Healthcare Reform Simplified: Medicare

A series of blog posts reviewing the basics of healthcare reform and how it will impact regular Americans. Post 5

Medicare actually received quite a bit of attention within the Affordable Care Act (ACA). The changes to Medicare will be less dramatic to the Medicare beneficiaries than to individuals or families. Most of the emphasis of the ACA on Medicare is directed at reducing long term costs and increasing quality and coordination of care. However, there are a couple of items that will help Medicare beneficiaries immediately and in the near future.

Prevention

The ACA requirement to include specific preventive office visits at no charge for individual and business plans, also pertains to Original Medicare and Medicare Advantage plans.

No charge, no copayment, no coinsurance visits

• “Welcome to Medicare” preventive visit is now covered without cost sharing during your first 12 months of Part B coverage. This exam is a one-time review of your health as well as education and counseling about preventive services and other care.
•  Counseling for tobacco cessation
• Screenings: No more Medicare Part B deductible or copayment for these screenings if certain coverage criteria apply:

1. Bone mass measurement
2. Cervical cancer screening, including Pap smear tests and pelvic exams
3. Cholesterol and other cardiovascular screenings
4. Colorectal cancer screening (except for barium enemas)
5. Diabetes screening
6. Flu shot, pneumonia shot, and the hepatitis B shot
7. HIV screening for people at increased risk or who ask for the test
8. Mammograms
9. Medical nutrition therapy to help people manage diabetes or kidney disease
10. Prostate cancer screening (except digital rectal examinations)

Some of the screenings may need additional tests or visits that may include copayment.

Closing the coverage gap

The coverage gap, also know as the donut hole, in the Part D Prescription Drug plans (PDP) will slowly shrink over the next decade. It has been a challenge for PDP enrollees to cover the cost of their medications between the initial coverage period, where the prescriptions had set copayments, through the coverage gap with little drug cost help until they hit the catastrophic coverage limit. The ACA slowly reduces the coinsurance percentage PDP participants will pay down to 25% for brand name and generic drugs by 2020.

• 2012: you’ll pay 50% for brand-name drugs and 86% for generic drugs
• 2013: 47.5% for brand-names and 79% for generics
• 2014: 47.5% for brand-names and 72% for generics
• 2015: 45% for brand-names and 65% for generics
• 2016: 45% for brand-names and 58% for generics
• 2017: 40% for brand-names and 51% for generics
• 2018: 35% for brand-names and 44% for generics
• 2019: 30% for brand-names and 37% for generics
• 2020: 25% for brand-names and 25% for generics

Community-based Care Transition Program

Authorized under the ACA, the CCTP will create and fund programs to help Medicare patients leaving the hospital transition to appropriate care to minimize re-admission to the hospital for the same illness. Hospitalizations account for approximately 33 percent of total Medicare expenditures and represent the largest program outlay. The Medicare Payment Advisory Commission estimated Medicare costs of approximately $15 billion due to re-admissions, $12 billion of which is for cases considered preventable.

Accountable Care Organizations

The Medicare Shared Savings Program will reward Accountable Care Organizations (ACO) that lower growth in health care costs while meeting performance standards on quality of care and putting patients first. ACO’s might best be described as a hybrid between the Preferred Provider Organization (PPO) and a Health Maintenance Organization (HMO). The key is that all the physicians and providers in the network will work closely together on each patient’s case. Patient and provider participation in an ACO is purely voluntary. The Shared Savings Program is designed to improve beneficiary outcomes and increase value of care by:

• Promoting accountability for the care of Medicare FFS beneficiaries
• Requiring coordinated care for all services provided under Medicare FFS
• Encouraging investment in infrastructure and redesigned care processes

Decreasing reimbursement to Medicare Advantage Plans

Medicare pays a monthly amount to Medicare Advantage plans, private insurance plans that replace Original Medicare, on behalf of each Medicare beneficiary they enroll. Medicare was reimbursing almost $1,000 per year per enrollee more than it cost to administer a similar person enrolled in Original Medicare. Subsequently, starting in 2011 Medicare will begin reducing what they reimburse to Medicare Advantage plans to reduce costs. Medicare Advantage plans must still cover all the same benefits as Original Medicare. It remains to be seen if some of the MA plans will reduce some of the extra benefits offered, potentially increase monthly premiums or have no change at all in the coming years.