Medicare is the national health insurance program for those aged 65 and older and certain disabled individuals. In 1998, Medicare insured approximately 39 million people. All beneficiaries can receive health care through Medicare’s traditional fee-for-service arrangement, and many beneficiaries live in areas where they also have the option of receiving their health care through a managed care plan. Of the almost 7 million Medicare beneficiaries enrolled in managed care as of March 1999, nearly all were enrolled in plans whose MCOs receive a fixed monthly fee from Medicare for each beneficiary they serve. Total Medicare spending is expected to reach about $216 billion in fiscal year 1999, with managed care’s portion reaching approximately $37 billion. The Balanced Budget Act of 1997 (BBA) established the Medicare+Choice program as a replacement for Medicare’s previous managed care program. Medicare+Choice was intended to expand beneficiaries’ health plan options by permitting new types of plans, such as preferred provider organizations and provider-sponsored organizations, to participate in Medicare. BBA also established an annual, coordinated enrollment period to begin in 1999 during which beneficiaries may enroll or change enrollment in a Medicare+Choice plan. Previously, MCOs were required to have at least one 30-day period each year when they accepted new members, but most MCOs accepted new members throughout the entire year. Also, before BBA, Medicare beneficiaries could join or leave a plan on a monthly basis. Beginning in January 2002, Medicare beneficiaries will no longer be able to enroll and disenroll on a monthly basis. If they experience problems with a plan, identify a better enrollment option, or simply have second thoughts, beneficiaries will have a limited time each year to change the election they made during the coordinated enrollment period. Afterwards, they will be “locked into” their health plan decision for the remainder of the year. Each plan’s benefit package is defined through a contracting process that establishes the minimum benefits a plan must offer and the maximum fees it may charge during a calendar year. After a benefit package is approved by HCFA, a plan may not reduce benefits or increase fees until the next contract cycle. A BIF, which is included in an MCO’s contract as an exhibit, describes in detail the services, copayments, and monthly premiums associated with each plan. HCFA’s central and regional offices are involved in reviewing plans’ marketing materials, which include member literature. The central office negotiates contracts and establishes national policy regarding marketing material review. HCFA’s regional offices review marketing materials when submitted throughout the year and require MCOs to change the materials when they omit required information or are inaccurate, misleading, or unclear. While some regional offices may review materials that certain organizations distribute nationwide, generally each regional office is responsible for reviewing the materials to be distributed within its geographic jurisdiction. To verify the accuracy of benefit information, regional staff are instructed to check plan materials against the BIF. HCFA staff also verify that MCOs have included certain information in their materials, such as explanations of provider restrictions and beneficiary appeal rights. HCFA provides guidance for both developing and reviewing marketing materials through its contract manual, marketing guidelines, and operational policy letters. Despite HCFA’s authority to do so, the agency does not require MCOs to use standard formats or terminology in their marketing materials. According to HCFA regulations, if HCFA staff do not disapprove submitted materials within 45 days, the materials are deemed approved, and MCOs may distribute the materials to beneficiaries. Review procedures established by several regional offices allow “contingent approval”; that is, the materials are approved on the condition that the MCOs make specific corrections. When contingent approval is given, procedures in three regions call for HCFA staff to verify that the MCOs have made the required corrections before the materials are published and distributed to beneficiaries. (See fig. 1.) Historically, HCFA has done little to address beneficiaries’ need for comparable and unbiased information about Medicare managed care plans. In 1996, we reported that beneficiaries received little or no comparable information on Medicare health maintenance organizations and that the lack of information standards made it difficult for beneficiaries to compare plans’ member literature. At that time, we recommended that HCFA produce plan comparison charts and require plans to use standard formats and terminology in key aspects of their marketing materials. BBA mandated that HCFA undertake a number of activities to provide Medicare beneficiaries with information about their health plan options. Beginning in November 1998, HCFA was required to provide an annual national educational and publicity campaign to inform beneficiaries about the availability of Medicare+Choice plans and the enrollment process. Also, each fall starting in 1999, HCFA must distribute to beneficiaries an array of general information about the traditional Medicare program, supplemental insurance, appeal and other rights, the process for enrolling in a Medicare+Choice plan, and the potential for Medicare+Choice contract termination. At the same