605: Medicare Part C & D, CHIP Flashcards
Medicare Part C
- What is Medicare Part C?
- Other name?
- History
- How does it work?
Medicare Part C: Medicare Advantage
- Not a special program that offers specifically defined medical services - instead is about organizations that can enroll beneficiaries (MCOs)
- By enrolling in Medicare Part C, the beneficiary receives all Part A, Part B, and usually Part D services through an MCO.
- The patient must choose from a number of available Medicare Advantage plans.
History:
- “Medicare + Choice” created by 1997 Balanced Budget Act (BBA)
- Was created as a way to control costs by using managed care
- Renamed “Medicare Advantage” by the 2003 Medicare Prescription Drug Improvement and Modernization Act
- Expanded the number of MCO organizations (organizations that are paid by capitation) competing for Medicare patients
- (Capitation - organization is paid a set “capitated” amount per patient per month to the organization, so gives more stable idea of what the costs will be per month for the gov’t)
- Early HMO history: Medicare pts were fairly profitable due partly to how HMOs were paid; over time, payment levels have decreased
- Under the ACA:
- Reduces payments to Medicare Advantage plans (to bring them more in line with costs under traditional Medicare plans)
- Bonus payments to plans based on quality of services
How it works:
- Risk contracts offered by managed care organizations as alternative to “traditional” Medicare fee-for-service (MCOs assume risk - responsible for providing any medicare care necessary for each enrollee, and if expenses happen to be higher than expected they lose revenue)
- The plan manages Medicare benefits for its members.
- To attract enrollees, MCOs may offer extra benefits (e.g. basic dental and vision) that may lower out-of-pocket costs.
- Also generally lower cost-sharing by enrollees (e.g. copayments/coinsurance might be lower)
- Different premiums (for Part B and Part D portion) charged based on the MCO plan
- The MCO tries to manage care to save money (so it won’t exceed the money they are receiving and so they can make a profit)
Changes in Medicare HMO Enrollment since 2005
- How the number of people enrolled has changed
- What percent of Medicare population is in Part C (and how this compares to 10 years earlier)
- What type of area has more MCOs?
Dramatic increase in Medicare Part C (Medicare Advantage) enrollment since 2005
- Enrollment almost doubled between 2005 and 2010 (5.6 to 11.1 million)
- Additional increase of 50% in past five years, 2010-2015 (11.1 to 16.8 million)
Percentage of Medicare population that has Part C
- 31% of Medicare beneficiaries were enrolled in Part C in 2015
- Up from 13% 10 years earlier
*Usually it is people who live in more urban areas who can enroll in managed care plans (there aren’t as many organizations in rural areas)
% Medicare Advantage Enrollment by State
- U.S. average
- States with highest Part C enrollment
- States with lower Part C enrollment
U.S. average = 31%
Highest states (% Medicare benficiaries enrolled in Medicare Advantage):
- 53% Minnesota
- 44-46% Hawaii, Oregon
- 40% Florida, Pennsylvania
- 37-38% AZ, CA, Ohio, NY, Wisconsin
Lowest states (% Medicare benficiaries enrolled in Medicare Advantage):
- 7-8% Delaware, Maryland, New Hampshire
- 2% Wyoming
- <1% Alaska (not as many people and people are more spread out)
*Also varies depending on part of U.S.: Western states tend to have more people enrolled in Medicare Advantage, Midwest and Northern (central) states tend to have less
Health plans/Organizations that have the most Medicare Part C enrollees
- United HealthCare 20%
- Humana 19%
- BlueCross/Blue Shield 16%
Not an even playing field . . . top three companies account for over half of coverage
Medicare Part D
- Description (including when it went into effect and legislation)
- What does enrollee pay?
- Financing
- Types of plans
- How drug costs are covered
Medicare Part D: Prescription drug coverage
- Effective January 1, 2006 (from MMA legislation in 2003)
- Available to anyone, regardless of income, who has coverage under Part A or Part B.
- Voluntary
- Provides coverage for Rx expenses
- Medicare defines “standard benefit”, but plans may offer expanded benefits
Enrollee costs:
- Requires a monthly premium (income-based), has an annual deductible
- Premium is means tested (varies by income)
Financing
- Financed mostly by federal government revenues
- Also monthly premiums and other cost-sharing by beneficiaries
Types of plans
- Beneficiaries may choose from a variety of plans (with different premiums)
- Coverage is offered through two types of private plans approved by Medicare
- Stand-alone prescription drug plans (PDPs) that offer only drug coverage are avilable to those who want to stay in the original Medicare fee-for-service program. (The number of these plans has decreased over the past few years)
- Medicare-Advantage (Part C) prescription drug plans (MA-PDs) are available to those who want to obtain all health care services through MCOs participating in Part C.
