that target

specific ethnic groups.

CMS’ partners in the REACH program are organized under the NMEP

Alliance Network Partnership. The alliance consists of more than 100

partners—community organizations, business groups, national non-profit

Community Outreach

Efforts
Page 14 GAO-01-1071 Medicare Information Program

organizations (such as AARP), and private companies that process

Medicare claims. Partners both provide advice to CMS and help

disseminate information to beneficiaries. Among the major NMEP partners

are the SHIPs, which receive the vast majority of community-based

outreach funds.17

REACH activities are proposed by partners and approved by CMS’ regional

offices. Every year, CMS formulates a national business plan to guide

REACH activities. CMS’ regional offices adapt the national plan to suit

local needs and formulate regional business plans. Each CMS regional

office then reviews the proposals submitted by its partners, evaluates the

proposals according to the criteria specified in its regional business plan,

and decides whether to fund the activity.

To help ensure NMEP’s success, HCFA initiated activities intended to

assist in the design, support, and evaluation of the program. Some

activities helped to lay the groundwork for NMEP. For example, HCFA

consulted with experts on the best methods of conveying information to

beneficiaries. HCFA established the Citizens Advisory Panel on Medicare

Education. Along with the alliance partners, the advisory panel—which

consists of 15 members from fields of senior citizen advocacy, health

economics research, health insurers, providers and clinicians, and

employers—provides input to guide NMEP activities.18 In addition, the

agency surveyed beneficiaries about their preferred methods of receiving

health care information. Other activities—such as training individuals in

other organizations that help educate Medicare beneficiaries—are ongoing

and serve to maintain and promote the program. This category also

includes expenditures for the Consumer Assessment of Health Plans Study

(CAHPS)—a survey of beneficiaries that provides, among other

information, some of the comparative data on M+C plans presented on

www.medicare.gov.

 17SHIPs, which exist in every state, sponsor health fairs and other outreach activities. In

addition, SHIPs operate telephone help lines that can provide individual counseling about

Medicare, Medicaid, and state-specific programs.

18The members represent: AARP, Aging 2000, Consumer Coalition for Quality Health Care,

General Motors Corporation, Henry J. Kaiser Family Foundation, Humana, Inc., Maryland

Insurance Administration, Medicare Rights Center, Mid Minnesota Legal Assistance, The

National Caucus and Center on Black Aged, Inc., National Hispanic Medical Association,

National Health Council, National Indian Council on Aging, Inc., On Lok Senior Health

Services, and Washington Hospital Center.

Program Support and

Evaluation
Page 15 GAO-01-1071 Medicare Information Program

Research that HCFA has sponsored to evaluate NMEP activities and their

effectiveness also falls into this budget category. For example, HCFA used

focus groups and beneficiary surveys to evaluate the Medicare & You

handbook. To determine the effectiveness of the help line, HCFA hired

contractors to survey callers and gauge their satisfaction with the help

line. The contractor also placed calls to the help line to assess the ability

of CSRs to handle beneficiary inquiries. The agency sponsors similar

research that surveys users of its Internet site and tracks how visitors use

the site.

Spending on NMEP totaled $323.3 million during the first 3 fiscal years of

its operation. Printed materials, the telephone help line, outreach efforts,

and program evaluation and support services were responsible for most of

the cost. Spending on the Internet site was relatively low. About 76

percent of the funds spent came from user fees collected from M+C plans.

The remaining amount came from Medicare program funds and other

sources. Recent legislation substantially reduces the total amount of user

fees collected from M+C plans. If this revenue source is not replaced,

future NMEP activities may have to be curtailed substantially.

On average, HCFA spent $107.8 million annually to run NMEP in fiscal

years 1998, 1999, and 2000.19 This average may somewhat understate the

annual cost of NMEP because it includes expenditures in fiscal year

1998—the initial year when some activities were not fully implemented.

For example, the Medicare handbook was not distributed to all

beneficiaries and the help line did not go national until midway through

the year. We report the 3-year average because limitations in HCFA’s

accounting systems did not allow us to obtain an accurate view of the

expenditures associated with a single year’s activities.20 Nonetheless, it is

clear that relative spending on some activities changed over time. For

example, Internet site expenditures grew from $1.5 million in fiscal year

1998 to $7.1 million in fiscal year 2000. However, in other cases the year-to-

 19For the purposes of this report, NMEP spending was calculated from HCFA-reported data

by subtracting final carryover amounts from obligations. For the first 3 years of NMEP,

HCFA generally tracked only obligations and carryover amounts. The agency tracked

expenditures only for funds collected from M+C plans.

