1 / 18

Medicare Program Overview

Medicare Program Overview . Wednesday, May 8, 2013 12:00 – 1:00 p.m. Eastern Time Conference Dial-In: (877) 594-8353 Participant Code: 21510704 Large Conference Room. Medicare Overview.

ince
Download Presentation

Medicare Program Overview

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Medicare Program Overview Wednesday, May 8, 2013 12:00 – 1:00 p.m. Eastern Time Conference Dial-In: (877) 594-8353 Participant Code: 21510704 Large Conference Room

  2. Medicare Overview • Medicare is a national social insurance program that guarantees access to health insurance for Americans ages 65 and older, younger people with disabilities, and people with certain diseases. • In 2010, Medicare provided health insurance to 48 million Americans—40 million people age 65 and older and eight million younger people with disabilities. • Persons with Medicare are called “enrollees” or “beneficiaries.” • As a social insurance program, Medicare spreads the financial risk associated with illness across society to protect everyone. • This is in contrast to private insurers that manage their risk portfolio by adjusting their pricing according to perceived risk. • Under Medicare all covered persons pay the same premiums regardless of risk, whereas in private insurance peoples’ premiums vary according to risk. ECONOMETRICA, INC.

  3. Before Medicare • Before Medicare, only half of older adults had health insurance. • For the other half, coverage was often unavailable or unaffordable. • Older adults had half as much income as younger people and paid nearly three times as much for health insurance.  ECONOMETRICA, INC.

  4. Significant Legislation • Initial legislation, Part A and Part B (“Original Medicare”) • In 1965, Congress created Medicare to provide health insurance to people age 65 and older, regardless of income or medical history. • Initially Medicare consisted exclusively of Part A, which covers hospital and other inpatient services, and Part B, which covers outpatient care, physician visits, and other medically necessary services. • Subsequent legislation • In 1972 Medicare benefits were expanded to include speech, physical, and chiropractic therapy. In the same year, Medicare added the option of payments to health maintenance organizations, and Congress expanded Medicare eligibility to younger people with permanent disabilities and those who have end-stage renal disease (ESRD). • In 1997 Congress added Medicare Part C (known today as “Medicare Advantage”), which allows enrollees to receive their Medicare benefits through a private plan.  • Medicare Part D covering prescription drugs was created in 2006. ECONOMETRICA, INC.

  5. Perspectives in Looking at Medicare • Beneficiaries • Benefits • Costs • Federal Government • Medicare • CMS • Providers • Payments • Regulations • Society (taxpayers; workers) • Contractors ECONOMETRICA, INC.

  6. Eligibility • Age 65 years and over. • Disabled. • ESRD (End-stage Renal Disease) or ALS (Lou Gehrig’s Disease). • Some beneficiaries are dual-eligible, meaning they qualify for both Medicare and Medicaid. • One has to enroll in Medicare—Part by Part—once becoming eligible. ECONOMETRICA, INC.

  7. Covered Services • Part A (Hospital Insurance) covers inpatient hospitalizations, skilled nursing facilities, and hospice care. People who are 65 or over are automatically eligible for Part; they can enroll and most not pay monthly premiums. • Part B (Medical Insurance) covers physician services, durable medical equipment, lab tests, and outpatient services. • Part C (Medicare Advantage plans) is an alternative way for beneficiaries to receive their Part A, B and D benefits through private health insurance plans, instead of through the Original Medicare (i.e., Parts A and B). Medicare Advantage plans are offered through private companies known as Medicare Advantage Organizations. • Part D (prescription drugs) went into effect in 2006. Anyone with Part A or B is eligible for Part D. These are private drug plans that are approved and regulated by the Medicare program, but are actually designed and administered by private health insurance companies. • A majority of Medicare enrollees have traditional Medicare (76%) over a Medicare Advantage plan (24%). ECONOMETRICA, INC.

  8. Financing: Costs to Beneficiaries • Neither Part A nor Part B pays for all of a covered person's medical costs. The program contains premiums, deductibles, copays and coinsurance, which the enrollee must pay out-of-pocket.  • Premiums. • Deductible and coinsurance. • Medigap. • Medicare enrollees pay about 25% of the cost of Medicare covered services and 52% of the cost for all of their medical care. The Federal government—or “Medicare” in this case—pays for the balance. ECONOMETRICA, INC.

  9. Financing: Cost to Government • Like Social Security, costs paid through the Federal government come from current workers and go to current Medicare beneficiaries. Therefore, the overall fiscal health of Medicare is related to how many workers there are in relation to the number of beneficiaries—currently about 3.7:1. • Medicare has several sources of financing. • Part A largely is funded by a 2.9% payroll tax levied on employers and workers (each pay 1.45%; self-employed individuals must pay the entire 2.9% tax on self-employed net earnings). The tax is levied on all earnings with no cap. • Parts B and D are mainly funded by premiums paid by Medicare enrollees and general fund revenue. Premiums cover about 25% of Part B costs, with general revenue covering most of the 75% balance. General revenues and transfers from States account for 89% of Part D spending. • In 2011, Medicare spending accounted for about 15% of the federal budget, and this share is projected to increase to over 17% by 2020. ECONOMETRICA, INC.

