Lecture 11 and 12: Medicare and Medicaid

Question 1

Medicare

Answer 1

targeted for people over 65 yrs old

Question 2

Medicare Part A: Hospital Insurance

Answer 2

Pays for care provided to patients in hospitals, hospices, and home healthcare
programs
- Very limited skilled nursing facility care for rehabilitation only (100 days only)

Question 3

Medicare Part B: Supplementary Medical Insurance

Answer 3

Provides coverage for physicians’ services, outpatient hospital care, and many other medical services not covered under Part A
Typically “ambulatory care” services

Question 4

Medicare Part C: Medicare Advantage

Answer 4

Added in 1997
- Expanded ability to participate in a wide variety of private health plans, including health maintenance organizations (HMOs) and preferred provider organizations
(PPOs)

Question 5

Medicare Part D: Prescription Drug Benefit

Answer 5

Medicare Prescription Drug, Improvement, and Modernization Act of 2003
established a new prescription drug benefit

Question 6

Part A eligibility

Answer 6

Hospital Insurance (HI)
 65 years old;
 No premium if:
 A U.S. citizen or permanent resident and person or spouse worked >10 years in
Medicare-covered employment
 Receiving or eligible to receive benefits from Social Security or Railroad Retirement Board
 Had Medicare-covered government employment
 Most beneficiaries don’t pay premiums for this par
Received disability benefits from Social Security (SS) or
Railroad Retirement Board for at least 24 months;
 No waiting period for amyotrophic lateral sclerosis [ALS (“Lou Gehrig’s Disease”)]
 End-stage renal disease (ESRD) requiring dialysis or transplant

Question 7

Part B Eligibility

Answer 7

Supplemental Medical Insurance (SMI)
- Outpatient Care: MD’s, clinics, etc.
 Eligible for Part A and pay a premium.
 Not required; but ~93% have Parts A and B
 SS recipients have premium deducted from checks

Question 8

Part C Eligibility

Answer 8

Medicare Advantage Plan
 Eligible for Part A, and
 Choose from approved MCO
 May need to pay additional premium

Question 9

Part D Eligibility

Answer 9

Prescription drug benefit
 Eligible for Part A, and
 Pay a premium.
 “Not required” – but there’s a penalty if you don’t join

Question 10

Medicare: Administration

Answer 10

Eligibility and enrollment is through SSA.
 Administration through the Centers for Medicare and Medicaid Services (CMS).
 U.S. Treasury manages the HI and SMI trust funds

Administrators determine reasonable charges for covered services to reimburse providers

Question 11

Medicare: Services and Cost Sharing Part A

Answer 11

Covers all emergency care, but not hospitalizations while in other countries;
CMS recommends separate health insurance.
 Blood deductible
 Patient must replace first 3 pints of blood used each yea

Question 12

Part A services

Answer 12

 Covers 90 days of medically-necessary inpatient care per benefit period.
 Each patient has lifetime reserve of 60 days used if hospitalization exceeds 90 days in
one benefit period.
 Emergency services.
 Lifetime limit of 190 days of inpatient psychiatric hospitalization not provided in a general
hospital.
SNF ( Skilled Nursing Facility) LIMITED: 100 days of SNF care per benefit period
 Must be preceded by at least a three-day hospitalization and within 30 days of
discharge
 Requires that daily skilled care or rehabilitation can only be provided in a SNF

Question 13

Part B covered services

Answer 13

Physician services provided in most settings
(e.g., office, hospital, nursing facilities, at home)
• Outpatient hospital services
(e.g., X-rays, labs, PT, OT, dialysis, ambulance transport, etc.)
• Preventive services
(e.g., vaccines, cancer and osteoporosis screenings, diabetes monitoring)
• Limited care by chiropractors, optometrists, podiatrists, dental surgeons

Question 14

Part B non-covered services

Answer 14

• Routine physical and vision exams
  • Hearing tests and hearing aids
  • Routine dental care

Question 15

Part B: Cost sharing

Answer 15

Monthly premium
 Nominal annual deductible
 Co-insurance of 20%
 All of non-covered services or charges

Question 16

Balance billing

Answer 16

If physician does not accept assignment, patient can be billed for the difference

However, by law, they can only be charged a maximum of 115% (less in some states) of the approved charge, which is 5% less than Medicare-participating physicians

Question 17

Part C: Medicare Advantage

Answer 17

• Increased options for Medicare beneficiaries
  similar to those of non-Medicare private plans
• Plan must provide minimum of a traditional Medicare benefit, excluding hospice care,
  without imposing any other out-of-pocket costs

Question 18

Part D (started Jan. 1, 2006)

Answer 18

 Coverage by two methods:
 Enrolling in free-standing prescription drug plan (PDP) while in traditional Medicare;
 or
 Joining a Medicare Advantage plan (Part C) that includes a PDP

Question 19

Medicare Part D Rx Coverage

Answer 19

1. Annual Deductible
   – Annual deductible (increasing: $445 in 2021)

 2. Initial Coverage Phase
– Co-insurance of 25% on next $3,585
(max. $1,366.25 out-of-pocket (OOP) on first $4,130).

 3. Coverage Gap Phase
– Donut hole: – closed! Used to be NO COVERAGE; but this has changed…
– Co-insurance 25% on brands and generics

 4. Catastrophic Coverage
– After ~$10,048 of total costs ($6,550 of OOP, beneficiaries pay HIGHER OF:
5% co-insurance; $3.70 (generic) / $9.20 (brand) copayment

Question 20

Medicare Part D: Services and Cost Sharing

Answer 20

Subsidies available for low- and limited-income beneficiaries:
• Premium and deductible waivers
• Copayments are nominal, with generics < brands

Covers most FDA-approved prescription drugs;
(not including those covered by Medicare Parts A or B).