20HCFA could not report expenditures for all NMEP activities. It could report NMEP

obligations, but some obligations for services were based on contracts that extended for

more than 1 year.

NMEP Expenditures

and Funding Sources

Expenditures
Page 16 GAO-01-1071 Medicare Information Program

year variation in spending by category is difficult to interpret because

activities may have been included in different categories in different years.

HCFA records showed that at least 73 percent of the expenditures were

for direct information services, including the Medicare & You handbook

and other printed material (20.2 percent), the telephone help line (26.3

percent), community-based outreach (23.6 percent), and the Internet site

(3.3 percent) (see table 3). The remaining expenditures (26.6 percent)

were for program support and evaluation activities related to NMEP’s

direct information activities.

Table 3: Annual Average Expenditures on NMEP Activities, Fiscal Years 1998 to

2000

NMEP activity

Average annual

expenditures

(millions)

Percent of average

total annual

expenditures

Printed materials $21.8 20.2

Telephone help line 28.3 26.3

Internet 3.6 3.3

Outreach 25.4 23.6

Program support and evaluation 28.6 26.6

Total 107.8a100.0

a

Sum of expenditures in each category does not equal total because of rounding.

Source: Center for Beneficiary Services, HCFA

During NMEP’s first 3 fiscal years (1998 to 2000), approximately threefourths of the expenditures were funded from user fees collected from

M+C plans. As authorized by BBA, HCFA collected $285 million from plans

during the 3-year period. (The law authorized the agency to collect $95

million each fiscal year.) Additional funding came from HCFA program

management ($60.7 million) and peer review organization (PRO)21

accounts ($23.7 million). Not all of the funds earmarked for NMEP were

spent in the 3-year period. Approximately $40.5 million in user fees and

 21PROs are independent physician organizations that CMS contracts with in each state, in

part to review beneficiary complaints. Since the NMEP subsumes some PRO

responsibilities for quality and beneficiary satisfaction data, CMS uses some PRO funding

for NMEP. For example, PRO funds were allocated to cover the costs associated with the

Consumer Assessments of Health Plans Study and the comparison information on nursing

homes on the Internet.

Funding Sources
Page 17 GAO-01-1071 Medicare Information Program

$5.5 million in other revenues remained available to help fund activities in

fiscal year 2001.

BBRA significantly reduced the amount of user fees CMS can collect from

M+C plans in fiscal year 2001 and subsequent fiscal years. The total of

$244.5 million in user fees spent in fiscal years 1998 through 2000 funded

about three-quarters of the program. However, M+C plans objected to

funding so much of NMEP because plans enrolled less than 20 percent of

Medicare beneficiaries and because NMEP provided general information

about Medicare in addition to information specific to the M+C program. To

address this perceived inequity, BBRA specified that the total amount of

user fees collected in a year would equal the percentage of Medicare

beneficiaries enrolled in M+C plans multiplied by $100 million. In fiscal

year 2001, for example, BBRA’s formula allows CMS to collect

approximately $17 million in user fees.

To adjust to the loss of approximately $78 million in annual user fee

revenues without scaling back NMEP activities, a larger portion of HCFA’s

Medicare operations budget had to be devoted to the program.22 In fiscal

year 2001, $54.1 million of the $1.2 billion Medicare operations budget has

been used to support NMEP, more than double the previous annual

average of $20.2 million. In fiscal year 2001, the effect of reduced user fee

revenues was partially offset by surpluses in NMEP’s accounts. CMS can

draw on $15.5 million in previously collected but unspent user fees, $25.0

million in previously collected user fees allocated to a printing account,

and $5.6 million in previously funded program management money held in

a postage account (see table 4). Therefore, the full impact of the reduction

will not be apparent until fiscal year 2002, when CMS will have to devote

an additional $46.1 million of the agency’s budget to NMEP to maintain

historical spending levels or scale back NMEP’s activities.

 22The Medicare Operations Budget is used to pay contractors that process Medicare claims,

answer inquiries, deal with appeals, and otherwise support agency operations handled by

carriers and intermediaries.
Page 18 GAO-01-1071 Medicare Information Program

Table 4: Funding for NMEP, Fiscal Year 2001

Funding source

Dollars

(in millions)

User fees 17.0

Program 54.1

PRO 11.5

Carryover fundsa 46.1

Total 128.7

a

Carryover funds consist of unspent and unallocated user fees previously collected from plans ($15.5

million), unspent user fees allocated to HCFA’s account with the Government Printing Office ($25

million), and previously allocated program management funds in HCFA’s account with the U.S. Postal

Service ($5.6 million).