  10. Administration • Congress passes laws that sketch out the program in broad strokes. • The Centers for Medicare and Medicaid Services (CMS) works out the details of program implementation and operation through regulations. • This involves notice of rulemaking, public comments, and final rules. • CMS contracts with regional private insurance companies (“Medicare Administrative Contractors”) to process over one billion fee-for-service claims per year.  • MACs are the chief source for coverage, billing, and enrollment questions. In addition, • MACs also handle claims appeals, identify billing errors, and answer any beneficiary inquires. ECONOMETRICA, INC.

  11. Provider Payments • Part A • For institutional care, such as hospital and nursing home care, Medicare uses prospective payment systems. • The institution receives a set amount of money for each episode of care provided to a patient, regardless of the actual amount of care used. • The actual allotment of funds is based on a list of diagnosis-related groups (DRG). • The DRG system classifies hospital cases into groups expected to have similar hospital resource use. • In 2013 there are approximately 500 DRG codes. • The actual payment amount depends on the primary diagnosis that is actually made at the hospital. If the patient uses less care, the hospital gets to keep the remainder. However, if the patient uses more care, then the hospital has to cover its own losses. ECONOMETRICA, INC.

  12. Provider Payments (continued) • Part B • Initially, Medicare compensated physicians based on the physician's charges. • In 1992, Medicare introduced the Medicare Fee Schedule (MFS), a list of about 7,000 services that can be billed for. Each service is priced within the Resource-Based Relative Value Scale (RBRVS) with three Relative Value Units (RVUs) values largely determining the price. The three RVUs for a procedure are each geographically weighted and the weighted RVU value is multiplied by a global Conversion Factor (CF), yielding a price in dollars.  • In 1998, Congress created the Sustainable Growth Rate (SGR) that attempts to control spending by setting yearly and cumulative spending targets. If actual spending for a given year exceeds the spending target for that year, reimbursement rates are adjusted downward by decreasing the Conversion Factor (CF). • Since 2002, actual Medicare Part B expenditures have exceeded projections. Congress has regularly passed a yearly “doc fix” to avoid massive cuts called for by the SGR formula, but has failed to fundamentally restructure the payment system to put it on a more fiscally sustainable path. ECONOMETRICA, INC.

  13. Long-term Fiscal Outlook • The retirement of the Baby Boom generation poses substantial financial challenges to the program because of rising overall health care costs, increasing enrollment as the population ages, and a decreasing ratio of workers to enrollees. • By 2030 Baby Boomer retirements are projected to increase enrollment from 48 million to more than 80 million. • The number of workers per enrollee will decline from 3.7 to 2.4, so there will be fewer workers to “support” Medicare enrollees. • Overall Medicare spending is projected to increase from $560 billion in 2010 to just over $1 trillion by 2022. ECONOMETRICA, INC.

  14. Long-term Fiscal Outlook (continued) • From the Medicare Board of Trustees’ Report for 2012: • Total Medicare expenditures were $560 billion in 2010. • Under current law, expenditures are projected to increase in future years at a somewhat faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, they will increase from 3.7% in 2011 to 6.7% by 2086. • The “unfunded liability” is the amount that has been promised in benefits to people that will not be funded by revenues the system is expected to take in to pay for those benefits. • Over the next 75 years Medicare faces an unfunded liability of $39 trillion, equal to $328,404 for each household in the U.S. in 2010! ECONOMETRICA, INC.

  15. Long-term Fiscal Outlook (continued) • Clearly, Medicare needs to be restructured to put it on a path of long-term financial stability. Some options: • Increase the age of eligibility. • Increase Medicare payroll taxes on workers. • Divert more money from general Federal revenues. • Increase premiums and out-of-pocket costs to beneficiaries. • Reduce benefits. • Increase program efficiency through reduction in waste and abuse. • Move to a premium support system, whereby Medicare contributes a given amount to beneficiaries who then shop among various private plans for the one that best suits them. • (Do nothing and kick the can down the road as Congress has done for decades.) ECONOMETRICA, INC.

  16. Medicare Data • CMS collects a lot of data that are useful for analysis: • Claims • Enrollment • Provider payment • Medicare data are often the “only game in town” for researchers and analysts. • The private sector tends to mimic Medicare’s provider payment methodologies. • This will be a topic for a future brown bag session. ECONOMETRICA, INC.

  17. Econometrica Projects with CMS That Have Something to Do with Medicare • Past • RAC (Recovery Audit Contractor) • Claims Standardization • Current • NCD • BPCI • B-CARE • PQRS • Market Analytics • CCTP • MTM ECONOMETRICA, INC.

  18. Questions ECONOMETRICA, INC.

More Related