Category: Medicare

What Difference Does Drug Insurance Make?

Results indicate that obtaining prescription drug insurance through Medicare Part D was associated with an 8% decrease in the number of hospital admissions, a 7% decrease in Medicare expenditures, and a 12% decrease in total resource use. Gaining prescription drug insurance through Medicare Part D was not significantly associated with mortality.

Robert Kaester, Cuiping Long, G. Caleb Alexander, National Bureau of Economic Research.

Twofer: Ryan’s Medicare Plan Saves Taxpayers $20 Billion and Reduces Seniors’ Premiums

Paul Ryan keeps making his Medicare reform proposal more politically palatable, while still saving money all around:

08Ryan’s plan has gone through several versions, but all of them have been based on the old bipartisan idea of “premium support.” The idea was that instead of paying for senior citizens’ medical services directly, the federal government would help them purchase private coverage plans.

The CBO still projects savings for the federal government — $15 billion — but it shows that beneficiaries will pay less, too.

(Ramesh Ponnuru, Bloomberg View)

Will Cuts in Home Health Care Increase Overall Health Care Spending?

On Jan. 1, Medicare‘s home health care services, formerly serving 3.5 million elderly beneficiaries across the country, were cut under ObamaCare. The cut deleted exactly 14 percent, or an estimated $22 billion, from these lowest-income Americans over four years…

Using 2009 as a reference year, Medicare‘s average Part A and Part B payment for a home health care visit was $145, compared to $373 per day in a skilled nursing facility or a whopping $1,805 per day in a hospital. In addition, according to one leading expert, skilled home health care services saved the Medicare program $2.8 billion during the most recent three-year period. Approximately $670 million of that savings is attributable to 20,000 fewer hospital readmissions. (More)

Where Are The Medicare Dollars Going?

A recent analysis of Medicare data provided to The New York Times shows that two percent of doctors earn twenty-four percent of Medicare payments.

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Hooray! The Medicare Doc Fix is Fixed Until Next April!

Confident DoctorsCongress has given up on repealing the Sustainable Growth Rate (SGR) as a way to pay physicians under Medicare. This blog has previously written about the futility of politicians’ efforts to “fix” the way they pay physicians (especially here, here and here).

The one they just passed last week runs for a year. And, just as always, these politicians who are elected for two-year to six-year terms voted to massively increase spending today, in exchange for draconian cuts a decade hence.

According to the Congressional Budget Office’s score of the bill, it increases Medicare’s physician payments by $15.8 billion over ten years. However, $11.2 billion (71 percent) is spent by 2015, and $13.3 billion (84 percent) is spent by 2016.

The savings to pay for this? Those come later, much later: Savings don’t become greater than spending until 2020, and not significant until 2024 — the last year of the mandated scoring “window“, when the law is supposed to claw back $9.3 billion from hospitals and re-impose the sequester on Medicare.

Good luck with that. Congress continues to make a mockery of Medicare-physician payment reform.

What Happens When Medicare Overpays Medicare Advantage Plans?

The Medicare Payment Advisory Commission (MedPAC) figures that Medicare Advantage plans cost 6 percent more than if beneficiaries had been in fee-for-service Medicare. New research concludes that beneficiaries only get a small fraction of these increased payments in benefits. According to Scott Duggan and colleagues:

…[O]nly about one-fifth of the additional reimbursement is passed through to consumers in the form of better coverage. A somewhat larger share accrues to private insurers in the form of higher profits and we find suggestive evidence of a large impact on advertising expenditures. Our results have implications for a key feature of the Affordable Care Act that will reduce reimbursement to MA plans by $156 billion from 2013 to 2022.

A Better Way to Cut Medicare Spending

Over the next 10 years, the Affordable Care Act (ObamaCare) is scheduled to cut Medicare spending by $716 billion, primarily by reducing payments to doctors and hospitals. Further, those cuts in spending will continue indefinitely into the future. By 2060, one-fifth of Medicare will be gone. The Medicare actuaries and others have warned that these cuts will reduce access to care for seniors.

iStock_000002100130XSmallFortunately, there is a better way ― proposed by Liqun Liu, Andrew J. Rettenmaier, Thomas R. Saving and Zijun Wang in a study for the National Center for Policy Analysis: The reform consists of two changes to current law: (1) raising the Medicare eligibility age to the same age as Social Security (and thereafter indexing it to increases in longevity) and (2) requiring higher income seniors to pay a greater share of their medical costs (or so-called means testing). This reform ensures that low income workers receive full benefits (defined as the average benefits retirees would receive if the ACA’s cost-cutting provisions are not realized) upon attaining the new eligibility age. Once seniors reach the new eligibility age:

CMS Backs Down from Medicare Part D Changes

Seniors should celebrate the administration’s decision to reverse its proposed restrictions of the Medicare Part D drug benefit plan.

By virtually all measures, Medicare Part D has been a great success. Seniors’ satisfaction rates average about 90 percent to 95 percent.

In January, the Centers for Medicare and Medicaid Services (CMS) announced plans to change how Medicare Part D plans are regulated. To save money, CMS wanted to block seniors’ access to drug plans that offer lower premiums (and lower copays) in return for patronizing a preferred pharmacy network. The changes would also have limited seniors’ access to certain medications.

After criticism launched from many fronts, including the NCPA, CMS this week announced it had backed away from its earlier recommendations to micromanage Medicare Part D drug plans.

Medicare Advantage Cuts Don’t Bite: Health Insurers’ Stocks Rally

Late Friday, after the stock market closed, the Centers for Medicare & Medicaid Services (CMS) announced proposed new rates for Medicare Advantage plans. These are Medicare plans that are run by private insurers that give seniors more choices than they have under traditional Medicare Part A (hospital) and Part B (physician) benefits.

ObamaCare is largely funded by cuts to Medicare, especially Medicare Advantage. However, the Administration has not squeezed rates as much as anticipated. Last year, announcing 2014 rates, CMS surprised by increasing rates by 3.3 percent, leading to a rally in insurers’ share prices. At the time, AHIP, the insurers’ trade association, announced that:

CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges. We are currently reviewing the final rate announcement and will continue to work with policymakers in both parties to strengthen this critically important part of Medicare that provides high-quality, affordable coverage to more than 14 million seniors and people with disabilities.

Medicare Reimbursement Cuts Kill

Under the Balanced Budget Amendment of 1997, different classes of hospitals received different cuts in Medicare reimbursement. The cuts reduced Medicare inpatient payment by an estimated 5 percent between 1998 and 2000. By contrast, the Affordable Care Act (ObamaCare) will reduce DRG payments by 1.1 percent per year indefinitely. A 2013 article (open preliminary version) by Yu-Chu Shen and Vivian Y. Wu examines the effect of the BBA reimbursement rate cuts on risk-adjusted mortality rates 7, 30, 90, and 365 days after hospital admission. They find that the risk of dying increases with the size of Medicare reimbursement cuts. Patients with heart attacks, congestive heart failure, stroke, pneumonia, and hip fracture were included, from 1995 to 2005.

Despite reimbursement cuts, mortality trends were similar in the first two years that the BBA took effect. After 2001, mortality rates began to diverge. For conditions with declining mortality rates, hospitals with smaller payment cuts had a sharper decline in their mortality rate than those with larger payment cuts. For stroke and hip fracture, conditions for which mortality rates increased until 2003, mortality rates increased more slowly in hospitals with smaller reimbursement cuts. Mortality a year after admission for hip fracture was apparently unaffected by reimbursement reductions. The authors note that this may reflect the fact that over 90% of hip fracture cases are discharged to postacute treatment facilities.