Source: Center for Beneficiary Services, HCFA

Beneficiaries and beneficiary advocacy groups generally praised NMEP’s

major activities. Industry officials representing M+C plans offered a mixed

reaction to NMEP. Medicare’s telephone help line is viewed favorably by

beneficiaries and M+C plans. Beneficiary advocates and industry

representatives both said that the Medicare handbook could be improved

and perhaps shortened. Industry officials also raised concerns about

Medicare’s Internet site and the community outreach efforts. Overall,

beneficiary advocates thought that current spending levels for NMEP—

about $3 per beneficiary—are inadequate and more comparative

information should be made available. Industry officials believe that

NMEP should place a greater emphasis on the M+C program and that M+C

plans should have more input into the design of NMEP and its activities

(see table 5).

HCFA-sponsored surveys of help line callers indicate that most

beneficiaries are satisfied with the service. About 84 percent of surveyed

callers were satisfied or very satisfied with the responses they received.

About 11 percent of the surveyed callers indicated that they were

dissatisfied or very dissatisfied. The remaining 5 percent of the surveyed

callers either said that they were neither satisfied nor dissatisfied or did

not answer the survey question.

According to beneficiary advocacy groups, the telephone help line has

become the source of information most familiar to the Medicare

population. These groups believe the help line is valuable because it

provides beneficiaries with one information resource that can answer

most Medicare questions. An Arthur Andersen assessment of help line

Beneficiary and Plan

Reaction to NMEP

Reaction to Medicare

Telephone Help Line
Page 19 GAO-01-1071 Medicare Information Program

performance found that 95 percent of CSR calls were answered accurately

or referred appropriately.23 Industry representatives agreed that the help

line provides a valuable service. They also liked the single, easy-toremember telephone number for beneficiaries.

According to beneficiary focus group studies sponsored by HCFA,

beneficiaries generally like the Medicare handbook and find it useful when

they read it. Focus group participants said that the handbook was

comprehensive, understandable, and a good reference. Most beneficiaries

who responded to a survey included in some versions of Medicare & You

said that the 2000 handbook was easy to read and contained the

information they sought. Nonetheless, the focus group studies suggested

that beneficiaries rarely read the handbook, but instead use it in a similar

manner to the telephone help line. That is, most beneficiaries save the

handbook and refer to it only if a change in personal circumstance or

health status prompts them to seek information.

Beneficiary advocacy groups told us that a Medicare handbook is a

necessary element of NMEP, but that the current version could be

improved. Some groups thought that the handbook can be confusing for

beneficiaries and does not contain enough comparative information on

available M+C plans to enable beneficiaries to make an informed choice.

One group said that the handbook should be condensed to emphasize a

few key messages. It believes that the handbook should be translated into

more languages. (HCFA produced English and Spanish language versions

of the handbook.)

Of the four major NMEP information outlets, the Medicare handbook

generated the most negative reaction from industry representatives. One

industry group stated that the handbook over-emphasized traditional

Medicare and that information about M+C plans appeared to be added as

an afterthought. Representatives from this group said that annual written

material is a necessary element of the NMEP, but felt that the handbook in

its current form was not an appropriate mechanism for educating

beneficiaries about choice. Another industry group said that the length of

the handbook discouraged beneficiaries from reading it and learning about

their Medicare choices.

 23The Arthur Andersen assessment was based on a sample of calls received during October

2000.

Reaction to Medicare

Handbook
Page 20 GAO-01-1071 Medicare Information Program

Beneficiary advocacy groups believe that the Medicare Internet site is a

good source of information. However, they added that that they thought

advocacy groups and beneficiaries’ families, not beneficiaries themselves,

were the main users of the site. Although there are no data to indicate who

uses the site, beneficiary access to the Internet has grown substantially in

the last few years. According to CMS’ annual Medicare Current Beneficiary

Survey (MCBS), 31 percent of beneficiaries had reported that they had

Internet access in 2000, an increase from 10 percent in 1999.24 Of the

people who used Medicare’s site, 85 percent found it very or somewhat

useful.