How drug costs are covered
- Monthly premium (varies by plan)
- Deductible (varies by plan)
-
After the annual deductible is met, benefits are paid according to three layers of personal out-of-pocket spending on prescription drugs:
- Initial coverage: cost sharing varies by plan
- Gap or donut hole: used to not have any coverage > now with the ACA changes the enrollee pays percentage (65% for generics, 45% for brand names) — this donut hole will be phased out by 2020 under ACA
- Catastrophic coverage: When spent around $5000 out-of-pocket (not including premium payments)
Number of Medicare Part D Stand-Alone prescription drug plans 2006-2016
2006: 1400
2007: 1900
Started slowing going down from there
2015: 1000
2016: 886
Medigap
- Insurance policies purchased from private insurers to supplement Medicare coverage
- Cover most/all of deductibles and copayments
- May also cover some services not covered by Medicare
- Doesn’t always save people money, but offers peace of mind
Sources of Medicare revenue (% from general revenue, payroll taxes, premiums)
- Total
- Part A
- Part B
- Part D
Total:
- General revenue: 41%
- Payroll taxes: 38%
- Premiums: 13%
Part A:
- General revenue: 1%
- Payroll taxes: 87%
- Premiums: NONE
Part B:
- General revenue: 73%
- Payroll taxes: NONE
- Premiums: 25%
Part D:
- General revenue: 74%
- Payroll taxes: NONE
- Premiums: 15%
Projections about Medicare funding
Projections show that a deficit will develop in 2020s, will grow for about a decade, and then will level off - something is going to have to change (cost-sharing, who qualifies, etc.)
*Not enough money to continue paying for Medicare with the way things are going
Medicare Trust Funds
HI Trust Funds: funds for Part A (from payroll taxes)
SMI Trust Funds: funds for part B & D (from general revenue and premiums)
Trust funds are savings accounts for Medicare > Medicare costs get paid out of these savings accounts (will diminish and have deficits, projected to begin in 2020s)
*Concern over depletion of trust funds as baby boomers become eligibile for Medicare
Change in Medicare population and number of workers per beneficiary
Medicare benefiaries are rapidly growing each decade, while the number of workers per beneficiary is rapidly diminishing (by 2020 there will be won’t be enough workers to pay for benefiary costs)
-in 2000 there were 4 workers per beneficiary (by 2020 there will be 2.8 workers per beneficiary, not enough to pay costs)
Possible remedies for Medicare fiscal problems
Overall: No easy fix, but something has to be done (will run out of funds soon)
Possible remedies:
- Could increase payroll tax
- could have an impact on economy though if people are making less money
- Could increase age at which people qualify for Medicare (>65)
- would mean people would have to work longer, few jobs for younger people, larger number of older people with private insurance which could increase costs for everyone
- Could increase cost sharing
- increase means testing, increase premiums, increase copayments, increase deductibles
- Decrease benefits (services covered)
- Replace Medicare and Medicaid with Single Payer System (for everyone)
Medicaid
- Act/Title
- # of people covered initially, # of people covered in 2014
- Financing
- How the program is administered
- Eligibility (and ACA expanded eligibility)
- Medicare services covered
Title 19 of Social Security Act - Medicaid is the U.S.’s public health insurance program for low-income individuals
Number of people covered:
- 17.6 million initially
- 68 million in 2014 (includes initial ACA-mandated expansion)
Financing:
- Jointly financed by the federal and state governments - fed gov’t provides matching funds to states based on the per capita income in each state (wealthier states have a smaller share of their costs reimbursed by the federal gov’t)
How program is administered:
- On a federal level, administered by CMS (Center for Medicare and Medicaid Services)
- Each state administers its own Medicaid program - eligibility criteria, covered services, and payments to providers differ considerably by state (however, for a state to receive federal matching funds, they must provide some specific health services)
- Each state has established its own criteria for eligibility according to income and other resources
Eligibility:
- Means-tested
- Often transitory (changes when earnings change)
- Eligible under federal law:
- Those eligibile to receive cash payments under Temporary Aid to Needy Families (TANF)
- Those receiving Supplemental Security Income (SSI): blind, disbled, elderly with low income
- Children and pregant women with family income below a certain % of federal poverty level (FPL)
- Medicare beneficiaries who qualify based on income (“dual eligibles”)
- Explansion of Medicaid with ACA:
- All people <65 with income <138% FPL covered
- Major avenue of coverage for low-income
- Mandated expansion ruled unconstitutional by Supreme court
- More than 20 states currently have NOT expanded their Medicaid program – so in these states there is a group of people not eligible for Medicaid and not eligible for state/federal insurance exchanges because they require that you make >138% of FPL (b/c Medicaid is cheaper than subsidizing private insurance and it was thought that the expansion would be nationwide)
Medicaid services covered:
- Inpt hospital services
- Outpt hospital services
- Physician services
- Lab and x-ray services
- *Nursing facility services
- *Home health services (if eligibile)
- Some others
Common optional services: (some states provide these, but they aren’t required)
- Optometrist services and eyeglasses
- Rx
- Dental
% of different populations with Medicaid coverage (FY2010)
Top Medicaid Spenders
- 5% of enrollees account for what % of expenditures
5% of Medicaid enrollees account for 54% of expenditures
Medicaid recipients and payments (how they compare)
