The Aging Network

INFORMATION MEMORANDUM
AOA-IM-97-08 -- April 4, 1997

TO: STATE AND AREA AGENCIES ON AGING AND TRIBAL ORGANIZATIONS ADMINISTERING PLANS UNDER TITLES III AND VI OF THE OLDER AMERICANS ACT OF 1965, AS AMENDED

SUBJECT: Managed Care Principles for the Aging Network

LEGAL AND RELATED REFERENCES: Older Americans Act, as amended

The purpose of this memorandum is to convey a set of principles to assist and help guide state and area agencies on aging, tribal organizations and service providers in interactions and activities related to managed health care. These principles reinforce the essential role which state and area agencies on aging and other aging organizations play with regard to consumer education, protection, and representing the interest of the elderly.

Many members of the aging network have requested additional assistance and guidance following the successful Administration on Aging (AoA) Managed Care Conference in February 1996. The University of Minnesota National Long Term Care (LTC) Resource Center, funded under Title IV of the Older Americans Act (OAA), provided substantive background and technical assistance for that successful event. Since the changes in this new health care environment are so complex, this set of principles seemed to be the best approach for assisting the aging network. This approach was broadened and clarified through input from and review of draft documents by other federal agencies, various state and area agencies on aging, national aging organizations, universities and groups representing consumer concerns. We greatly appreciate the contributions of many managed care experts as we analyzed, revised and refined various aspects of the managed health care principles.

Why Are We Issuing This Document?

In many meetings and discussions, the question of the appropriate roles of state and area agencies on aging in managed care has been widely discussed. In an effort to respond to the issues and questions which have been raised, it was concluded that AoA needed to call attention to, and reinforce, the public mission of state and area agencies funded under the Older Americans Act in this rapidly changing era of health and long-term care reform. Our goal is to provide guidance for responding to new issues facing the elderly as they encounter changes in health and LTC delivery systems. This information will assist the aging network in its decision making as its representatives work with managed care organizations and policy makers in addressing managed care issues. This guidance alerts the aging network to some of the potential benefits and possible pitfalls of managed health care plans.

Although the primary audience for these managed care principles is state and area agencies on aging, tribal organizations, aging service providers, aging organizations and others who work with the elderly, these principles may be of value to others with responsibility for vulnerable populations, particularly those concerned about persons with disabilities.

Managed Care Enrollment:

As of March 1, 1997, approximately 5 million Medicare beneficiaries are enrolled in managed care plans, accounting for approximately 14 percent of the total Medicare population. Of the total 369 prepaid contracts, 285 are risk contracts, 37 are cost contracts, 19 are demonstrations and 48 are health care prepaid plans. There was a 1.6 percent increase in managed care enrollment during February 1997.

Enrollment in Medicaid managed care plans is increasing also. As of June 30, 1996, approximately 40.1 percent of the Medicaid population is enrolled in managed care. This figure is an increase from 29.37 percent enrolled in 1996. The data available from the Department of Health and Human Services Health Care Financing Administration do not indicate the proportion of elderly and persons with disabilities enrolled in managed care arrangements. While a number of states have moved aggressively to enroll the Supplemental Security Income (SSI) disabled and the dually eligible (e.g., Oregon, Tennessee, and Massachusetts), it currently appears that only a small percentage of elderly and disabled are served under managed care contracts.

A survey of 26 states completed in 1997, which was conducted by the Center for Vulnerable Populations, codirected by the National Academy for State Health Policy in Portland, Maine and the Institute for Health Policy at Brandeis University in
Waltham, Massachusetts, indicates that there are no strong trends

in the approach to serving elderly persons or persons with disabilities. However, half of the states plus the District of Columbia do enroll elderly persons and/or persons with disabilities into risk-based Medicaid managed care programs. The report, which was prepared by the Center, is entitled "Directory of Risk-Based Medicaid Managed Care Programs Enrolling Elderly Persons or Persons with Disabilities, Update: January 1997." More detailed information is available by contacting Joanne Rawlings-Sekunda at (207) 874-6524.

Discussion:

Managed care has three basic dimensions: the payment mechanism, the organization of services and the delivery of care. It is important to recognize that capitation is not synonymous with managed care, and that managing costs does not guarantee that care will be managed. Since "managed care" is a continuously evolving approach in how America pays for and organizes its health care, it is difficult to provide precise information about the many variations in the practice of "managed care." The variations are driven by geographic concerns, including historic trends in managed care penetration and population characteristics, past practices in paying the "going-rate" of health care services, which organization is "at risk," and many other socio-political and economic factors.

Managed care can be thought of as some combination of an insurance mechanism and health care delivery system which covers health care costs in return for the premium paid. Each plan has its own network of providers such as doctors, hospitals, skilled-nursing facilities and other health care providers. Premium costs and copayments for services received vary from plan to plan and the circumstances of the enrollee. The range of plans available varies considerably in different geographic parts of the country.

