Transcript The Financing of Health Care for Older Adults

Financing Health Care for Older Adults:
A Focus on Medicare
Dale K. Hursh, MD
January 23, 2008
Learning Objectives
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Appreciate how Medicare fits in the overall
system of health care financing for older adults
Learn how Medicare developed and changed
over time
Learn details of coverage and costs of Medicare’s
different parts
Understand how the federal government
monitors and protects the Medicare Trust Fund
National Health Expenditures 2006
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Total: $2.1 trillion
$7,026 per person
16% of nation’s GDP
A 6.7% increase from 2005
Health Care Spending 2006
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Hospital
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Physician Services
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7% growth in 2006 to $648.2 billion
Deceleration in growth from 8.2% in 2002
5.9% growth in 2006 to $447.6 billion
Slowest rate of growth since 1999
Home Health
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9.9% growth in 2006 to $52.7 billion
Deceleration in growth from 12.3% in 2005
Fastest growing component of personal health care spending
Health Care Spending 2006, cont’d
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Nursing Homes
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Prescription Drugs
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3.5% growth in 2006 to $124.9 billion
Deceleration in growth from 4.9% in 2005
Slowest rate of growth since 1999
8.5% growth in 2006 to $216.7 billion
Growth accelerated for first time in 6 years from low of 5.8% in
2005
DME
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2.3% growth in 2006 to $23.7 billion
Growth accelerated in 2006
2006 Health Spending by
Major Sources of Funds
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Medicare
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18.7% total spending growth to $401.3 billion
Acceleration in growth from 9.3% in 2005
Medicaid
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Spending fell by 0.9% to $308.6 billion
First time total Medicaid spending declined
since inception of the program
2006 Health Spending by Major
Sources of Funds, cont’d
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Private Health Insurance
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5.5% growth in private health insurance premiums in
2006 to $723.4 billion (slowest rate of growth since
1997)
6.0% growth in benefit payments in 2006 to $634.6
billion (decline in growth from 2005)
Out-of-Pocket
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3.8% growth in spending to $256.5 billion
Deceleration in growth from 2005
Accounted for 12% of national health spending in
2006
Medicare in 2006
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43.2 million people covered by Medicare
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36.3 million aged 65 and older
7.0 million disabled
Total benefits paid were $402 billion
Major Sources of Health Care
Funding for Elderly in the U.S.
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Medicare (Federal Government)
Medicaid (Federal and State Government)
Other Federal Programs
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Private Insurance
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Veterans Health Administration
Older Americans Act
Title XX of the Social Security Act
Military Retiree Benefits (TRICARE)
PACE program
Medigap (Medicare Supplement Insurance) Policies
Long-Term Care Insurance
Out-of-Pocket
History of Social Security and
the Origins of Medicare
Development of Social Security
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The foundation of economic security for
much of human history was people living
and working on farms in extended families
Industrial Revolution brought change
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More people became wage-earners working
for others
Less reliance on family and farming
Relocation from rural communities to cities
Development of Social Security,
cont’d
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The idea of having a program of economic
security in a modern, industrialized world
developed in Europe in late 19th century
U.S. 1930s: economic upheaval brought
on by the Great Depression played a role
in the development of the Social Security
program in this country
Social Security Act
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Signed into law by FDR on August 14,
1935
Created a social insurance program
designed to pay retired workers age 65 or
older a continuing income after retirement
Establishment of the Social Security Board
Franklin D. Roosevelt
“We can never insure one-hundred percent of the
population against one-hundred percent of the hazards
and vicissitudes of life. But we have tried to frame a law
which will give some measure of protection to the
average citizen and to his family against the loss of a job
and against poverty-ridden old age. This law, too,
represents a cornerstone in a structure which is being
built, but is by no means complete…. It is…a law that
will take care of human needs and at the same time
provide for the United States an economic structure of
vastly greater soundness.”