Although industry representatives stated that the concept of making M+C

information available on the Internet was worthwhile, they expressed

significant frustration with some of the information contained in the

Medicare Health Plan Compare pages. Specifically, the representatives

were concerned that CMS’ process for translating plans’ benefit package

descriptions into standardized language for the Medicare Health Plan

Compare pages sometimes produced benefit descriptions that could have

confused beneficiaries.

Representatives from beneficiary advocacy groups said that local

education was an essential element of NMEP and generally expressed a

favorable opinion of REACH. They were most positive about the work of

the SHIPs. The representatives said that the one-on-one nature of much of

the SHIPs’ outreach efforts was the preferred learning method of many

beneficiaries. The representatives understood that community outreach

can be expensive, but said that there is a large unmet need for these

efforts. All three beneficiary advocacy groups we interviewed agreed that

even though local community outreach cannot serve many Medicare

beneficiaries, for those it does, it works very well.

Industry representatives said that HCFA often did not include M+C plans

in local education efforts or inform them of local events. Consequently,

M+C plans were sometimes unprepared for the volume of beneficiary

telephone calls following a NMEP media campaign.

 24The MCBS did not include this question in the 1998 survey.

Reaction to Medicare

Internet Site

Reaction to Community

Outreach
Page 21 GAO-01-1071 Medicare Information Program

Table 5: Summary of Reaction to NMEP by Beneficiaries and Groups Representing

Beneficiaries and M+C Plans

Beneficiaries and

beneficiary advocatesa M+C plan representativesb

Overall program • should increase spending

and provide more

comparative information

• should emphasize M+C

more

Telephone help line

(1-800-MEDICARE)

• valuable, one place to go

for answers to Medicare

questions

• more than 80 percent of

callers satisfied or very

satisfied

• useful for beneficiaries to

have a single, easy-toremember number to call

Medicare handbook

(Medicare & You)

• comprehensive and

understandable

• generally read only when

a question arises

• limited comparative

information

• sometimes contains

incomplete or misleading

information about plans

• does not emphasize M+C

enough

• length discourages

beneficiaries from reading

and learning about their

options

Internet

(www.medicare.gov)

• useful, detailed

information available

• small but growing share

of beneficiaries have

access to Internet

• main users likely

individuals who advise

beneficiaries, not

beneficiaries themselves

• worthwhile concept

• HCFA’s standardized

language used in

Medicare Health Plan

Compare sometimes

poorly reflects plans’

actual benefits, may

confuse beneficiaries

Local education (REACH) • local education efforts

essential

• one-on-one approach

preferred method of

learning for many

beneficiaries

• too expensive to do on a

large scale

• plans should be included

more in local education

efforts

a

Beneficiary reaction summarized from multiple HCFA-sponsored studies issued from June 1998

through October 2000. Reaction of beneficiary advocates gathered during interviews conducted from

December 2000 through January 2001.

b

Reaction gathered through interviews with managed care trade associations conducted in December

2000.

The focus of NMEP over the first 3 years has been to make more

information available to beneficiaries. Most of HCFA’s research and

implementation efforts concentrated on improving the mandated

information outlets—the Medicare handbook, telephone help line, Internet

site, and local education programs—and the content of the information

Future Challenges for

NMEP
Page 22 GAO-01-1071 Medicare Information Program

available through those outlets. These efforts have aided beneficiaries

ready to make a choice. However, HCFA-sponsored research suggests that

NMEP may need to adopt new education strategies to encourage other

beneficiaries to actively consider their Medicare options.

Beginning in the fall of 2001, it will become more important for

beneficiaries to be aware that M+C health plan alternatives to the

traditional FFS program may be available in their geographic area and to

understand each option and its implications. As required by the BBA,

Medicare will now have an annual open enrollment period each November

when beneficiaries may select either the FFS program or a specific M+C

plan for the following calendar year. Beneficiaries who do not specify a

different selection during that period will remain in the FFS program or

their M+C plan. Beneficiaries will have strictly limited opportunities for

changing their selection outside of the open enrollment period, a

constraint known as “lock-in.”

Although modifications to NMEP may be indicated to promote active,

informed choice, CMS is constrained in its ability to alter certain aspects

of the information campaign. BBA provisions specify the content and

timing of many existing NMEP activities. Altering these activities could

require statutory changes. In addition, short time frames each year hamper

the agency’s ability to compile and distribute comparative information in

advance of the open enrollment period.

Recently, CMS announced changes to NMEP activities planned for this

fall. The agency will undertake a $30 million advertising campaign to

increase awareness of M+C and recent changes in the Medicare program.

