Statement of Peter Haytaian, Vice President, Government
Programs,
Oxford Health Plans, Trumbull, Connecticut
Testimony Before the Subcommittee on Health
of the House Committee on Ways and Means
Hearing on Status of the Medicare+Choice Program
December 4, 2001
I. INTRODUCTION
Good morning. Madam Chairwoman, Congressman Stark, and other distinguished Committee members, my name is Peter Haytaian and I am the Vice President of Government Programs for Oxford Health Plans. I would like to begin by thanking you for the opportunity to come before this Sub-committee to discuss the status of the Medicare+Choice program.
As you may know, Oxford Health Plans provides services to about 1.5 million members in the tri-state region of lower New York, all of New Jersey, and Connecticut through traditional health maintenance organizations, point-of-service plans, third-party administration of employer-funded benefit plans and Medicare+Choice plans.
When I first joined Oxford back in 1997, Oxford had approximately 160,000 Medicare members in a service area that encompassed all of New Jersey, the greater New York City area, including Long Island, the northern counties surrounding and including Westchester County, and most of Connecticut.
Due to the payment inadequacies of the current system, Oxford has made the difficult decision to curtail our participation in the Medicare+Choice program in 1999, again in 2001 and most recently for 2002. At the core of the problem is the flawed M+C reimbursement methodology in the Balance Budget Act of 1997 that limits the growth of reimbursement in urban areas to two percent per year.
During the same period (1998-2002), most commercial and government health insurance programs experienced annual premium increases ranging from high single digits in the late 1990s to more recently mid to high double-digit increases. Meanwhile medical inflation has been approaching ten percent annually.
Consequently, as of January 2002, Oxford’s Medicare Advantage program will serve approximately 65,000 members in a service area that has shrunk to include only the five boroughs of New York City and one county in both New Jersey and Connecticut. (See Attachment A)
We especially concerned with member displacement since a majority of our senior members are financially vulnerable, most with household annual incomes of less than $20,000. Without an M+C option many of these seniors are forced back to the Medicare fee-for-service program and are unable to afford supplemental policies (as high as $300/month) to receive a comparable level of benefits.
In fact, recent research shows that the rate of Medicare beneficiary health maintenance organization (HMO) enrollment is inversely proportional to income. Medicare beneficiaries had a HMO enrollment rate of 28% when their yearly income was less than $15,000. This rate decreased as annual income level increased.[1] In addition, in the urban Northeast, among beneficiaries who had Medicare supplemental coverage that was not subsidized, 41% were enrolled in Medicare HMOs.[2]
II. OXFORD HEALTH PLANS ROLE IN THE MEDICARE+CHOICE PROGRAM
In spite of the existing funding issues, the Medicare+Choice program has demonstrated that adequately funded plans can provide high-quality, comprehensive, affordable health coverage for a variety of populations that is not available in the Medicare fee-for-service program. This is readily evident in the New York metropolitan marketplace.
Through its many years of experience, Oxford has learned to craft its plan design to accommodate the needs of a diverse Medicare population by creating a portfolio of plan choices. Oxford’s business decisions are governed in part by our understanding of our members’ needs and preferences (e.g. zero premium products and prescription drug benefits), the local medical services market, etc. Oxford’s philosophy firmly endorses the concept that one size does not fit all.
Oxford Medicare Advantage Plan Offerings As Compared to Alternative Medicare Products
Oxford’s portfolio includes three plans: The Oxford Medicare Advantage Essential Plan, The Oxford Medicare Advantage Plan, and The Oxford Medicare Advantage Plus Plan. These three options are specifically designed to cater to different populations.
The Advantage Essential Plan is designed to operate in tandem with New York’s public assistance pharmacy program (EPIC) and to provide access to low-income beneficiaries. Through EPIC, low-income New Yorkers are able to get brand pharmacy benefits. Oxford also provides additional benefits not provided in fee-for-service program as well as relaxed cost-sharing requirements.
For example, in New York, the majority of members in the Medicare+Choice program are served through HMO products, with little or no monthly premiums. This population is predominated by low-income status beneficiaries that embrace gated delivery system products. For these populations, the Oxford Essential Plan’s zero premium provides a rich benefits package that includes unlimited generic drugs, hearing and vision benefits, with no co-payments for in-patient hospital services, primary care physician visits or generic drugs, and minimal co-payments for specialty physician visits.
