Health Care Law and Regulations assignment 4
Emir7
CF.Chp5.HA6101.pptxChapter 5 Medicare Insurance Reforms
Medicare Insurance Reforms
“Our current national health care system is simple: do not get sick.”
— Anonymous
Lecture Outline
Principles and Applications
Medicare Reform: Financing by Individuals or Society?
Complexity of Medicare Insurance
Structural Reform of Medicare Insurance
Reallocating Medical Treatments and Prevalence
Overhauling Medicare
https://www.kff.org/medicare /
Source: Hammaker, D. K., & Knadig, T. M. with Tomlinson, S.J. (2017). Medicare insurance reforms. In Health care management and the law: Principles and applications (pp. 87-97). (2nd Ed.) Burlington, MA: Jones & Bartlett Learning.
Principles and Applications (1 of 2)
The Medicare program is the second largest social insurance program in the United States, behind Social Security, offering health insurance benefits to those eligible by virtue of their Social Security eligibility
Persons eligible for Medicare insurance include:
Individuals aged 65 and over
The severely disabled
Those with end stage renal disease
While the Medicare insured make up just 17% of the U.S. population, they account for most of the U.S. health care costs
The rise in treatment prevalence (common chronic diseases) accounts for most of the spending growth in health care costs
https://www.kff.org/medicare/issue-brief/the-facts-on-medicare-spending-and-financing /
The sickest 25% of the Medicare-insured spend 90% of the U.S. health care dollars with an average of:
At least one hospitalization yearly
$181,800 in health expenditures yearly
5 diagnosed medical conditions
10 prescriptions
12 physicians
The key to cutting costs lies with the physicians who treat these super-users:
At least two of their chronic medical conditions were preventable
Their care is not being coordinated by their multiple providers
They are being over-treated and mistreated (polypharmacy)
Principles and Applications (1 of 2)
Medicare Reform: Financing by Individuals or Society?
Medicare insurance must be changed if it is to be sustained
Its benefits package still closely resembles the standard package available in the mid 1960s:
70% of medicare enrollees have traditional indemnity insurance at a time when less than 2% of the insured have conventional insurance
Medicare payments are not intended to cover all the medical needs of enrollees, nor should society pay for all these expenses
Only 1 in 10 individuals over 65 relies solely on Medicare insurance; the rest have:
Medicaid insurance
Employer provided coverage
Supplementary health insurance in addition to Medicare
Indeminty Insurance Plans: different than policies offered bby HMOs, PPOs because it allowes you to obtain medical care wehre you choose providing compensation for a set portion of the cots. IT does not force you to choose a primary care doctor and you can self refer to specialisist. Very simliar to Fee-for service
Complexity of Medicare Insurance Part A: Hospital, Skilled Nursing, Home Health, and Hospice Care
Medicare Part A covers hospital insurance
Pays for almost ¼ of benefits spending:
Most of the Medicare insured do not pay premiums for this benefit, because they have already paid it through their payroll taxes
Part A does not cover custodial or long term nursing care, and consumers must meet certain eligibility criteria for home health and hospice care
The home health care benefit is available to individuals certified by their physicians as homebound
The Medicare hospice benefit is available only to individuals whose physicians have certified their expected mortality is less than six months away
Complexity of Medicare Insurance Part B: Physician, Outpatient, Home Health Care, and Preventive Services
Medicare Part B covers physician visits, outpatient visits, preventive services, and some home health visits
Most people pay a monthly premium for this insurance:
Medicaid insurance may subsidize premiums based on income eligibility, which varies by state
Services are provided on a medically necessary basis
No coinsurance or deductible is charged for an annual wellness visit or for preventive services
Complexity of Medicare Insurance Part C
Medicare Advantage
Medicare Part C refers to Medicare Advantage, where the federal government pays a fixed amount per member per month to private insurance companies that then coordinate and finance care
Consumers can select from a variety of private managed care plans and enroll in:
Health maintenance organizations
Preferred provider insurance
Private fee for service plans
Special needs plans
Medicare Advantage has doubled its enrollments in the past decade
Complexity of Medicare Insurance-Part C: Medicare Advantage Coverage
Medicare’s Special Needs Program
Restricted to dual eligible Medicare/Medicaid insurance consumers residing in long term care facilities
Serves about 1.2 million consumers
Complexity of Medicare Insurance-Part C: Medicare Advantage Coverage
Administrative Complexity of Medicare Advantage
With private/public sector complexity, the federal government has no way to monitor access, use, or performance for the over 165 million consumers enrolled in Medicare Part C
Medicare Advantage insurance plans are not required to:
Have Medicare review of services
Negotiate fees
Report quality measures
The increase in competition generated by higher payments to Medicare Advantage has not translated into better benefits for consumers
Complexity of Medicare Insurance Part D: Medicare Prescription Drug Coverage