CMS also announced it will allow plans to submit their benefit package

proposals for the 2002 contract year by September 17, 2001, instead of the

July deadline specified in BBRA. This extension is intended to encourage

plan participation in the M+C program. However, it will hamper the ability

of both CMS and plans to distribute information to beneficiaries before the

start of the annual enrollment period in November. To help minimize the

impact that this delay might have on beneficiaries, the agency has also

announced it will extend the enrollment period through December 2001.

To date, HCFA has improved NMEP by enhancing or fine tuning existing

activities. During the first 3 years of NMEP, the agency increased the

amount of comparative information available through the handbook,

telephone help line, and Internet site. It also improved the presentation of

some information. For example, in response to focus group findings and

Promoting Active,

Informed Choice
Page 23 GAO-01-1071 Medicare Information Program

comments from literacy experts, HCFA made the handbook easier for

beneficiaries to read by increasing the typeface size and amount of white

space surrounding the text. To make finding information easier, HCFA

expanded the handbook’s table of contents and added color tabs for the

telephone section. The agency modified portions of the handbook that

focus group participants identified as confusing. HCFA also sought

efficiencies to limit NMEP costs. For example, it evaluated the types of

inquiries CSRs received and used the findings to modify the information

available through the automated menus. As a result, the number of calls

handled by the automated menus increased from 20 percent to 40 percent.

Because calls that do not involve a CSR are substantially less expensive,

these actions have helped to control the cost of the help line.

HCFA recently began studying alternative education strategies that could

require more substantial changes to NMEP. Research suggests that NMEP

primarily helped the minority of beneficiaries who were already

considering their Medicare coverage options. The comparative

information and improved access to information may have enabled those

beneficiaries to make more informed decisions. However, NMEP did not

appear to motivate the majority of beneficiaries to consciously examine

their present Medicare arrangements and consider whether alternatives

might be better for them. Although health plans, through their marketing

efforts, seek to move beneficiaries to such a decision point, the language

in BBA indicates that CMS is expected to play a role too. Specifically, BBA

directs the Secretary of HHS (and thus, by extension, CMS) to undertake

activities that “promote an active, informed selection.” To that end, CMS is

researching how NMEP might encourage more beneficiaries to

consciously consider their Medicare options.

Whether CMS decides to maintain the existing NMEP efforts or replace or

augment them with new activities, the agency faces two major constraints.

• BBA requirements. The prescriptive nature of BBA’s NMEP provisions

may limit CMS’ flexibility to alter existing activities. The Medicare

handbook illustrates one of the major constraints facing CMS. Beneficiary

advocacy groups and organizations representing health plans indicated

that the current handbook is too long and raised doubts about whether it

is the best vehicle to educate beneficiaries about their options. One

beneficiary advocate questioned whether mailing the handbook annually

to all Medicare households was the best use of NMEP resources. They

suggested that CMS could distribute the handbook to new enrollees and

make it available to others upon request, but conduct mass mailings only

Mandates and Short Time

Frames
Page 24 GAO-01-1071 Medicare Information Program

when changes in Medicare required an update. However, BBA requires an

annual mailing and specifies an extensive list of topics—in addition to a

list of available M+C plans and a comparison of plan options—that must

be covered. For example, the mailing must include information on the FFS

program’s covered benefits and cost sharing; procedures for selecting an

M+C plan or the FFS program; beneficiary rights and the appeals process

in both M+C plans and the FFS program; and descriptions of benefits,

enrollment rights, and other requirements of Medicare supplemental

policies (Medigap). Significantly modifying the content of the handbook or

changing how frequently it is mailed may require a statutory change.

• Short time frames. Compressed time frames each year hampers the

agency’s efforts to distribute more complete comparative information in

printed form. A complaint voiced by beneficiary and health plan

representatives is that the Medicare handbook contains limited

comparative information about M+C plans. According to HCFA officials,

plan benefit package details have not been available until late September

when plans’ Medicare contracts for the coming year were approved.25 That

left the agency too little time to assemble extensive data in a handbook

that must be mailed out by mid-October, as required by BBA. HCFA

therefore pre-approved selected aspects of each plan’s contract. The

agency focused on the basic information it believed would most help

beneficiaries make some initial decisions: plan service area, monthly

premium, whether prescription drugs are covered, and how to contact the

plan for detailed information. HCFA included other information, such as

rates of mammography screening exams and beneficiary satisfaction with

plans’ primary care physicians, that was not dependent on the contract

approval package. Complete benefit information for each plan was not

available until more than a month after the Medicare handbook was

printed (see fig. 1). At that time, the information was posted on the

Medicare Health Plan Compare pages of the Medicare Internet site.