August 14, 1935
1939 Amendments
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Two new benefit categories added
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Dependents benefits (spouse and minor
children of the worker)
Survivors benefits (paid to family in event of
premature death of worker)
Transformed Social Security from a
retirement program for individuals into a
family-based economic security program
Additions and Changes to the
Social Security Program
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1950 Amendments
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The Social Security Amendments of 1954
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Initiated a disability insurance program
Amendments of 1961
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Raised benefits
Legislated Cost-of-Living Adjustments (COLAS)
Age at which men first eligible for retirement benefits
was lowered to 62
Social Security Amendments of 1965
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Passage of Medicare and Medicaid
Medicare Established
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This legislation provided for health coverage to
be extended to Social Security beneficiaries aged
65 or older (eventually extended to those
receiving disability benefits as well)
Signed into law on July 30, 1965 by LBJ
Social Security maintained responsibility for
Medicare until a 1977 reorganization created
HCFA; in 2001, HCFA renamed CMS
Medicare Bill Signed 1965
Medicare
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A health insurance program for:
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People 65 years of age or older
People under age 65 with certain disabilities
People of all ages with ESRD
The Parts of Medicare
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Part A is hospital insurance
Part B is medical insurance
Part C is Medicare Advantage (formerly
Medicare + Choice)
Part D is the prescription drug plan
Organizations That Impact
Medicare
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Social Security Administration
OIG
Quality Improvement Organizations
State Health Insurance Assistance
Programs
Recent Laws That Impact Medicare
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Medicare Prescription Drug, Improvement,
and Modernization Act of 2003
Health Insurance Portability and
Accountability Act of 1996
Medicare Part A: Hospital Insurance
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Helps cover inpatient care
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Hospitals
Semiprivate room, private room only if medically
necessary, meals, general nursing, other hospital
services and supplies
 Does not include private duty nursing or TV or
phone in room
 Inpatient mental health care in a psychiatric
hospital is limited to 190 days in a lifetime
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Medicare Part A, cont’d
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SNF (not custodial or LTC)
After a qualifying three-day hospital stay; must
enter SNF within 30 days of leaving hospital
 Coverage up to 100 days in a benefit period
 Benefit period ends with occurrence of break of at
least 60 consecutive days since inpatient hospital
or SNF care was provided
 No limit to number of benefit periods
 Semiprivate room, meals, skilled nursing and rehab
services, medications, and other supplies
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Medicare Part A, cont’d
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Hospice care
People with terminal illness with 6 months or less
life expectancy if the disease runs its normal
course
 Coverage includes drugs, medical and support
services, grief counseling
 Coverage of some short-term inpatient stays (pain
and symptom management) and for respite care
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Medicare Part A, cont’d
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Some home health care
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Limited to part-time, medically necessary
skilled care (nursing, physical therapy,
occupational therapy, and speech-language
therapy) ordered by a physician
May also include medical social services,
home health aide, DME
Patients are required to be "homebound" as a
condition of eligibility for these services.
Medicare Part A Costs to Patients in
Original Medicare Plan—2008
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Monthly premium is not paid for those (or
their spouse) who paid Medicare taxes
while working
For those not eligible for premium-free
Part A, cost of monthly premium is up to
$423
Medicare Part A Costs to Patients in
Original Medicare Plan—2008
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Hospital
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$1,024 deductible and no coinsurance for days of 1–60 each
benefit period
$256 per day for days 61 – 90 each benefit period
$512 per “lifetime reserve day” after day 90 each benefit period
(up to 60 days over lifetime)
Most individuals do not pay a monthly premium for part A
because they or a spouse paid Medicare taxes while working
Blood
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Patient pays for the first three pints of blood, then 20% of