Question 21

Reimbursements to plans are

Answer 21

tied to star ratings ! $$$$

Question 22

Medicare: Expenditures

Answer 22

Payments for MDs & and hospital services account for about 35% of Medicare

 Payments for outpatient Rx drugs = 11% of expenditures

Within Medicare, a relatively small group of patients with serious medical
problems accounts for a disproportionate amount of
expenditures/beneficiary

Question 23

Medicare Supplement (Medigap) Insurance

Answer 23

Medicare pays for less than half of the average beneficiary’s health care bills

Question 24

75% of beneficiaries have coverage in addition to traditional Medicare such as:

Answer 24

1. Other retiree benefit from own or spouse’s employer
2. Medicaid
3. “Medigap” – private plan that covers many of the charges not covered by Medicare
   Also referred to as “Medicare Supplemental Policy”

Question 25

Most basic Medigap policy (Plan A) covers

Answer 25

 Co-pays for days 61-90 of inpatient hospitalization
 Co-pay for lifetime hospital inpatient reserve
 100% of Medicare-eligible hospital costs after all
Medicare benefits are exhausted
 3-pint blood deductible
 Medicare Part B co-insurance

Question 26

Title XIX: Grants to the States for Medical Assistance Programs (Medicaid)

Answer 26

SSA was passed in 1965 to provide medical assistance to eligible needy citizens

Question 27

Personal Responsibility and Work Opportunities Act of 1996

Answer 27

removed automatic eligibility for individuals who received cash welfare through Aid to Families with Dependent Children (AFDC)
Successfully cut link between Medicaid and cash welfare.
Replacing AFDC with Temporary Assistance for Needy Families (TANF) program

Question 28

TANF

Answer 28

Temporary Assistance for Needy Families

provides block grants to states for time-limited cash assistance
-Allows families to receive cash welfare for no more than five years; and allows
states to impose other requirements related to employment and education

Question 29

What 3 broad groups can be covered by Medicaid?

Answer 29

1. Mandated categorically needy
2. Optionally categorically needy
3. Medically needy

Question 30

Mandated Categorically Needy Eligibility

Answer 30

• Families below a state-determined maximum limit on income and resources
• A child living with a parent or other relative that is deprived of parental support or care
  due to death, absence, incapacity, or unemployment
• Individuals receiving cash assistance through the Social Security Income (SSI)
  program below income and asset limits
• Pregnant women and children under the age of 6 below certain income limits
• All children <19 in families below the federal poverty level
• Qualified Medicare Beneficiaries (QMBs) below certain income and asset limits

Question 31

Optionally Categorically Needy Eligibility

Answer 31

Determined by states
 Do not meet mandated requirements, but share certain characteristics with
the mandated categorically needy
 Must receive same benefits as the mandated group

Question 32

Medically Needy Eligibility

Answer 32

Optional category; determined individually by states

May be eligible in other two groups, except exceed the income or asset limits
- Medical expenses reduce “net” income to below thresholds
(i.e., “spend-down”)
- Used mostly to grant eligibility to institutionalized persons who incur extremely
large medical expenses for ex. Nursing facility patients

Question 33

State Flexibility: Medicaid programs must adhere to:

Answer 33

1. Statewideness – in effect throughout state without variation
2. Freedom of choice – obtain covered services from any qualifying provider
3. Comparability of services – services equal for all beneficiaries

Question 34

Under the SSA, CMS can grant two types of waivers

Answer 34

1. Section 1115

2. Section 1915b

Question 35

Section 1115

Answer 35

• 5-year demonstration waiver for innovative ideas
• Must be “budget-neutral” – does not increase costs, but increases eligibility or provides
  new benefits
• Mostly have been managed care demonstrations

Question 36

Section 1915b

Answer 36

• Targets only current beneficiaries (will not expand eligibility)
• To implement managed care principles

Question 37

Federal Medical Assistance Percentage

FMAP

Answer 37

is determined by comparing a state’s mean per capita income to the national
average; max. 83%, min. 50%

Question 38

Financing and Administration for Medicaid

Answer 38

Medicaid is actually an optional program; it is not required of the states by the federal
government.
 Federal and state governments share financing and administration – CMS and a single
agency in each state, which actually administers the program.
 States determine eligibility (other than those mandated), scope of services, and provider
payment rates

Question 39

Required Services Covered for medicaid

Answer 39

 Inpatient hospital services
 Outpatient hospitals services
 Physician services
 Rural health clinic services
 Federally-qualified health center services
 Labs and X-rays
 Nursing facility services for individuals >21 years old
 Early and periodic screening, diagnosis, and treatment (EPSDT) for individuals <21 years old
 Family planning services and supplies
 Home health services for persons eligible for skilled nursing services
 Nurse-midwife services
 Certified pediatric and family nurse practitioner services
 Prenatal care

Question 40

Optional Services for Medicaid

Answer 40

 Outpatient prescription drugs
 Prosthetic devices
 Physical therapy
 Rehabilitation therapy
 Optometrist services and eyeglasses
 Services in an intermediate care facility for the mentally retarded
 Transportation services
 Home- and community-based care for certain persons with chronic
impairments