The managed care alternative to fee-for-service medicine offers the potential for more appropriate services and continuity of health care at lower cost, but its incentives to control health care costs makes inadequate access, undertreatment, and inappropriate care of particular concern to older persons and persons with disabilities. As managed care continues to evolve, the aging network, including states, area agencies on aging, Indian tribes, service providers and other agencies providing care to older adults, (e.g., care management agencies and community action agencies) is in a unique advocacy position. The day-to-day "hands-on" experience with high risk, vulnerable populations is a valuable asset in developing "best-practice" approaches, standards and shaping managed care organizations (MCO) approaches for gaining consumer input and satisfaction with the services received. The Aging Network can offer considerable expertise in discussions which relate to access, benefits and coverage, ethics, conflict resolution procedures and consumer issues.

POTENTIAL BENEFITS AND PITFALLS OF MANAGED CARE FOR OLDER PERSONS

Among the potential benefits are:

• Enhanced service coordination through a single entry point;
• Reduced copayments and deductibles;
• Reduced paperwork for beneficiaries;
• Emphasis on prevention (both primary and secondary) and patient education;
• Flexible benefits, i.e., service packages developed around individual needs or added-value services which the insurer may provide;
• Fewer tests, procedures and treatments which may eliminate duplication, overlap and unnecessary procedures;
• More appropriate use of medications resulting from increased care management; and
• More efficient use of public funds available for health care.

Potential pitfalls may include:

• Choice of physician and providers may be limited to those participating in the plan selected.
• (Special note: Under "risk" plans, beneficiaries generally must receive all of their covered care from providers participating in that particular plan, unless the primary care physician refers the patient to services outside the plan. Emergency or urgent care are exceptions if the beneficiary is away from the service area. Some "risk" plans offer a "point-of-service" type option in which the insured person pays a higher copayment. Services obtained outside plan coverage must be paid for by the individual receiving the service.)
• Competitive plans may be nonexistent in rural and low-income areas;
• Consumer confusion about enrollment, benefits, and coverage;
• Service delivery sites may be less accessible;
• Treatment regimes may be less flexible and adaptable to individual needs;
• Inadequate or delayed access to specialty care;
• Less aggressive care and under-service, particularly for those who have multiple, chronic infirmities; and
• Less than adequate medical tests, treatment, medications, and choices of medical procedures.

POTENTIAL ROLES FOR THE AGING NETWORK

• The aging network agencies can facilitate the effective dissemination of accurate and timely consumer information about managed care plans offered in their geographic area. Dissemination efforts should be accompanied by counseling, translating, and explaining benefits and requirements. Elderly enrollees, or potential enrollees, and their families need understandable and accurate information about benefit packages, consumer satisfaction with various plans, and may need assistance in deciding which plan best suits their need.
• The information sharing role is closely intertwined with the network's advocacy role, which requires a full understanding of contracting practices, arrangements between and among Medicare and Medicaid plans and providers, and regulatory issues. Potential roles for the aging network include:
• Educating and assisting consumers to make informed health care choices;
• Building community coalitions or partnerships with other advocacy organizations, particularly with those organizations that represent persons with disabilities, to influence needed improvements in health care quality;
• Creating partnerships with the state insurance departments and other state and local regulatory entities to assist with monitoring and oversight responsibilities in the quality of care;
• Contracting with managed care organizations to provide selected services, such as information and assistance, care management, public education, and staff training;
• Developing health care ombudsman programs to assist consumers with complaints, consumer rights and protection, assist with grievances and appeals; and
• Establishing mechanisms to measure consumer satisfaction with subsequent actions to improve the quality of health care services.

Conclusion:

Although the enrollment of older Americans into managed health care plans continues to increase daily, Medicare beneficiaries still have the option to remain in "fee-for-service" arrangements. An additional safeguard is that once enrolled in a managed care arrangement, Medicare beneficiaries can disenroll from one managed care plan and enroll in another plan or return to "fee-for-service." One caution in returning to "fee-for-service" is that reinstatement in a Medi-gap insurance plan may be more difficult.

Many elderly persons and their families look to the aging network to provide expert advice and counsel as to whether to join an MCO. For many older Americans, a managed care plan may offer good health care coverage and care at a reasonable cost; additional benefits such as prescription drugs and more aggressive and comprehensive health promotion and disease prevention efforts, may enhance the quality of life. However, for those individuals with complex, long-standing health problems or chronic conditions, managed care plans may restrict access to necessary specialists and treatments.

