Since August 1997, about three-quarters of the mandates with a July 1998 deadline have been implemented. HCFA’s recent publication of the Medicare+Choice and SNF PPS regulations are examples of the progress HCFA has made in implementing key mandates. BBA-mandated changes. Adequate Information Critical to Success of Medicare+Choice

BBA establishes a new Medicare+Choice program, which will significantly expand the health care options that can be marketed to Medicare beneficiaries beginning in the fall of 1998. Recognizing that consumer information is an essential component of a competitive market, BBA mandated a national information campaign with the objective of promoting informed plan choice. campaign” that includes comparative data on the available health plan choices. Reliable Plan Performance Data Essential to Quality-Based Competition

Comparative data on quality and performance are a key component of the information campaign mandated by BBA and an essential underpinning of quality-based competition. immature health plan information systems and ambiguities in the HEDIS measurement specifications. The large range in disenrollment rates among HMOs suggests that this single variable could be a powerful tool in alerting beneficiaries about potentially significant differences among plans and the need to seek additional information before making a plan choice. The campaign is to be financed primarily from user fees—that is, an assessment on participating health plans. Ultimately, the design of this and other aspects of the information campaign should be driven less by cost and more by how effective they are in meeting beneficiary needs and contributing to the intended transformation of the Medicare program. Anticipated Savings at Risk With New SNF Payment System

On July 1, 1998, HCFA began phasing in a Medicare PPS for SNFs, as directed by BBA. Although HCFA met the deadline for issuing the implementing regulations for the new SNF per diem payment system, features of the system and inadequate data used to establish rates could compromise the anticipated savings. Even if additional audits were to uncover significant inappropriate costs, HCFA maintains that it has no authority to adjust the base rates after the July 1, 1998, implementation of the new payment system. Thus, more people could be eligible and Medicare could be responsible for longer stays unless HCFA is clear that Medicare coverage criteria have not been changed. In contrast, when Texas implemented a similar reimbursement system for Medicaid, the state instituted on-site reviews to monitor the accuracy of patient assessments and to determine the need for training assessors. At the time it is processing the bill, the claims contractor will not have access to data that would allow confirmation that the patient’s classification matches the assessment. HCFA could take short-term steps to correct deficiencies in the new SNF PPS. BBA Provisions Delayed by Year 2000 Computer Renovations

Collection of non-inpatient encounter data from plans SHMO: Plan for integration of part C and SHMO Medicare subvention: Project for military retirees Reporting and verification of provider identification numbers (employer identification numbers and Social Security numbers)
Maintaining savings from temporary reductions in capital payments for  PPS hospitals SNF consolidated billing for part B services Payment update for hospice services Update to conversion factor 1/1/99Implementation of resource-based practice expense RVUs Implementation of resource-based malpractice RVUs Prospective payment fee schedule for ambulance services Application of $1,500 annual limit to outpatient rehabilitation therapy services (continued)
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Why GAO Did This Study

GAO discussed the Health Care Financing Administration's (HCFA) implementation of Medicare provisions contained in the Balanced Budget Act of 1997 (BBA), focusing on: (1) an overview of how HCFA's implementation has progressed since GAO's earlier testimony; (2) the efforts to inform Medicare beneficiaries about the expanded health plan choices available to them in 1999, commonly referred to as the information campaign; and (3) the prospective payment system (PPS) for skilled nursing facilities (SNF), which began a 3-year phase-in in June 1998.

What GAO Found

GAO noted that: (1) HCFA is making progress in meeting the legislatively established implementation schedules; (2) since the passage of BBA in August 1997, almost three-fourths of the mandates with a July 1998 deadline have been implemented; (3) however, HCFA officials have acknowledged that many remaining BBA mandates will not be implemented on time; (4) HCFA maintains that these delays will have a minimal impact on anticipated Medicare program savings; (5) given the concurrent competition for limited resources and the differing importance and complexity of the many BBA mandates, the success or failure of HCFA's implementation efforts should not be judged solely on meeting deadlines; (6) rather, any assessment should consider whether the agency is meeting congressional objectives while taking a reasoned management approach to identifying critical BBA tasks, keeping them on track, and integrating them with other agency priorities; (7) complying with the BBA mandate to conduct an information campaign that provides beneficiaries with the tools to make informed health plan choices poses significant challenges for HCFA and participating health plans; (8) in implementing the Medicare plus Choice program, HCFA must now assemble the necessary comparative information about these options and find an effective means to disseminate it to beneficiaries; (9) a parallel goal of the information campaign is to give beneficiaries information about the quality and performance of participating health plans to promote quality-based competition among plans; (10) HCFA has accelerated its goals for obtaining standardized information from plans, and GAO believes health plan disenrollment rates provide an acceptable short-term substitute measure of plan performance; (11) the campaign is to be financed primarily from user fees; (12) HCFA has met the July 1, 1998, implementation date for phasing in a new payment system for SNFs; (13) GAO is concerned, however, that payment system design flaws and inadequate underlying data used to establish payment rates may compromise the system's ability to meet the twin objectives of slowing spending growth while promoting the delivery of appropriate beneficiary care; (14) in the short term, the new payment system could be improved if HCFA clearly stated that SNFs are responsible for insuring that the claims they submit are for beneficiaries who meet Medicare coverage criteria; and (15) in the longer term, further research to improve the patient grouping methodology and new methods to monitor the accuracy of patient assessments could substantially improve the performance of the new payment system.