time, HCFA must provide each Medicare beneficiary with a list of available Medicare+Choice plans and a comparison of plan options. All of these activities are designed to coincide with and support the coordinated open enrollment period slated to occur each November starting in 1999. HCFA’s goal is to make beneficiaries aware of their health plan options and to provide some summary information to help beneficiaries compare those options. According to HCFA officials, in 1999 each beneficiary will receive a Medicare handbook that contains some comparable information about available health plans. Beneficiaries who want more information may call HCFA’s toll-free telephone number (1-800-MEDICAR) or log onto the Internet Web site (www.medicare.gov). All of these resources—the Medicare handbook, toll-free telephone number, and Web site—are designed to help beneficiaries identify enrollment options and compare selected aspects of benefits. To obtain detailed information about specific plans, however, beneficiaries must continue to rely on MCOs’ sales agents and member materials. (See fig. 2.) Our investigation of 16 MCOs uncovered flaws in their plans’ member literature, beneficiaries’ only source of detailed benefit information. Much of the MCOs’ plan literature contained errors or omissions about mammography and prescription drug benefits, ranging from minor oversights to major discrepancies. While we found no errors about ambulance services, some MCOs’ member literature omitted information about the benefit. Moreover, beneficiaries frequently did not receive important information until after enrollment. Even then, beneficiaries in some plans received member literature that was incomplete and did not fully disclose plan benefits, exclusions, and fees. The lack of full disclosure in member literature leaves the beneficiary vulnerable to unexpected service denials and additional out-of-pocket fees. Making comparisons among health plans’ benefits remains challenging because of the use of nonstandard formats and terminology. In contrast, FEHBP participants received plan brochures that contained relatively complete benefit descriptions presented in a standard format. We found significant errors and omissions in the plans’ member literature that MCOs distributed to beneficiaries. For example, effective January 1998, HCFA required organizations to cover annual screening mammograms and to permit beneficiaries to obtain this service without a physician’s referral. Also, MCOs were required to notify beneficiaries of this new Medicare benefit. Materials from five MCOs, however, explicitly stated that beneficiaries must obtain physician referrals to obtain screening mammograms. (See fig. 3 for three examples.) Member literature from five other organizations failed to inform beneficiaries of their right to self-refer for this service. Much of the MCOs’ member literature provided incorrect or inconsistent information about prescription drug coverage. For example, the member literature for a large, experienced Medicare MCO specified an annual dollar limit for prescription drugs that was lower than the amount required by the organization’s Medicare contract. The contract required the provision of unlimited generic drugs and coverage of at least $1,200 for brand-name drugs. This MCO’s materials, which varied by county, understated the brand-name drug coverage, listing annual dollar limits as low as $600. When we contacted the MCO officials, they confirmed that they were providing the lower benefit coverage. On the basis of the MCO’s enrollment for 1998, we estimated that about 130,000 members could have been denied part of the benefit that Medicare paid for and to which they were entitled under the MCO’s contract. Another MCO provided conflicting information about its prescription drug benefit. In one document, the MCO alternately described its prescription drug benefit as having a $200 monthly limit and a $300 monthly limit. (The correct limit was $300.) In another case, an MCO used the same member literature for four separate plans, emphasizing that all members were entitled to prescription drug benefits. Actually, however, only two of the four plans offered a prescription drug benefit. The member literature we reviewed did not contain errors regarding ambulance services, but the documents often omitted important information about the benefit. One MCO did not include any reference to the benefit in its preenrollment member literature. Three other MCOs stated that ambulance services were covered “per Medicare regulations” but did not define Medicare’s coverage. Most of the remaining MCOs provided general descriptions of their ambulance coverage but did not give details of the extent of the coverage, such as whether the MCOs would pay for out-of-area ambulance service in an emergency. Officials from several MCOs told us that their organizations typically issue a member policy booklet—a document that discloses the details of a plan’s benefit coverage, benefit restrictions, and beneficiary rights—after a beneficiary enrolls. Moreover, MCOs often provided enrollees with outdated member policy documents. For example, one MCO failed to provide enrollees with a current member policy document until August 1998—8 months after the start of the new benefits year. Distributing outdated information can be misleading. HCFA allows MCOs to use outdated plan member materials as long as the organizations attach an addendum indicating any changes to the benefit package.