Unlike other large health care purchasing organizations, HCFA has not routinely provided plan-specific information directly to beneficiaries. Standard Benefit Descriptions Could Help Beneficiaries Compare Plans’ Benefits and Ease Burden on Plans and Agency Staff

Although HCFA has efforts under way to publish comparative information on Medicare+Choice plans, it has not taken the steps needed to enable beneficiaries to make similar comparisons using individual plans’ marketing materials. The absence of standards for format and terminology used to describe benefits and out-of-pocket costs limits the usefulness of these materials for comparison purposes. Lack of Standard Format and Terminology in Marketing Materials Hinders Ready Comparison of Plans’ Benefits and Costs

Federal employees and retirees can readily compare benefits among health plans in the Federal Employees Health Benefits Program (FEHBP) because the Office of Personnel Management, which administers FEHBP, requires plan brochures to follow a common format and use standard terminology. Without required standards from HCFA, HMOs are left to their individual discretion, as we reported in 1996. To learn what “formulary” means when it is not defined in the marketing literature, beneficiaries would have to ask plan representatives or read the plan’s “evidence of coverage”—a document normally provided to beneficiaries after they enroll in a plan. Individual HCFA staff have wide discretion in approving and rejecting plans’ marketing materials. HMOs report that this discretion leads to inconsistent decisions and unnecessary delays in the development and distribution of plan materials. HMO representatives reported that corporate purchasers often require plans to use standard language. Standard Format and Terminology in Plans’ Contract Submissions Could Facilitate HCFA’s Development of Comparative Information

The lack of standards for benefit descriptions in plans’ contract submissions hinders HCFA’s efforts to produce benefit comparison charts and complicates the agency’s reviews of plans’ marketing materials. HCFA’s Center for Health Plans and Providers reviews these packages and approves plans’ Medicare contracts. HCFA staff said this would reduce the administrative burden on health plans and the agency. HCFA could act sooner, however, to provide this information to beneficiaries. Although HCFA is working to produce information to help beneficiaries compare their health plan options, the agency could leverage its resources by setting information standards, especially for plans’ marketing materials. Similarly, HCFA could also take immediate advantage of the data it already collects to publish such performance indicators as annual disenrollment rates. 10, 1997). Additional copies are $2 each.
Why GAO Did This Study

Pursuant to a congressional request, GAO discussed the extent to which the Health Care Financing Administration's (HCFA) Medicare Choice information development efforts are likely to: (1) enable beneficiaries to readily compare benefits and out-of-pocket costs using plan brochures; and (2) facilitate the agency's approval of plans' marketing materials and other administrative work required of both HCFA and the health plans.

What GAO Found

GAO noted that: (1) HCFA has begun making certain plan-specific information available to beneficiaries; (2) these efforts, however, do not address the problem beneficiaries face in trying to carefully evaluate their health plan choices using the plans' summaries of benefits and other marketing materials; (3) these materials are a major source of health plan information; (4) currently, plans use widely varied formats and definitions of benefits in the materials they distribute to beneficiaries; (5) this lack of common formatting and language made it difficult, if not impossible, for beneficiaries to rely on health maintenance organizations' (HMOs) marketing literature to compare benefits and premiums; (6) preliminary results from GAO's current work on HMOs' prescription drug benefit suggest this situation continues to exist; (7) GAO's current work also suggests that critical information is sometimes missing from plans' marketing materials; (8) the diverse formats and terms also cause problems for health plans and HCFA staff; (9) without HCFA's specifying common standards for plans' marketing materials, agency staff have wide discretion when deciding to approve or reject these documents; (10) plan representatives and HCFA staff stated that this latitude leads to inconsistent HCFA decisions, unnecessary delays, and extra costs; (11) the lack of required standards similarly affects the efficient development of comparative benefits information; (12) to help beneficiaries evaluate their health plan options, HCFA could move faster to publish readily available plan performance indicators such as plans' disenrollment rates; (13) with this information, beneficiaries could then decide to seek more information about a plan before enrolling; (14) HCFA could better serve beneficiaries, reduce burdens on health plans, and leverage its own resources by setting information standards for health plans' marketing literature; (15) GAO believes, therefore, that HCFA should adopt the recommendations it made in 1996 and require plans to use standard formats and terminology in their benefit descriptions; and (16) in addition, HCFA should use plan performance data it already collects to help inform beneficiaries' health plan decisions.