Category: Medicare

Medicare Part D Responsible For 60 Percent of Medicare’s Spending Slowdown

When Medicare added Part D, the prescription-drug benefit, via the Medicare Modernization Act (2003), its framers decided that every beneficiary would receive the benefit from a private plan, not from the government directly.

The benefits of this design continue to show themselves. In Health Affairs, Loren Adler and Alex Rosenberg conclude that the Part D benefit is responsible for 60 percent of the reduction in the rate of Medicare spending since 2011.


Medicare Advantage: Telemonitoring Cuts Hospital Readmissions 44 Percent, ROI $3.30 per Dollar

Geisinger Health Plan has conducted a study of elderly patients enrolled in Medicare Advantage who were treated for congestive health failure. It is reported by Mobihealthnews‘ Jonah Comstock:

A new study from Pennsylvania hospital system Geisinger Health Plan shows that remote monitoring of congestive heart failure patients can reduce readmissions by 38 to 44 percent and produce a return on investment of $3.30 on the dollar.

Medicare Goes Concierge – Sorta

Medicine Bag and StethoscopeOne of the great things about concierge medicine (also called direct practice) is the ability to contact your doctor at any time. Also, that your doctor will work with other caregivers and advocate on your behalf.

Yes, it costs you extra for the extra service, but that is how the doctors can reduce their case loads and free up the time to provide you with additional attention. Not everybody thinks the additional fee is worth it, but many do. Plus an argument can be made that the customized care saves money by reducing duplicative tests and hospitalization.

Medicare Fees: The RUC is Bad, But There’s No Point Regulating It

Politico recently ran an interesting story on the Relative Value Scale Update Committee — the “RUC”, a body convened by the American Medical Association that fixe the fees that Medicare pays physicians. It describes the absurdity of a committee of physicians fixing fees that the government pays physicians, and demonstrates how the RUC pays primary-care practitioners much less than specialists. Our blog has covered this thoroughly:

StethoscopeWilliam Hsiao, the economist who designed the Medicare Prospective Payment System, determined Medicare’s fees as follows: “He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from 45 minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer. They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do.” (Rick Mayes and Robert A. Berenson, Medicare Prospective Payment and the Shaping of U.S. Health Care, Baltimore: Johns Hopkins University Press, 2006, p. 86.)

Explaining Medicare’s Slowing Spending Rate

The slowing rate of growth of Medicare spending per beneficiary is the root cause of the rose-colored glasses through which the Administration views the latest Medicare Trustees’ report, which predicts insolvency four years later than the previous report did. So, what explains this slowing rate of growth?

Analysts at the U.S. Department of Health & Human Services have just released an analysis explaining what has happened. Figure 1 shows that national health expenditures have been growing at 3 percent per capita from 2009 through 2013. Medicare spending per beneficiary has grown slower than this since 2009, effectively flattening in 2013.


CMS Views Medicare Solvency through Rose-Colored Glasses

The 2014 Trustees Report was released on Monday, July 28th. The Center for Medicare and Medicaid Services (CMS) press release paints a rosy picture, but fails to discuss the bad news that is hidden in plain sight.  According to the cheerleaders at CMS, the health of the Medicare Hospital Insurance Trust Fund has improved since last year. The Trust Fund purportedly will remain solvent until 2030 — four years longer than projected in the 2013 Trustees’ Report. The press release partially credits the 2010 landmark law, the Patient Protection and Affordable Care Act (ACA) with controlling the growth of Medicare spending.

The Trustees Report is supposed to project future Medicare spending based on current law. But, that also means the official projection includes provisions meant to slow spending growth that the Trustees know are unlikely to occur. In years past, the Trustees tended to ignore these uncomfortable facts. Around 2010 the Office of the Actuary at CMS took the unprecedented step of producing an Alternative Scenario report explaining that the assumptions in the Trustees Report were unrealistic, and the projection were most assuredly wrong. That raised eyebrows in the policy world. This year, the alternative scenarios (i.e. conditions that are more likely to occur) crept up from the appendix (at the back) and landed uncomfortable on page 2, with the authors explaining:

Yippee! Medicare Won’t Go Bust Until 2030!

The latest Congressional Budget Office’s latest Long-Term Budget Outlook now asserts that Medicare’s so-called “Trust fund”. Talk about kicking the can down the road!

As the chart below shows, the problem is not that the “trust fund” will go bust in any given year, but that the federal government is borrowing money to finance consumption. “Other non-interest spending” includes major infrastructure and defense, tasks which constitutionally and under a proper economic understanding fall to the federal government. These were the purposes for which the Founders gave Congress the power to borrow money in the people’s name. Borrowing to finance seniors’ healthcare consumption does nothing for future generations’ prosperity.


Is Crony Capitalism Good Enough for Health Care?

In the Wall Street Journal, Paul H. Rubin and Joseph S. Rubin make an argument in favor of “crony capitalism” as a second-best solution. Their example from health care is Medicare Part D:

Some claim that Medicare Part D, which pays for drugs, was a giveaway to the pharmaceutical industry. But 40 years of research has clearly shown that the Food and Drug Administration’s regulatory process makes drug development and approval unnecessarily and inefficiently expensive. Perhaps, in this environment, supplementing the costs of drugs may move us toward a more efficient drug policy, and bring more life-saving drugs to market.

That’s not quite the way I see it. Medicare is widely accepted in American society, and excluding prescription drugs made no sense because prescription drugs substitute for more expensive treatments, especially hospitalization. Costs are below budget and seniors’ have lots of choices. So, Medicare Part D is a second-best solution, but it is a second-best solution to the socialization of health care for American seniors. It is not a second-best solution to the unnecessary costs imposed on pharmaceutical development by the FDA.

Medicare’s Spending per Beneficiary Increased Twice as Fast as Employer-Based Plans’ in Ten Years

A new study from the American Health Policy Institute analyzes the growth in health spending by different payers over the last decade. In summary, the study found:

  • 1On average, all U.S. employers spent $3,430 per covered life on health care in 2012, up 13.6 percent from 2003 after adjusting for inflation.
  • On average, large U.S. employers (1,000 or more employees) spent $4,990 per covered life on health care in 2013.
  • In 2012, government (federal and state) spent $1.1 trillion on health care, or an average $9,130 per covered life, up from $8,010 in 2003, or 14.0 percent, after adjusting for inflation;

I’m Shocked, Shocked: Allegations of Medicare Fraud in New Jersey

Ambulance at Emergency EntranceDozens of New Jersey ambulance companies — most of them headquartered within 15 miles of Paterson — billed Medicare for unusually large numbers of non-emergency ambulance rides in 2012, a ProPublica analysis of recently released Medicare payment data found.

Some 37 operators claimed an average of 50 trips or more per patient, collecting more than $46.5 million from Medicare that year. By comparison, in 33 other states, not a single ambulance company billed Medicare for that many rides per patient, the analysis showed.

Prosecutors had video showing some patients walking to and from ambulances, or even being driven to dialysis in personal vehicles instead of the ambulances for which Medicare was billed, Assistant U.S. Attorney Beth Leahy said.

“It’s direct evidence that these patients are ambulatory,” she said, “that they don’t need to be transported by ambulance, yet the companies are submitting claims to Medicare stating that the transport by ambulance is medically necessary for their wellbeing.”

(Charles Ornstein, ProPublica)