Beneficiaries’ ability to make informed health care choices would be enhanced by the availability of objective, comparative information and access to a hot line. A limited enrollment period would facilitate an annual HMO marketing campaign and create a natural opportunity for HCFA to distribute comparative plan information to beneficiaries. HMOs would focus more of their marketing dollars on mass media campaigns—including print, radio, and television advertising—concentrated around Medicare’s enrollment season. Representatives of most HMOs we contacted stated that limiting Medicare’s enrollment period would slow the growth of managed care because plans would not (1) have time to educate beneficiaries about Medicare’s managed care option and (2) be able to hire enough trained sales staff on a seasonal basis to answer beneficiary questions during the limited enrollment period. The effectiveness of an FEHBP-like mass marketing campaign for Medicare may depend on whether HCFA develops ancillary mechanisms to inform beneficiaries. If the Medicare program relies solely on enrollment brokers and prohibits HMOs from marketing to individual beneficiaries, however, growth of Medicare managed care might slow. Under the limited enrollment period policy discussed here, beneficiaries dissatisfied with their HMOs would have three choices: (1) remain in the HMO, (2) switch to traditional Medicare fee for service and pay the deductible and coinsurance for submitted claims, or (3) switch to traditional Medicare fee for service and purchase a Medigap policy if one was available to them. The annual enrollment change resulting from a limited enrollment period could be difficult for HMOs to predict accurately; any unanticipated HMO enrollment growth could contribute to provider access problems. A Limited Enrollment Period Policy Could Discourage Some Employers From Offering Managed Care to Retirees

Limiting Medicare’s enrollment period would create varying degrees of administrative problems for employers and could, as a result, discourage some employers from offering managed care to their retirees. 3.) 4.) Limiting Disenrollment Might Save Medicare Money but Cause Problems for Beneficiaries and HMOs

If a new enrollment policy also limited HMO members’ opportunities to disenroll and change to fee for service, the Medicare program might save some money; however, the policy could also result in reduced beneficiary protections, increased beneficiary dissatisfaction, and slower HMO growth. Depending on the timing of the enrollment period, the announcement of the payment rates might need to occur earlier in the year so that HMOs could set premiums and benefits before Medicare’s open season. 5.) Although such a policy would reinforce the concept of managed care and reduce the opportunities for less healthy HMO enrollees to change to Medicare fee for service, our analysis suggests that the savings might be relatively small. Moreover, an enrollment policy change would likely have several unintended consequences, including the loss of important beneficiary protections and complications for many employers who offer managed care to their retirees. HCFA agreed that the monthly disenrollment option is an important consumer protection. Our report indicates that changing Medicare’s current policy of allowing beneficiaries to switch among HMOs or between an HMO and fee for service could have far-reaching consequences. The Health Benefit Services Division handles enrollments or changes in plans and conducts educational activities for members.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed how a limited enrollment period would affect the Medicare program, private health plans, beneficiaries, and employers who provide Medicare supplemental benefits to retirees, focusing on: (1) the growth of Medicare's managed care program; (2) employers' attempts to administer their respective benefits seasons; (3) taxpayer savings measured against beneficiary protections; and (4) the resources needed by the Health Care Financing Administration (HCFA), which runs Medicare's day-to-day operations.

What GAO Found

GAO noted that: (1) changing Medicare's current policy that allows beneficiaries to switch among health maintenance organizations (HMO) or between an HMO and fee for service monthly would have far-reaching consequences for the Medicare program, beneficiaries, HMOs, employers, and HCFA; (2) the specific effects would depend on the limits placed on switching plans; (3) any change that restricts beneficiary opportunities to enroll or disenroll would likely slow the growth of Medicare managed care; (4) a limited enrollment period for Medicare could have two principal advantages: (a) to improve the quality and distribution of managed care information to beneficiaries: a focused enrollment period would create a natural opportunity for HCFA to provide objective, comparative information about health plans; and (b) to make impractical the current practice of in-home sales of HMOs, a source of marketing abuses, which are difficult for HCFA to deter; (5) a limited enrollment period could also have several of the following disadvantages, the combined effect of which could slow Medicare managed care enrollment growth: (a) lessen the effectiveness of marketing Medicare HMOs: HMOs would likely focus more of their marketing dollars on mass media campaigns concentrated around Medicare's enrollment season, but beneficiaries unfamiliar with managed care might not receive enough specifics through mass marketing to appreciate any advantages offered by an HMO over traditional fee-for-service Medicare; (b) lessen the attractiveness of HMOs to beneficiaries: the only choice available to dissatisfied HMO enrollees might be to change to fee for service and pay either Medicare's deductibles and coinsurance or, if available, premiums for a supplemental Medigap policy; and (c) pose considerable administrative obstacles for employers: accommodating Medicare's schedule could be so administratively difficult that some employers might simply stop offering a managed care option to their retirees; (6) limiting beneficiaries' option to change to fee-for-service Medicare except during the officially appointed open season could also produce the following mixed effects: (a) Medicare might achieve modest savings on money now spent on services for HMO members who change to fee for service; and (b) beneficiaries would lose an important consumer protection and might be less willing to enroll in managed care; (7) ultimately, changing Medicare's HMO enrollment and disenrollment policies could have unintended effects; and (8) savings could be offset if policy changes also led to slowing or reducing the enrollment of Medicare beneficiaries in HMOs.