Strategic management of Medicare Advantage product implementation in HMOs

¶ … Strategic Management Process for Implementation of Medicare Advantage Product in Health Maintenance Organization

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 was signed into law in December 2003. This law makes changes of a major nature to Medicare, which is the health insurance program for those 65 years of age and over as well as some individuals with disabilities. One of the changes made by this Act is the alternation of the program dealing with private health plans in Medicare specifically Medicare+Choice. Medicare Part C (Medicare+Choice) has been renamed to Medicare Advantage and is the method of obtaining Medicare coverage through a private health plan, which are likely to be less expensive than original Medicare and as well may provide benefits that are not covered under Medicare. The Medicare Advantage may be in the form of:

Health Maintenance Organization (HMO)

Point of Service (POS);

Private Fee-for-Service (PFFS) plan; or 4) Local Preferred Provider Organization (PPO).

For the purpose of this study, the Health Maintenance Organization (HMO) will be the focus of study. This plan is ran by a private company and the private company makes the rules of benefit coverage and payment. This company will decide each year whether to offer the Medicare Advantage plan. The individual can choose each year whether to stay in the plan choose another plan or return to traditional Medicare. (Medicare Advantage, How Does it Relate?, nd; paraphrased)

The Health Maintenance Organization provides each member with a primary care physician that sees the patient for all of their health care needs. Within the framework of the HMO the primary care physician is the one who makes the decision as to whether the patient needs to see a specialist, whether the patient is admitted to the hospital, or needs any special tests or procedures.

The work of Hoadley (2006) entitled: "Medicare's New Adventure: The Part D Drug Benefit" relates that the greatest challenge faced by the Medicare program is "...educating beneficiaries about the new benefit." The first step in the decision of beneficiaries to enroll in Medicare advantage is learning "enough about the program to decide whether to enroll." (Hoadley, 2006) Secondly, the individual must "determine their possible eligibility for the low-income subsidy." (Hoadley, 2006) Third, 'beneficiaries who enroll in Part D must sort through the array of choices - both the standalone prescription drug plans and the MA plans." (Hoadley, 2006) a study conducted in October 2005 by researchers at the Kaiser Family Foundation and the Harvard School of Public Health states that beneficiaries "are expected to turn to a variety of sources when deciding whether to enroll in a Medicare drug plan." (Hoadley, 2006) Top among these were Medicare, doctors, and pharmacists.

BACKGROUND to the STUDY

The Medicare Prescription and Drug Improvement and Modernization Act of 2003 became law in 2003 and has, among other provisions the Part D drug benefit. Prior to the MMA there were no outpatient drugs covered under Medicare creating a huge gap in the coverage. Medicare Part D is reliant on private drug plans that are in competition in 39 regions for availability of the benefit covered under Medicare. MA organizations are required to make an offer of at least one plan accompanied by a drug benefit to those enrolled in the areas in which they serve. The following chart illustrates the range of premiums for all stand-alone prescription drug plans for 2006.

Range of Premiums for all Stand-Alone Prescription Drug Plans

Source: Covering Health Issues (2006)

Depending on the situation of the beneficiary, the role of Medicare Part D differs in a substantial manner. There are almost 6.6 million beneficiaries who are dually eligible and who have been receiving drug coverage from Medicaid and who were furthermore required to switch to Part D plans. These dually eligible individuals were "automatically enrolled for the low-income subsidy and were randomly auto-enrolled in a Part D plan with an option of switching to a different plan." (Covering Health Issues, 2006) the beneficiaries of Medicaid who were enrolled in eligible Medicare drug plans are not required to pay premiums or deductibles and subsequently do not have a coverage gap to deal with. The following chart shows the number and percentage of plans covering top 10 brand name and generic drugs for 2006.

Number and Percentage of Plans Covering Top 10 Brand-Name and Generic Drugs (2006)

Source: Covering Health Issues (2006)

The analysis is stated to be based on: "...coverage of 152 drugs from Medicare.gov Drug Plan Finder for 35 different stand-alone Medicare Prescription Drug Plans offered by 14 sponsor organizations, representing 1,222 of the 1,429 plans nationwide." (Covering Health Issues, 2005) it is related that a great challenge Medicare faced in the education, marketing and enrollment of beneficiaries in this plan was the education of beneficiaries about this benefits. Confusion about this drug benefit has posed a major concern related to implementation of this plan. Forty percent of beneficiaries stated that the "process of researching a plan selection to be difficult." (Covering Health Issues, 2006)