 25CMS approves plan benefit packages through a process formally known as the adjusted

community rate proposal process, which is intended to ensure that Medicare does not pay

plans more than a commercial purchaser would pay for the same benefits, after adjusting

for differences in Medicare beneficiaries’ use of services. Because Medicare payments to

plans are established according to a predetermined formula, plans adjust their benefit

packages to comply with this requirement.
Page 25 GAO-01-1071 Medicare Information Program

CMS recently announced that it would fund a $30 million advertising

campaign this fall to increase beneficiaries’ awareness of the choices

available to them and to encourage them to use the NMEP information

channels to learn more about those choices. In addition, the advertising

campaign is intended to help beneficiaries learn about Medicare’s new

features—such as the annual enrollment and lock-in provisions, and

coverage for preventive services and medical screening examinations. The

agency will also extend the operating hours of the help line and add an

interactive feature to the Internet site designed to help beneficiaries select

the Medicare coverage option that best fits their preferences.

CMS has made other decisions about the fall information campaign that

illustrate the sometimes difficult trade-off between accommodating plans

and serving beneficiaries. To encourage health plan participation in the

M+C program, CMS has allowed plans additional time to prepare their

2002 benefit proposals. In a June 2001 memorandum, CMS notified M+C

plans that for contract year 2002 the deadline for filing complete cost and

benefit information in their adjusted community rate proposals (ACRP)

would be moved from July 2, 2001 to September 17, 2001. M+C plans were

still required to submit a non-binding summary by July 2, 2001. According

to CMS officials, the agency expects to review and approve all of the

ACRPs by October 26, 2001.

The ACRP extension further shortens the time frames for NMEP activities,

hampering the ability of CMS and health plans to disseminate information

before the BBA-established November open enrollment period (see fig. 1).

For example, 2002 cost and benefit information will not be posted on the

Medicare’s Internet site until October 1. Plan benefit packages that have

not been approved by CMS will include a disclaimer that the information is

pending approval. CMS had planned to not include any information about

specific health plans in the annual handbook mailed to Medicare

households. However, an August 9, 2001 court order requires the Secretary

of HHS to mail comparative information on health plans to beneficiaries at

least 15 days before the beginning of the November open enrollment

period (October 16), the deadline specified in BBA.26 To comply with the

court order, CMS will prepare separate brochures containing comparative

plan information and mail them by October 16. To reduce the potentially

adverse effects of an abbreviated fall information campaign, the agency

 26Gray Panthers Project Fund v. Tommy G. Thompson, Secretary of the Department of

Health and Human Services C.A. No. 01-1374; U.S. DIST. CT. (D.C.); August 9, 2001.

Recent CMS

Announcements Regarding

Fall 2001 NMEP Activities
Page 26 GAO-01-1071 Medicare Information Program

will allow health plans to distribute marketing materials with proposed

benefit package information marked “pending Federal approval.” CMS will

also extend the open enrollment period through the end of December.
Page 27 GAO-01-1071 Medicare Information Program

Figure 1: Timeline of Events Preceding Start of Medicare 2001 and 2002 Benefit Years

Source: HCFA/CMS

11/1 to

12/31- Election period

7/2-M+C plans must submit 

non-binding summary

benefit package proposals

CMS plans to mail 

Medicare & You without 

comparative information 

about plans 

9/1 to 

10/1 -

1/1- Effective date

for plan benefits 

Agency activities M+C plan activities

9/17-M+C plans must submit 

benefit package proposals, 

sign contract, and submit 

CMS puts Medicare Summary of Benefits

Health Plan Compare 

on Internet with 

disclaimers that 

information is pending 

Federal approval

CMS approves benefit 

package proposals 

(tentative)

10/2- 

10/26-

10/16-

Jul

Aug

Sep

Oct

Nov

Dec

Jan

8/4- HFCA began final print

of Medicare and You

9/15 - HCFA put Medicare 

Health Plan Compare

on Internet 

1/1- Effective date

for plan benefits 

7/3-21- HCFA tentatively 

approved selected 

information for 

Medicare & You 

Agency activities M+C plan activities

2001 2002

10/15- M+C plans begin marketing to 

beneficiaries with disclaimer that

information is pending Federal 

approval

9/1- HFCA approved benefit 

package proposals

(tentative)