With managed care becoming the dominant approach for the delivery of health care services, those of us who work with the elderly must carefully examine our relationships with managed care organizations. Our long-standing public mission of advocating on behalf of vulnerable elderly and protecting them from abuse, neglect and exploitation should guide our decision making as to how to work with managed care organizations. We must be supportive of consumer efforts to make informed and reasoned choices, as well as supportive of efforts to achieve high quality care at a reasonable cost. The ethical issues raised in this new health care environment are complex and create many new dilemmas in the allocation of scarce resources. The set of principles attached to this memorandum are offered to the aging network to help guide and assist aging organizations in making decisions about what roles to play in this new health care environment.

This nation has prided itself on the quality of health care it delivers. In this time of uncertainty, it is essential to incorporate safeguards and protections for the elderly and persons with disabilities as new systems are built. Over the years, Older Americans Act programs have taken a strong leadership role to ensure that the needs and concerns of older persons are adequately considered as times change. An informed proactive role, during this period of change, is critically needed to ensure that we continue to fulfill the mission of the Older Americans Act in improving the lives of our nation's elderly.

EFFECTIVE DATE : Immediate

/S/
________________________________
Robyn I. Stone
Acting Assistant Secretary for Aging

Attachment

ATTACHMENT

ADMINISTRATION ON AGING

MANAGED CARE PRINCIPLES

I. INTRODUCTION

Today managed care is dominating this country's health care reform debate. In view of the Administration on Aging's (AoA) mandate to serve as a visible advocate on behalf of the elderly, this paper sets forth operating principles to guide the aging network in its activities related to managed health care systems.
Although the principles are primarily focused upon managed health care arrangements for Medicare recipients, they also have applicability to Medicaid participants and elderly persons participating in various types of managed long-term care (LTC) arrangements.

Managed care can be thought of as a combination insurance company and health care delivery system which covers health care costs in return for the premium paid. Each plan has its own network of providers, such as doctors, hospitals, skilled-nursing facilities, and other health care providers. Premium costs and copayments for services received vary from plan to plan and the circumstances of the enrollee. The variety of plans available varies considerably in different geographic parts of the country.

There is no question that managed care is a rapidly growing reality in the lives of persons with disabilities and the elderly. The challenge faced by older consumers and the aging network is to obtain the possible benefits of managed care, while guarding against its possible pitfalls.

Given the changing environment brought about by the rapid growth of managed health care, AoA offers the following principles to help guide the aging network in the development and establishment of strategies and policies to respond to the challenges and opportunities that managed care presents. The principles are grounded in the mission, programs and history of the Older Americans Act of 1965 (OAA), as amended. It is AoA's intent to offer guidance to the OAA network in fulfilling our long-standing advocacy and consumer protection functions by working to assure high quality and appropriate health care for seniors. A key objective of the OAA is to help older persons secure:

"Freedom, independence, and the free exercise of
individual initiative in planning and managing
their own lives, full participation in the planning
and operation of community-based services and programs
provided for their benefit, and protection against
abuse, neglect, and exploitation."

The following principles are thus designed to afford states and localities flexibility for conducting business in diverse managed care environments, while ensuring that the rights of older persons are protected. As such, they are not intended to instruct entities within the aging network as to specific activities they should or should not undertake, but rather they are meant to serve as a guide and anchoring point for helping to make hard decisions within fluid health care environments.

II. PRINCIPLES

The overarching principles cover four major themes:

• All individuals should have uninterrupted and unhindered access to benefits that are medically necessary;
• A variety of plans and options within plans should be available and consumers should have freedom of choice among the plans and options within plans;
• The care system should meet basic quality standards and be adequately monitored; and
• There should be guaranteed consumer protections.

The following describes, in more detail, the key elements of the four themes with respect to managed care arrangements for AoA and the aging network:

A. Access:

• All individuals should have uninterrupted and unhindered access to benefits that are medically necessary.
• Plans should be available to all without regard to age, ethnicity, gender, existing health status, pre-existing conditions, or economic situation. Plans should include preventive health services and a continuous care system which ensures provision of appropriate care without interruption.
• Information about plans, and criteria to assist in evaluating them, should be readily available and understandable to consumers.
• Facilities and services should be available in reasonable proximity to enrollees.
• Health care coverage should be portable when the consumer travels out of the service area and with accommodation for those who live in other residential locations on a temporary or part-time basis.
• Care should be appropriate to the presenting condition, with referral to specialists, medical tests and rehabilitative services provided when needed. This care should be provided in a timely, efficient manner and include ready access to emergency care.
• Plans should not include barriers to accessing services, such as unduly burdensome or time-delayed pre-authorization requirements, unreasonable restrictions on second opinions, or lengthy appeals processes.

B. Consumer Choice:

• Consumers should be free to choose whichever plan best fits their needs, including "fee-for-service" plans. Plans should offer provider and treatment options.
• All printed materials should be understandable to the consumer with print size to accommodate elderly vision.
• Coverage and non-coverage provisions should be clearly specified.
• Consumers should be advised that they have the option to change from or disenroll from plans which are non-responsive to needs, inefficient, inadequate, and which misrepresent plan coverage. (Medicare beneficiaries may disenroll at any time.)
• Consumers should be free to choose their own physician within the plan and be referred to specialists by the primary care physician when a medical condition warrants such a referral.