The work of Jones, Jones and Miller entitled: "The Medicare Health Outcomes Survey Program: Overview, Context and Near-Term Prospects" relates that: "Medicare managed care plans are an important source of health care services for beneficiaries. At present, 5.3 million beneficiaries receive care in these settings, of whom 4.6 million are enrolled in Medicare+Choice plans (since renamed Medicare Advantage plans)." (2004) the ability of the managed care organization in providing quality health care is very important to the Medicare program as Medicare provides services to 34.6 million elderly and six million young beneficiaries with disabilities. (Jones, Jones and Miller, 2004; paraphrased) Many of these individuals are poor and approximately 40% having incomes "of 200% of the poverty level or lower. Chronic conditions are prevalent, with 57%a of non-institutionalized beneficiaries self-report arthritis, 55% reporting hypertension and 37% reporting heart disease." (Jones, Jones, and Miller, 2004)

The Centers for Medicare & Medicaid Services initiated the Medicare HOS program in 1996, which is a survey that "measures a health plan's ability to maintain or improve the physical health of its Medicare beneficiaries over time." (Jones, Jones and Miller, 2004) the HOS is comprised of the SF-36 questions concerning the Activities of Daily Living (ADLs), chronic health conditions, demographics, and survey administration. HOS is used in collection of health outcomes and is stated to mirror: "...national trends in quality improvement activities to utilize outcome-based measures of quality." (Jones, Jones, and Miller, 2004) Jones, Jones and Miller state:

The HOS is based on a longitudinal cohort research design, in which a baseline and 2-year follow-up surveys are administered to a sample of beneficiaries in each plan. The survey is primarily a mailed questionnaire that is sent to selected participants, with a series of reminder postcards and telephone interviews among non-respondents and incomplete survey respondents in efforts to increase the survey response rate.. The HOS survey instrument consists of three primary components: 1) the SF-36®, 2) case-mix and risk-adjustment questions, and 3) demographic and other questions required by the 1997 Balanced Budget Act the SF-36®, as previously noted, is a multipurpose short-form general health survey, which provides eight scale scores of physical and mental health attributes, as well as two summary measures of physical and mental health status, the Physical Component Summary (PCS) and Mental Component Summary (MCS), both of which are weighted combinations of all eight scale scores the responses to the SF-36® are scored as eight Likert scales, summarized using standard weights, and then normed using 1998 U.S. general population data to produce the PCS and MCS scales." (2004)

All HMOs are responsible to align their standards of practice to meet the requirements set out so that they are able to meet the standards when Medicare applies the testing measures as related. The work entitled: '2007 Medicare Products" published by the Harvard University Mossavar-Rahmani Center for Business and Government" relates the description of the Medicare 'Part D' plan as shown in the following table.

Description of Medicare 'Part D' Plan

Source: Harvard University Mossavar-Rahmani Center for Business and Government (2007)

I. STRATEGY FORMULATION

The work of Ginter, Swayne and Duncan entitled: "Strategic Management of Health Care Organizations" defines the Health Maintenance Organizations (HMOs) as the "organization interposed between providers and payors that attempts to manage the care on behalf of the health service consumer and payor." (2003) Therefore the strategy formulation of the HMO for implementation of the Medicare Advantage program for its patients will involve first and foremost the education of the patients as to what benefits are offered to them through this program.

A. MISSION STATEMENT

It is the mission of the Health Maintenance Organization to provide patients with the information and education needed to access the benefits of the Medicare Advantage program.

B. VISION STATEMENT

The vision of the Health Maintenance Organization is that all patients will receive the optimal health maintenance care possible.

C. VALUES STATEMENT

Values of the Health Maintenance Organization include:

1) Educating all patients so they are enabled to assess the best benefits possible; and 2) Assisting all patients in assessing the best benefits possible;

D. RATIONALE for the ELEMENTS

The rationale for the elements stated within the mission, vision and values statement is that through educating and assisting patients in signing up for and choosing their provider under the Medicare Advantage plan that the patients will be enabled to receive the best possible benefits for their individual health maintenance needs.

E. PROPOSED STRATEGIC GOALS

Strategic goals of this program includes those as follows:

1) Enrollment of all patients in the Medicare Advantage program who are eligible for this coverage.

2) Assisting all Medicare Advantage enrolled patients in utilizing this coverage to the best possible level enabling them to receive the best care possible.

F. IDENTIFICATION of CRITICAL SUCCESS FACTORS

Critical success factors are identified as being those as follows:

Adoption of the necessary technology applications to assist patients;

Efficiency and effectiveness in getting information out of patients concerning the assistance offered by the HMO; and Response level of patients to the information provided by the HMO.