9/1 to 

10/1 - HFCA mailed 

Medicare & You

9/6-8- M+C plans previewed

Medicare Health Plan 

Compare

10/15- M+C plans began

marketing to beneficiaries

11/1-30- Annual election period 

7/3- M+C plans had to submit 

benefit package proposals 

and sign contract

7/17- M+C plans had to submit 

Summary of Benefits for 

Medicare Health Plan 

Compare

7/21-26- M+C plans previewed 

Medicare and You

CMS mails brochures

with comparative information

on health plans
Page 28 GAO-01-1071 Medicare Information Program

HCFA fulfilled the BBA’s basic requirements for NMEP by making

information readily available through a number of communication devices

such as printed materials, telephone help line, Internet site, and

community outreach efforts. However, several HCFA-sponsored studies

have suggested that these activities primarily aided those beneficiaries

who were already reevaluating their Medicare options. NMEP activities

did not appear to encourage other beneficiaries to learn more about

choices available in the program. In this sense, NMEP has not been fully

successful in promoting active, informed choice.

Beneficiaries’ coverage decisions will soon become more important

because these choices will be binding for a much longer period of time.

Currently, beneficiaries may change health plans or switch between the

traditional FFS and M+C programs monthly. However, in November and

December 2001 beneficiaries will select how they will receive Medicare

coverage during 2002—under the traditional FFS program arrangements

or through a specific M+C plan. After beneficiaries make their initial

selection they typically will have only one opportunity to switch their

coverage arrangements until the start of the new benefit year in 2003.

The agency only recently began studying approaches that might encourage

more beneficiaries to actively consider their Medicare coverage options.

However, CMS’ ability to modify NMEP to better promote active, informed

choice or even to maintain current activities, may be constrained by BBA’s

statutory provisions and the short time frames that precede each open

enrollment period. Moreover, future NMEP activities will have to compete

with other Medicare priorities for funding.

To better promote beneficiaries’ active and informed selections among

their Medicare coverage options, the Congress may want to consider

allowing CMS more flexibility in conducting NMEP activities, especially

with regard to the content, format, medium, and timing of information that

the agency distributes to beneficiaries.

In written comments, CMS stated that the agency generally agreed with

the findings and observations in our report. CMS said that one of its

primary goals is to ensure that Medicare beneficiaries have the

information they need to make informed choices. The agency stated that is

has been working to improve NMEP each year. It noted that recent and

planned major improvements include an expansion of the hours of

operation for the telephone help line, new information tools that telephone

Conclusions

Matters for

Congressional

Consideration

Agency Comments
Page 29 GAO-01-1071 Medicare Information Program

customer service representatives can use to help callers consider their

health plan choices, and an advertising campaign designed to publicize

Medicare information resources. CMS concurred with our matter for

congressional consideration, stating that additional latitude in the conduct

of NMEP activities could assist agency efforts to respond to beneficiary

information needs in an appropriate and timely manner. CMS also

provided technical comments, which we incorporated as appropriate.

(CMS’ comments appear in app. III.)

We are sending copies of this report to CMS Administrator and other

interested parties who request them. If you or your staffs have any

questions about this report, please call me at (202) 512-7119. This report

was prepared under the direction of James Cosgrove, Assistant Director,

by Cam Zola, Linda Radey, Jennifer Podulka, and Richard Neuman.

Laura A. Dummit

Director, Health Care – Medicare Payment Issues
Page 30 GAO-01-1071 Medicare Information Program