By contrast, less comparable Medicare supplemental policies are exorbitantly expensive. Last year, in New York, the average annual quote for a Medigap Plan A, which only covers only basic cost sharing was $890, while the average annual quote for Medigap Plan F, which covers 100% of Part B excess charges, was around $1,571.[3] In many instances, this means that beneficiaries would have to choose to pay premiums beyond their means for a Medigap policy to the detriment of other life necessities. Alternatively, Oxford’s Medicare+Choice products provide an economical substitute that limits beneficiaries’ out-of-pocket costs for catastrophic illnesses without saddling beneficiaries with undue financial burden.
The standard Advantage plan is an example of the traditional Medicare+Choice offering that is based on a zero premium product with a prescription drug benefit. This plan constitutes Oxford’s core product. The plan covers physician visits, in-patient and out-patient hospital care, and $750 of outpatient prescription brand name drugs and unlimited generic drugs with minimal cost-sharing on the part of members-less than fee-for-service Medicare but more than our Essential Plan.
Finally, the Advantage Plus plan is meant to capture the beneficiary population that has traditionally shied away from Medicare+Choice in favor of “open access to care” products with additional benefits such as prescription drugs. We have identified this population as “Gap with concern” beneficiaries. The Advantage Plus plan is attractive to these beneficiaries because it combines a “point of service” product with extensive prescription drugs at a premium of $110 per month ($1,320 per year), whereas the national average for the richest Medigap policy (Plan J) is approximately $3,065 a year.[4]
III. THE MERITS OF THE MEDICARE+CHOICE PROGRAM
Oxford’s Medicare+Choice Plans Offer Additional Benefits
One of the reasons for the popularity of Medicare+Choice plans is that they typically offer traditional benefits not covered by the Medicare fee-for-service program. All three of Oxford’s New York M+C plans include pharmacy benefits, physical exams, vision and hearing services, preventive dental care, routine podiatry services, nutrition services, and a fitness benefit. Oxford also has an education and outreach program that works closely with local Departments of Aging, in order to access the best resources for our members throughout the communities we serve.
Moreover, our roster of participating physicians include more than 15,000 doctors, specialists, and complementary and alternative medicine providers ensures that our members have plenty of choices in choosing a physician. When our Medicare members need healthcare guidance when their physician’s office is closed they may telephone Oxford On-Call (OOC) and immediately speak to a registered nurse. OOC is a 24-hour/seven-day-a-week healthcare guidance service operated under the direction of an Oxford Medical Director.
Oxford’s Medicare+Choice Plans Offer Innovative Patient-Care Programs
Some of the most popular Medicare+Choice programs for our beneficiaries are the innovative disease management programs. Oxford’s current M+C disease management programs include stroke prevention, dialysis, asthma, congestive heart failure, and diabetes.
Oxford’s Options for Living With Lung Conditions is a self-management program is designed to empower the lives of Oxford members living with chronic obstructive pulmonary disease (COPD) and asthma. A seven week workshop was created to educate members on lung conditions in general, and on topics of nutrition, exercise, coping skills, daily living skills, understanding medications/complications, and alternative wellness. An identical program exists for Oxford members living with diabetes.
In addition to the aforementioned program elements, the programs utilize health professionals to develop written materials and interactive presentations to teach members how to manage their conditions on their own. Comprehensive workbooks (150 pages long) have been developed to target various avenues of self-management.
The benefits of such programs have been validated through a number of scientific studies that have found that outcomes of care in HMOs were better than or equal to care in non-HMO settings.[5]
One of Oxford’s most unique programs for members is our falls prevention program. The Oxford Activity & Safety Program For Fall Prevention is a primary prevention program, which uses in-home rehabilitation therapy services to reduce falls in a targeted Medicare population. To meet this objective, Oxford is the only managed care organization that offers the combined approach of occupational and physical therapy, and issues durable medical equipment for this program. (See Attachment B)
IV. THE CURRENT STATUS OF MEDICARE+CHOICE
Payment Relief Is Needed Now As A Bridge to Medicare Reform
A survey of the landscape of the Medicare+Choice program reveals that the program is at a critical juncture in its history. The lack of payment parity with traditional Medicare fee-for-service has led to significant losses that have forced plans to reduce benefits, raise premiums and other cost sharing, and in many cases like our own plan even withdraw from the program in certain areas. The current payment environment is untenable and threatens the viability of existing plans. A readjustment of the current payment methodology is essential to insure the continuing success of Medicare+Choice.