Medicare-approved amount for additional pints used (unless the
patient or someone else donates blood to replace what is used)
Medicare Part A Costs to Patients in
Original Medicare Plan—2008
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SNF Care
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Patient pays $0 for first 20 days each benefit period
For days 21 – 100, patient pays $128 per day
Patient pays all costs beyond the 100th day in the
benefit period
Home Health Care
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Costs patient $0 for Medicare-approved services
Patient pays 20% of Medicare-approved amount for
DME
Medicare Part A Costs to Patients in
Original Medicare Plan—2008
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Hospice Care
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Co-payment of up to $5.00 per Rx for
outpatient prescription drugs
5% of Medicare-approved amount for
inpatient respite care
Generally, room and board not covered (e.g.,
not covered in nursing facility)
Medicare Part B: Medical Insurance
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Helps to cover
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Medically necessary doctors’ services,
outpatient care, and other medical services
not covered by Part A
Some preventive services
Medicare Part B Covered Services
(not all-inclusive list)
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Ambulance services
Ambulatory surgery center
fees
Blood (outpatient)
Chiropractor services
(limited)
Diabetes supplies
Diagnostic tests
DME
Doctor services
ER services
Eye exams (limited)
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Hearing and balance exams
Home health services
Kidney dialysis services and
supplies
Outpatient mental health
care
Outpatient PT, OT, ST
Medically necessary clinical
lab services
Outpatient hospital services
Prosthetic/orthotic items
Medicare Preventive Services—Part B
(not all-inclusive list)
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AAA screening
One-time “Welcome to
Medicare” physical exam
Cardiovascular screening
Breast cancer screening
Cardiovascular screenings
Cervical and vaginal cancer
screening
Colorectal cancer screenings
Diabetes screenings
Diabetes self-management
training
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Prostate cancer screening
Immunizations (flu vaccine,
pneumonia vaccine, hepatitis
B)
Bone mass measurements
Diabetes screening, supplies,
and self-management training
Glaucoma tests
Medical nutrition therapy
services
Smoking cessation
Medicare Part B Costs to Patients in
Original Medicare Plan—2008
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Annual deductible of $135
Monthly premium of $96.40
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Premium may be higher depending on income
and whether or not individual signed up for
Part B when first eligible
Pay coinsurance (generally 20% of the
Medicare-approved amount) when
required
Medicare Part B Services Requiring
20% Coinsurance (not all-inclusive list)
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Ambulance services
Ambulatory surgery
center fees
Blood (starting with 4th
unit—1st 3 patient pays)
Chiropractor services
Diabetes supplies
Doctor services
DME
ER services
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Eye exams
Hearing and balance
exams
Kidney dialysis services
and supplies
OT, PT, ST
Outpatient hospital
services
Prosthetic/orthotic
devices
Medicare and “Assignment”
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Agreement between Medicare beneficiaries, their
doctors and suppliers, and Medicare
Individual with Medicare agrees to allow the
doctor to request direct payment from Medicare
for covered Part B services
Doctors agreeing to accept assignment from
Medicare cannot try to collect more than the
proper Medicare deductibles and co-insurance
amounts from the person with Medicare, or their
other insurance
Medicare Part B Costs to Patients in
Original Medicare Plan—2008
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50% of most outpatient mental health services
Patient pays $0 for Medicare-approved clinical
lab services
Patient pays $0 for Medicare-approved home
health services
20% of Medicare-approved amount for DME
Blood
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Patient pays for first three pints, then 20% of the
Medicare-approved amount for additional pints unless
someone else donates to replace
What Is Not Paid For by Medicare
Part A or Part B in the
Original Medicare Plan
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Acupuncture
Deductibles, coinsurance, co-payments
Dental care and dentures
Cosmetic surgery
Health care when traveling out of the U.S.
Hearing exams unless ordered by physician
Hearing aids and hearing exams for the purpose of fitting a hearing
aid
Custodial care, long-term care in nursing home
Orthopedic shoes (with only a few exceptions)
Routine foot care (with only a few exceptions)
Routine eye care and most eyeglasses
Routine or yearly physical exams
Medicare Part C
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Medicare Advantage plans
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Health plan options approved by Medicare and run by private
companies
Available in most areas of U.S.