List of Congressional Committees

The Honorable Tom Harkin

Chairman

The Honorable Arlen Specter

Ranking Minority Member

Subcommittee on Labor, Heath and Human Services, and Education

Committee on Appropriations

United States Senate

The Honorable Max Baucus

Chairman

The Honorable Charles E. Grassley

Ranking Minority Member

Committee on Finance

United States Senate

The Honorable Ralph Regula

Chairman

The Honorable David R. Obey

Ranking Minority Member

Subcommittee on Labor, Heath and Human Services, and Education

Committee on Appropriations

House of Representatives

The Honorable Michael Bilirakis

Chairman

The Honorable Sherrod Brown

Ranking Minority Member

Subcommittee on Heath

Committee on Energy and Commerce

House of Representatives

The Honorable William M. Thomas

Chairman

The Honorable Charles B. Rangel

Ranking Minority Member

Committee on Ways and Means

House of Representatives
Appendix I: Scope and Methodology

Page 31 GAO-01-1071 Medicare Information Program

To do our work we reviewed relevant sections of BBA and BBRA. We also

interviewed various HCFA officials responsible for operating the different

elements of NMEP. We also spoke with representatives from beneficiary

advocacy groups (AARP, Medicare Rights Center, and the Center for

Medicare Education) and health care plan associations (American

Association of Health Plans and the Health Insurance Association of

America). We analyzed information on the funding sources and costs for

operating the program for the first 3 fiscal years (1998-2000). Further, we

analyzed various operating results for the telephone help line and the

Internet site. We reviewed the results of various assessments done by

HCFA and its contractors on several aspects of the program. In addition

we spoke with officials in two HCFA regional offices about NMEP and

specifically the community-level education effort known as REACH. Our

work was done from November 2000 through August 2001 in accordance

with generally accepted government auditing standards.

Appendix I: Scope and Methodology
Appendix II: Medicare Publications that

Supplement the Medicare & You Handbook

Page 32 GAO-01-1071 Medicare Information Program

HCFA produced and distributed a variety of printed materials to help

beneficiaries understand the Medicare program and the options available

to them. The most widely distributed document is the Medicare & You

handbook. However, as listed in the handbook and below, the agency also

produces more than two dozen educational booklets and brochures on

specific topics, including Medicare managed care.

Services Medicare Covers:

• Medicare and Your Mental Health Benefits

• Medicare Coverage of Kidney Dialysis and Kidney Transplant Services

• Medicare Coverage of Skilled Nursing Facility Care

• Medicare Coverage For Second Surgical Opinion

• Medicare Home Health Care Services

• Medicare Hospice Benefits

• Medicare Preventive Services

Health Care Choices:

• Choosing a Doctor

• Choosing a Hospital

• Choosing Treatments

• Your Guide to Choosing a Nursing Home

• Private Contracts Fact Sheet

• Nursing Homes Fact Sheet

Medicare Health Plan Choices and Supplemental Coverage:

• Health Plan Comparison Information (with quality data)

• Learning about Medicare Health Plans

• 2000 Guide to Health Insurance for People with Medicare

• Your Guide to Private Fee-for-Service Plans

• Your Guide to Medicare Medical Savings Accounts

• Worksheet for Comparing Medicare Health Plans

Beneficiary Rights and Protections:

• Medicare Appeals and Grievances (Complaints)

• Medicare Fraud and Abuse

• Medicare Patient Rights

• Medigap Policies and Protections

Appendix II: Medicare Publications that

Supplement the Medicare & You Handbook
Appendix II: Medicare Publications that

Supplement the Medicare & You Handbook

Page 33 GAO-01-1071 Medicare Information Program

Health Care Costs and Payment:

• Do You Need Help to Pay Health Care Costs?

• Does Your Doctor or Supplier Accept Assignment?

• Medicare and Other Health Benefits: Your Guide to Who Pays First

• Your Guide to Outpatient Prospective Payment System
Appendix III: Comments From the Centers for Medicare

and Medicaid Services

Page 34 GAO-01-1071 Medicare Information Program

Appendix III: Comments From the Centers

for Medicare and Medicaid Services
Appendix III: Comments From the Centers for Medicare

and Medicaid Services

Page 35 GAO-01-1071 Medicare Information Program
Related GAO Products

Page 36 GAO-01-1071 Medicare Information Program

Medicare+Choice: HCFA Actions Could Improve Plan Benefit and Appeal

Information (GAO/T-HEHS-99-108, Apr. 13, 1999).

Medicare+Choice: New Standards Could Improve Accuracy and

Usefulness of Plan Literature (GAO/HEHS-99-92, Apr. 12, 1999).

Medicare Managed Care: Information Standards Would Help

Beneficiaries Make More Informed Health Plan Choices (GAO/T-HEHS98-162, May 6, 1998).

Medicare Managed Care: HCFA Missing Opportunities to Provide

Consumer Information (GAO/T-HEHS-97-109, Apr. 10, 1997).

Medicare HMOs: Potential Effects of a Limited Enrollment Period Policy

(GAO/HEHS-97-50, Feb. 28, 1997).

Medicare: HCFA Should Release Data to Aid Consumers, Prompt Better

HMO Performance (GAO/HEHS-97-23, Oct. 22, 1996).

Related GAO Products

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