As I stated previously, the core of the problem is the flawed M+C reimbursement methodology in the Balanced Budget Act of 1997 that limits the growth of reimbursement in urban areas to two percent per year while medical inflation has been approaching ten percent. The Act and its successors (BBRA and BIPA) have elevated M+C reimbursement in areas of the country where fewer seniors reside and a select group of suburban areas. It is now time to significantly increase the reimbursement in the urban areas where most of the beneficiaries live.
As you know legislation has already been introduced to address this urban funding shortfall. HR2836/S1317 creates a fifth payment prong for urban counties by primarily reimbursing M+C plans at 100 percent of fee-for-service (FFS). One hundred percent of fee-for-service is a significant boost in most urban areas. However, in many urban counties graduate medical education (GME) accounts for a significant portion of fee-for-service costs, as much as 14% but generally about 6%. HR 2980 also creates a fifth payment prong for urban areas based on 100% of fee-for-service but including the GME costs without taking any funds from the current GME pool that is directly distributed to the hospitals.
I urge the Committee to act expeditiously on these proposals.
CONCLUSION
In the Medicare+Choice market, Oxford has tailored products to meet each segment of our market. We have launched new products and services, such as the “point of service” concept, alternative medicine initiatives through a contracted network of alternative medicine providers, a host of disease management programs and quality monitoring techniques. None of which are available to seniors in the traditional Medicare fee-for-service program.
A properly funded Medicare+Choice program is ripe for further benefit and health delivery innovation. Oxford’s commitment to the Medicare+Choice program is evidenced by our long history of providing Medicare beneficiaries with access to high quality, affordable, patient-centered health coverage. We believe that Congress should enact a minimum payment two-year solution that addresses concerns about inadequate funding for the program. This will create a stable environment for our company’s participation in the Medicare+Choice program in anticipation of further Medicare reform.
Madam Chairwoman and members of the Committee, I again thank you for the opportunity to discuss the Medicare+Choice program, and welcome any questions you may have.
[1] B. Virnig, et al., “Medicare HMOs: Who Joins and Who Leaves?” American Journal of Managed Care, April 1998.
[2] American Association of Health Plans, 2000.
[3] Weiss Ratings, 2001
[4] Weiss Ratings, 2001
[5] See J. Seidman, Medical Care, Vo. 36, 1998 (heart disease); and Preston and Retchin, Journal of the American Geriatrics Society, July 1991 (diabetes and hypertension).
-ATTACHMENT A-
-ATTACHMENT B-
Options For Living With Diabetes
Options for Living With Diabetes is a self-management program designed to empower the lives of our Oxford Medicare Advantage Members living with diabetes.
The seven-week workshop has been created to educate Members on diabetes as a disease, and on topics of nutrition, exercise, coping skills, daily living skills, understanding medications/complications, and alternative wellness. It is emphasized to the Members that increasing knowledge of these areas can positively impact living with these conditions and subsequently improve the quality of their lives. Meetings are held for 3 hours, once per week for seven weeks. Members are encouraged to attend all of the seminars as the material presented builds on lectures from the previous weeks.
Health professionals have developed written materials and interactive presentations to teach members how to manage diabetes in their own lives. A 150-page, comprehensive workbook has been developed that targets various avenues of self-management. We encourage all members and their family members to take advantage of this exceptional opportunity for comprehensive learning.
Options For Living With Lung Conditions
Options for Living With Lung Conditions is a self-management program designed to empower the lives of our Oxford Medicare Advantage Members living with lung conditions.
The seven-week workshop has been created to educate Members on lung conditions as a disease, and on topics of nutrition, exercise, coping skills, daily living skills, understanding medications/complications, and alternative wellness. It is emphasized to the Members that increasing knowledge of these areas can positively impact living with these conditions and subsequently improve the quality of their lives. Meetings are held for 3 hours, once per week for seven weeks. Members are encouraged to attend all of the seminars as the material presented builds on lectures from the previous weeks.
Health professionals have developed written materials and interactive presentations to teach members how to manage lung conditions in their own lives. A 150-page, comprehensive workbook has been developed that targets various avenues of self-management. We encourage all members and their family members to take advantage of this exceptional opportunity for comprehensive learning.
Activity & Safety Program For Fall Prevention
Description of Innovation
One of Oxford’s most unique programs for members is our falls prevention program. The Oxford Activity & Safety Program For Fall Prevention is a primary prevention program, which uses in-home rehabilitation therapy services to reduce falls in a targeted Medicare population. To meet this objective, Oxford is the only managed care organization that offers the combined approach of occupational and physical therapy, and issues durable medical equipment for this program.
Description of Interventions
Collaborative Arrangements