Medicare Part D prescription plans generally have at least two economic objectives:
(1)Allow the health care system to improve the overall delivery of health care to the Medicare-insured
(2)Relieve the financial burden on those who have trouble affording prescription drugs
While the prescription drug program has value, it does not begin to address either of these economic objectives:
It shows how public perceptions, or misconceptions, can unduly influence decisions about health risks
Example of health policy based not on a rational response to health risks, but rather on misperceptions of risks
Complexity of Medicare Insurance – Part D: Medicare Prescription Drug Coverage (1 of 2)
The drug plan, while providing coverage at the lower and upper ends of expenditures, allows for a coverage gap in the middle:
Donut hole coverage
The drug benefit is not catastrophic coverage above a deductible, but rather:
75% coverage for a range of expenses, after a modest deductible (or, most of the donut), then
100% cost-sharing for beneficiaries (or, the donut hole with zero coverage), before
A return to 80% donut coverage (or, the rest of the donut)
Medicare Part D reduces coverage for people with high expenses to offer coverage for people with low expenses:
Provides most consumers with a return on their premium
Patient Assistance Programs
For enrollees covered by Medicare Part D, the medical products industry offers patient assistance programs that provide drugs outside the Part D benefit without any cost to the Medicare program
Most manufacturers have a data-sharing agreement with the federal government to help coordinate prescription use with plans providing Medicare prescription coverage
Medicare Part D benefit coverage has reduced the load on patient assistance programs, enabling the medical products industry to expand these programs to individuals with complex needs and high costs
Complexity of Medicare Insurance – Part D: Medicare Prescription Drug Coverage (2 of 2)
Complexity of Medicare Insurance – Supplemental Insurance Coverage
Medicare has high cost arrangements, no limit on out-of-pocket spending, and a coverage gap in the Part D prescription drug plan
Employer-sponsored health insurance, Medicaid insurance, and Medigap overlay each of the four types of Medicare
Help with cost-sharing requirements and benefit gaps
Medigap is a supplemental insurance offered through private insurers.
Takes care of medical expenses not covered by Medicare
Most of the Medicare-insured have some sort of supplemental coverage
Structural Reform of Medicare Insurance (1 of 2)
It is important to gather more evidence about the implications of either paying less to Medicare Advantage or other changes in entitlement to make the Medicare system more fiscally responsible
Little attention is being drawn to the:
$65 trillion the United States needs to make Medicare whole
$1 billion that private insurers get in profit subsidies from Medicare Advantage plans each year
$1 trillion in unfunded health care obligations for health care retirees
Discussion generally centers on increasing payroll taxes or the premiums for Medicare insurance
How to control the growth of Medicare?
Structural Reform of Medicare Insurance (2 of 2)
United States v. Lahey Clinic Hospital, Inc.
Demonstrates the problems that may arise under single-payer systems without competition
Physicians could not compete for laboratory services and receive lower rates
Obtaining more revenue for the Medicare program does not solve the issue of long-term sustainability until unnecessary spending like the Lahey case is controlled
Medicare puts a price tag on consumer’s health, perhaps even their lives
Reallocating Medical Treatments and Prevalence
Given the higher costs of Medicare Advantage, with no discernible improvement in the quality of its managed care, there may be many opportunities to cut its services, with little minimal adverse impact on consumers
The money saved could then be allocated where it may provide more efficient benefits:
Advertising expenditures are expanding but better quality care does not come from advertising.
The rise in treatment preference, rather than rising treatment costs, accounts for most of the spending growth
“This person’s life expectancy is only so many years, so this procedure is not worth the cost”
Overhauling Medicare
There is a general consensus on several overhauls of the Medicare system:
Increase payroll taxes and premiums for medicare insurance to those who can afford to pay more
Mandate that profit subsidies from Medicare Advantage be returned to consumers in the form of reduced premiums or additional benefits
Monitor quality use and performance for all the Medicare-insured
Require more competitive bidding for medical services reimbursed by Medicare insurance
Overhauling Medicine
Everyone pays for hospitalization insurance through payroll taxes, but physician payments for prescription drug benefits are voluntary:
Perhaps those who are better off should pay higher premiums
Medicare is an inadequate health insurance plan in the sense that it does not protect against long hospital stays or catastrophic expenses
The least likely to purchase supplemental Medicare coverage are financially distressed consumers with complex needs
Management and Law Issues
Why is it important to provide health care coverage for the groups Medicare covers?
Should employers be required to fund retirees’ health care costs?
Should some medical services be exempt from Medicare coverage?