C. Quality

• The care system should, at a minimum, meet the basic quality standards set forth by the National Committee for Quality Assurance (NCQA). Quality of care, consumer satisfaction and cost savings, together, should define the success of a managed care arrangement. Plans must have the mechanisms to make information on quality (both process and outcome) available to consumers in an understandable and timely fashion.
• Care should be provided by qualified providers and meet the basic standards of care.
• State and local mechanisms should be created for regular monitoring of appropriateness and quality of care by qualified, independent professionals.
• Consumer satisfaction with care received should be an important determination in monitoring quality.
• Health promotion and disease prevention should be an integral part of every care plan.
• Pressures to control costs should not compromise or adversely affect quality of or appropriateness of care.
  

D. Consumer Protection

• There should be adequate consumer safeguards and protections.
• States and managed care organizations should assure consumer input and involvement in the planning, designing and monitoring of the quality of the provider's plan, its services and providers.
• A system for routinely measuring consumer satisfaction with services received should be built into every managed care plan.
• All informational materials should clearly state who pays for what and under what conditions.
• Medically necessary care should not be denied solely on the basis of cost. Other factors, such as health status, prognosis, and medical directives should be taken into
  consideration in making decisions.
• Grievance and appeals mechanisms must be available, and information about such grievance and appeals must be provided to consumers upon entry into the plan.
• Consumers should have access to an independent consumer advocate for assistance with appeals if needed.
• Special provisions should be available for appealing decisions in emergency care situations.
• Consumers should receive written responses to complaints.
• Care organizations and providers should be subject to independent reviews on a periodic basis, with performance information available to consumers.
• Plans should ensure complete confidentiality of medical records, requiring consumer consent for disclosure of personal information.
• Arrangements should be made for an appropriate surrogate decision-maker for physically and mentally challenged individuals who are unable to handle their own affairs.
• Consumers should be protected from financial liability of providers.
• Consumer bills and reimbursements should be processed promptly and accurately using appropriate billing procedures and should be readable.

III. POTENTIAL ROLES OF THE AGING NETWORK - DISCUSSION

The roles that individual state and area agencies on aging, Indian tribes, and local service providers play in managed care will be greatly determined by decisions made by each state and locality as they respond to their unique service needs and to the peculiar requirements of their managed care marketplace. No matter how responsibilities differ, the aging network is responsible for advocacy on behalf of older Americans, this is the cornerstone of the Older Americans Act, and represents an important common ground among aging network agencies, and it is critically important to the achievement of all the consumer protection principles enumerated below.

Advocacy, in the context of managed care, can take many forms, ranging from systems change to case management, to benefits and legal counseling. Some examples are:

• Providing leadership and expertise in shaping the systems of care designed by the managed care organizations;
• Developing and supporting citizen groups that attempt to shape public and corporate policy relative to managed care;
• Presenting testimony and written comments about proposed and approved policies of managed care organizations;
• Participating in regulatory oversight that addresses such matters as program eligibility, marketing and enrollment practices, service package design, bidding and contract procedures, rate setting, contract oversight, financial solvency and consumer protection;
• Providing timely, accurate, and informative consumer education and materials about available options for managed care plans;
• Developing and disseminating criteria which will help older persons evaluate the appropriateness of plans in meeting their needs; and
• Providing a "health-ombudsman" type of assistance for vulnerable older persons which will help them navigate in a rapidly changing health care environment. This assistance may include:
  • Counseling and assistance to help educate older persons about plan options;
  • Information about how to obtain needed services;
  • Assistance with language barriers and understanding of complex medical procedures and various treatment alternatives;
  • Information about patient rights and appeal procedures;
  • Assistance in filing and resolving complaints, grievances, and appeals;
  • Monitoring plans for quality of care, access to care, consumer choice, and consumer protections; and
  • Providing training to health professionals and paraprofessionals in areas related to caring for the elderly, particularly those who are chronically disabled.

Agencies functioning in an advocacy capacity must recognize the potential risk of becoming involved in direct service provision in a managed care arrangement. Direct service provision, either contracted for or carried out directly through network agencies that intend to pursue advocacy and direct service provision, must demonstrate the existence of formal mechanisms to ensure the explicit separation of functions. A managed care organization has the potential for compromising or limiting credibility and independence of aging network agencies to serve as trusted and effective advocates for older persons. A crucial challenge for the network, in assuring consumer protection in managed care, is to separate, to the extent possible, advocacy functions from service provision responsibilities. This separation minimizes the potential for actual and perceived conflicts of interest and maintains the integrity of advocacy responsibilities.