G. METHOD of MEASURE to ASSESS GOAL ACHIEVEMENT

The method of measure that may be used in assessing the achievement of these goals is the level of enrollment in the Medicare Advantage Program by those patients who are eligible for this program. Furthermore, the HOS program, which accesses the overall health of patients, will be used to identify the health outcomes associated with achievement of this goal.

H. PROPOSE STRATEGIES and RATIONALE

Strategic goals proposed in this work include those as follows:

Training and Education for Strategic Intake of Patients

Individuals who perform the intake applications of patients must be specialized in Medicare benefit coverage therefore special training will be required in complying with Medicare and Social Security Standards for making these type of applications for individuals who are in receipt of these benefits specifically to prevent conflict of interests in assisting patients.

Medicare Preferred Implementation and Requirements of HMOs

The training of the aforementioned individuals will serve two-fold in that it automatically have the patient enrolled for coverage that benefits the patient the most in terms of payment thereby bringing about a reduction in the out-of-pocket costs of the patient and results in a better chance of healthy lifestyle for the patient.

Process of Enrollment

The point-of-contact from the HMO must contact the patient proactively if the HMO will meet the no penalty deadlines of Medicare.

Strategic implementation of this plan relating to providing assistance to patients of the HMO in applying for 'Part D' of the Medicare plan will begin with contacting the patient and setting up an appointment for the patient to come into the HMO office and consult with the individual assigned to case management of the patient's cases who qualify and are eligible for this plan which includes all recipients of Medicare. The patients should be advised that they will need to bring their Medicare and Social Security cards with them to this appointment as well as proof of income and other information relating to their monthly expenses and other assistance they receive from other than Social Security Income benefits. The patient should be instructed that upon receipt of their enrollment package that they should telephone the HMO and make an appointment for review of the confirmation material that they receive from Medicare concerning enrollment in the "Part D" program. At this time the representative of the HMO who is assisting patients with enrollment in the Medicare "Part D" program should assist the patient in reviewing the plans that are available and in making a choice of the plan that is most suited for the patient. This can be accomplished by submission of bids to participating providers of coverage in the region the patient is located. Upon receipt of bid the HMO would review the possible options with the patient that may be chosen from. The patient's choice would be then input to the Medicare program with the patient present during the process. Requirements of Medicare for assisting patient are met in this process. The patient benefits financially and in terms of the best possible coverage.

III. STRATEGIC CONTROL

As related in the work of Jones, Jones and Miller the Medicare Health Outcomes Survey was developed in 1996 by the Centers for Medicare & Medicaid Services (CMS) in an initiative to measure the quality of life and function health status of Medicare beneficiaries enrolled in managed care. The Medicare Health Outcomes Survey (HOS) is a program that gathers valid and reliable health data for those who are in Medicare managed care and used in quality improvement, public reporting, plan accountability and improvement of health outcomes based on competition. (Jones, Jones and Miller, 2004; paraphrased) Jones, Jones and Miller state that the context for the development of the HOS was "on the convergence of the following factors:

1) a recognized need to monitor the performance of managed care plans;

2) Technical expertise and advancement in the areas of quality measurement and health outcomes assessment;

3) the existence of a tested functional health status assessment tool (SF-36) I, which was valid for an elderly population;

5) CMS leadership, and 5) political interest in quality improvement." (2004)

It is reported that since 1998 "there have been six baseline surveys and four follow up surveys. CMS conducts the following with its partners and performs the following task as a part of the HOS program:

1) Supports the technical/scientific; development of the HOS measure, 2) Certifies survey vendors, 3) Collects Health Plan Employer Data and Information Set (HEDIS®)2 HOS data, 4) Cleans, scores, and disseminates annual rounds of HOS data, public use files and reports to CMS, Quality Improvement Organizations (QIOs), Medicare+Choice Organizations (M+COs), and other stakeholders, 5) Trains M+COs and QIOs in the use of functional status measures and best practices for improving care, 6) Provides technical assistance to CMS, QIOs, M+COs and other data users, and 7) Conducts analyses using HOS data to support CMS and HHS priorities." (Jones, Jones, and Miller, 2004)

According to Jones, Jones and Miller: "During the time of HOS development, there was an increased interest in measuring outcomes of health care. The use of outcome measures in quality improvement efforts stems, in part, from a desire to focus on the impact of care on patients." (2004) it is noted that it was asserted in the work of Berwick (2004) that the patient's experience should be "the ultimate source of defining quality." (Jones, Jones, and Miller, 2004) Jones, Jones and Miller (2004) state that: "The HOS is now the only approved patient-based health outcomes measure for MA quality improvement and performance monitoring."