Title: Financing Health Care for Older Adults: A Focus on Medicare
1Financing Health Care for Older Adults A Focus
on Medicare
- Dale K. Hursh, MD
- January 23, 2008
2Learning Objectives
- 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 Medicares
different parts - Understand how the federal government monitors
and protects the Medicare Trust Fund
3National Health Expenditures 2006
- Total 2.1 trillion
- 7,026 per person
- 16 of nations GDP
- A 6.7 increase from 2005
4Health Care Spending 2006
- Hospital
- 7 growth in 2006 to 648.2 billion
- Deceleration in growth from 8.2 in 2002
- Physician Services
- 5.9 growth in 2006 to 447.6 billion
- Slowest rate of growth since 1999
- Home Health
- 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
5Health Care Spending 2006, contd
- Nursing Homes
- 3.5 growth in 2006 to 124.9 billion
- Deceleration in growth from 4.9 in 2005
- Slowest rate of growth since 1999
- Prescription Drugs
- 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
- 2.3 growth in 2006 to 23.7 billion
- Growth accelerated in 2006
62006 Health Spending by Major Sources of Funds
- Medicare
- 18.7 total spending growth to 401.3 billion
- Acceleration in growth from 9.3 in 2005
- Medicaid
- Spending fell by 0.9 to 308.6 billion
- First time total Medicaid spending declined since
inception of the program
72006 Health Spending by Major Sources of Funds,
contd
- Private Health Insurance
- 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
- 3.8 growth in spending to 256.5 billion
- Deceleration in growth from 2005
- Accounted for 12 of national health spending in
2006
8(No Transcript)
9(No Transcript)
10Medicare in 2006
- 43.2 million people covered by Medicare
- 36.3 million aged 65 and older
- 7.0 million disabled
- Total benefits paid were 402 billion
11Major Sources of Health Care Funding for Elderly
in the U.S.
- Medicare (Federal Government)
- Medicaid (Federal and State Government)
- Other Federal Programs
- Veterans Health Administration
- Older Americans Act
- Title XX of the Social Security Act
- Military Retiree Benefits (TRICARE)
- PACE program
- Private Insurance
- Medigap (Medicare Supplement Insurance) Policies
- Long-Term Care Insurance
- Out-of-Pocket
12(No Transcript)
13(No Transcript)
14History of Social Security and the Origins of
Medicare
15Development of Social Security
- The foundation of economic security for much of
human history was people living and working on
farms in extended families - Industrial Revolution brought change
- More people became wage-earners working for
others - Less reliance on family and farming
- Relocation from rural communities to cities
16Development of Social Security, contd
- 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
17Social Security Act
- 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
18Franklin 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 isa 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
191939 Amendments
- Two new benefit categories added
- 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
20Additions and Changes to the Social Security
Program
- 1950 Amendments
- Raised benefits
- Legislated Cost-of-Living Adjustments (COLAS)
- The Social Security Amendments of 1954
- Initiated a disability insurance program
- Amendments of 1961
- Age at which men first eligible for retirement
benefits was lowered to 62 - Social Security Amendments of 1965
- Passage of Medicare and Medicaid
21Medicare Established
- 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
22Medicare Bill Signed 1965
23Medicare
- A health insurance program for
- People 65 years of age or older
- People under age 65 with certain disabilities
- People of all ages with ESRD
24The Parts of Medicare
- 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
25(No Transcript)
26Organizations That Impact Medicare
- Social Security Administration
- OIG
- Quality Improvement Organizations
- State Health Insurance Assistance Programs
27Recent Laws That Impact Medicare
- Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 - Health Insurance Portability and Accountability
Act of 1996
28Medicare Part A Hospital Insurance
- Helps cover inpatient care
- 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
29Medicare Part A, contd
- 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
30Medicare Part A, contd
- 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
31Medicare Part A, contd
- Some home health care
- 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.