Must be eligible for Medicare A and B to join
Plans include:
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PPO plans
HMO plans
PFFS plans
Medical Savings Account (MSA) plans
Special Needs Plans (SNP)
Medicare Advantage Plans
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Provide all of a patient’s Part A and Part B
benefits
Must cover at least all of the medically-necessary
services that the Original Medicare Plan provides
May offer extra benefits such as vision, hearing,
dental, and health and wellness programs
Most offer prescription drug coverage
Medicare Advantage Plans
Costs to Patients in 2008
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Depends on the type of plan and the
specific company
Monthly part B premium + monthly
premium charged by company for the plan
(which generally includes Part A and Part
B benefits, Medicare prescription drug
coverage if offered and extra benefits if
offered)
Medicare Part D
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Prescription drug benefit plans
Medicare contracts with private companies
to offer coverage
Anyone with Medicare Part A and/or B can
join
Medicare D Costs to Patients—2008
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Exact costs differ among plans, but
include monthly premium, yearly
deductible, co-payments and coinsurance,
coverage gap
CMS estimate of average monthly
premium for standard Part D coverage is
$25
Medicare D Costs to Patients—
2008, cont’d
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Base premium of $27.93
Initial deductible of $275
Coinsurance of 25% of remaining costs,
up to an initial coverage limit of $2,510
Beneficiary then pays for all costs until an
out-of-pocket threshold of $4,050 is
reached
$2,510
$4,050
Medicare Part D: Coverage Gap
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Patients continue to pay monthly
premiums while in the coverage gap
Each state offers at least one plan with
gap coverage, but these plans generally
charge a higher monthly premium
Once patient reaches limit of coverage gap
set by plan, they receive “catastrophic
coverage”
Medicare D Catastrophic Coverage
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Provides for special prescription drug
coverage once patient spends $4,050 in
2008
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Limit may vary depending on the plan
After reaching limit, patient pays the greater
of 5% coinsurance or a small defined copayment amount per prescription
Medigap Policies
(Medicare Supplement Insurance)
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Health insurance policies sold by private
insurance companies to fill “gaps” in Original
Medicare Plan coverage
Must follow federal and state laws
Not needed and cannot be used if patient is in a
Medicare Advantage Plan
Generally must have Medicare Part A and Part B
Medigap insurance premium paid in addition to
monthly Part B premium
Payment of Bills in The Original
Medicare Plan
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Part A services (and some Part B services)
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Provider of service such as a hospital or home health
agency must send a claim to the fiscal intermediary, a
private company that contracts with Medicare to pay
the bills (in PA, Highmark Medicare Services)
Part B services and supplies
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Provider of covered service or supply must send a
claim to the Medicare carrier, a private company that
contracts with Medicare to pay Part B claims (in PA,
Highmark Medicare Services)
DME MAC in Pennsylvania is National Heritage
Insurance
Protecting the Medicare Trust Fund
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Medicare Integrity Program (MIP)
Medical Review process
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Review claims
Target problem areas
Validate claim errors
Classify severity of problems, collect
overpayments, develop corrective action plan
Medicare Coverage Determinations
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Two types of coverage determinations
assist providers and suppliers in correctly
coding and billing Medicare only for
covered items and services
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National Coverage Determinations (NCDs)
Local Coverage Determinations (LCDs)
Medicare Coverage Determinations,
cont’d
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National Coverage Determinations (NCDs)
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Specify the extent to which Medicare will cover specific services,
procedures, or technologies on a national basis
Medicare contractors are required to follow NCDs
http://www.cms.hhs.gov/coverage/
Local Coverage Determinations (LCD)
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Made in the absence of a specific NCD by local Medicare
Contractors
Outline coverage criteria, define medical necessity, provide codes
that describe what is and is not covered
Protecting the Medicare Trust Fund
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Fraud and Abuse
Potential legal actions
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Investigations, civil monetary penalties,
suspend payment, exclude from participation
OIG
References
1.
2.
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4.
5.
National Health Expenditure Accounts 2006 Highlights. CMS Website.
Available at:
http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthA
ccountsHistorical.asp. Accessed January 18, 2008
The Nation’s Health Dollar, Calendar Year 2006. CMS Website. Available
at:
http://www.cms.hhs.gov/NationalHealthExpendData/downloads/PieChart
SourcesExpenditures2006.pdf. Accessed January 18, 2008.
Pompei P, Murphy JB, eds. Geriatrics Review Syllabus: A Core Curriculum
in Geriatric Medicine. 6th ed. New York: American Geriatrics Society;
2006.
Social Security: A Brief History. Social Security Website. Available at:
http://www.socialsecurity.gov/history. Accessed January 18,2008.
Medicare Physician Guide: A Resource for Residents, Practicing
Physicians, and Other Health Care Professionals. CMS; 2006.
References, cont’d
1.
2.
Brief Summaries of Medicare and Medicaid. CMS Website. Available at:
http://www.cms.hhs.gov/MedicareProgramRatesStats/downloads/Medicar
eMedicaidSummaries2007.pdf. Accessed January 18, 2008.
Medicare & You 2008. CMS Website. Available at:
http://www.medicare.gov/Publications/Pubs/pdf/10050.pdf. Accessed
January 3, 2008.