32Medicare Part A Costs to Patients in Original
Medicare Plan2008
- 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
33Medicare Part A Costs to Patients in Original
Medicare Plan2008
- Hospital
- 1,024 deductible and no coinsurance for days of
160 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
- 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)
34Medicare Part A Costs to Patients in Original
Medicare Plan2008
- SNF Care
- 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
- Costs patient 0 for Medicare-approved services
- Patient pays 20 of Medicare-approved amount for
DME
35Medicare Part A Costs to Patients in Original
Medicare Plan2008
- Hospice Care
- 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)
36(No Transcript)
37Medicare Part B Medical Insurance
- Helps to cover
- Medically necessary doctors services, outpatient
care, and other medical services not covered by
Part A - Some preventive services
38Medicare Part B Covered Services(not
all-inclusive list)
- Ambulance services
- Ambulatory surgery center fees
- Blood (outpatient)
- Chiropractor services (limited)
- Diabetes supplies
- Diagnostic tests
- DME
- Doctor services
- ER services
- Eye exams (limited)
- 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
39Medicare Preventive ServicesPart B(not
all-inclusive list)
- 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
- 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
40Medicare Part B Costs to Patients in Original
Medicare Plan2008
- Annual deductible of 135
- Monthly premium of 96.40
- 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
41Medicare Part B Services Requiring 20
Coinsurance (not all-inclusive list)
- Ambulance services
- Ambulatory surgery center fees
- Blood (starting with 4th unit1st 3 patient pays)
- Chiropractor services
- Diabetes supplies
- Doctor services
- DME
- ER services
- Eye exams
- Hearing and balance exams
- Kidney dialysis services and supplies
- OT, PT, ST
- Outpatient hospital services
- Prosthetic/orthotic devices
42Medicare and Assignment
- 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
43Medicare Part B Costs to Patients in Original
Medicare Plan2008
- 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
- Patient pays for first three pints, then 20 of
the Medicare-approved amount for additional pints
unless someone else donates to replace
44What Is Not Paid For by Medicare Part A or Part B
in the Original Medicare Plan
- 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
45(No Transcript)
46Medicare Part C
- Medicare Advantage plans
- 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
- PPO plans
- HMO plans
- PFFS plans
- Medical Savings Account (MSA) plans
- Special Needs Plans (SNP)
47Medicare Advantage Plans
- Provide all of a patients 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
48Medicare Advantage Plans Costs to Patients in
2008
- 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)
49(No Transcript)
50Medicare Part D
- Prescription drug benefit plans
- Medicare contracts with private companies to
offer coverage - Anyone with Medicare Part A and/or B can join
51Medicare D Costs to Patients2008
- 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
52Medicare D Costs to Patients2008, contd
- 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
532,510
4,050
54Medicare Part D Coverage Gap
- 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
55Medicare D Catastrophic Coverage
- Provides for special prescription drug coverage
once patient spends 4,050 in 2008 - Limit may vary depending on the plan
- After reaching limit, patient pays the greater of
5 coinsurance or a small defined co-payment
amount per prescription
56Medigap Policies (Medicare Supplement Insurance)
- 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
57Payment of Bills in The Original Medicare Plan
- Part A services (and some Part B services)
- 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
- 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
58Protecting the Medicare Trust Fund
- Medicare Integrity Program (MIP)
- Medical Review process
- Review claims
- Target problem areas
- Validate claim errors
- Classify severity of problems, collect
overpayments, develop corrective action plan
59Medicare Coverage Determinations
- Two types of coverage determinations assist
providers and suppliers in correctly coding and
billing Medicare only for covered items and
services - National Coverage Determinations (NCDs)
- Local Coverage Determinations (LCDs)
60Medicare Coverage Determinations, contd
- National Coverage Determinations (NCDs)
- 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)
- 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
61Protecting the Medicare Trust Fund
- Fraud and Abuse
- Potential legal actions
- Investigations, civil monetary penalties, suspend
payment, exclude from participation - OIG
62(No Transcript)
63References
- National Health Expenditure Accounts 2006
Highlights. CMS Website. Available at
http//www.cms.hhs.gov/NationalHealthExpendData/02
_NationalHealthAccountsHistorical.asp. Accessed
January 18, 2008 - The Nations Health Dollar, Calendar Year 2006.
CMS Website. Available at http//www.cms.hhs.gov/
NationalHealthExpendData/downloads/PieChartSources
Expenditures2006.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.g
ov/history. Accessed January 18,2008. - Medicare Physician Guide A Resource for
Residents, Practicing Physicians, and Other
Health Care Professionals. CMS 2006.
64References, contd
- Brief Summaries of Medicare and Medicaid. CMS
Website. Available at http//www.cms.hhs.gov/Medi
careProgramRatesStats/downloads/MedicareMedicaidSu
mmaries2007.pdf. Accessed January 18, 2008. - Medicare You 2008. CMS Website. Available at
http//www.medicare.gov/Publications/Pubs/pdf/1005
0.pdf. Accessed January 3, 2008.