Objective 4

Question 1

Workers in the US who are not covered by Social Security

Answer 1

1. Federal EEs hired before 1984
2. State and local gov’t workers covered by comparable plans (about 1/4)
3. People who object to receiving governmental benefits on religious grounds
4. Railroad EEs, who are covered by a program similar to Social Security

Question 2

Requirements for insured statuses under Social Security

Answer 2

1. Disability-insured status - requires 6 (at young age) to 40 credits (at ages 62+). Some must have been earned recently:
   a. For those required to have 20 or more credits, 20 credits must be from the last 40 quarters
   b. For those required to have between 6 and 20 credits, at least half must have been earned after age 21
   c. For those required to have 6 credits, all must be from the last 12 quarters
2. Fully-insured status - requires credits equal to the worker’s age minus 22, with a minimum of 6 and a maximum of 40.
3. Currently-insured status - requires 6 credits in the 13 calendar quarters ending with the quarter of death

Question 3

Eligibility and benefit amounts for Social Security disability and survivor benefits

Answer 3

1. Disabled-worker benefits:
   a. Eligibility - must be disability insured and fully insured and be unable to engage in any “substantial gainful activity:
   b. Benefit amounts - calculated using essentially the same procedures used for retired-worker benefit amounts, using an assumed age of 62 and no early-retirement reduction factor
2. Survivor benefits:
   a. Eligibility - family members may receive survivor benefits if the worker was either fully insured or currently insured at the time of death
   b. Benefit amounts - the worker’s primary insurance amount (PIA) is computed using the standard procedures and assuming an age of 62. Survivors receive a percentage of the PIA:
   i. 75% for eligible children
   ii. Between 71.5% and 100% for eligible widows or widowers
   iii. 82.5% for an eligible surviving parent or 75% each for two parents (family maximum applies - usu. 175%)

Question 4

Individuals eligible for Medicare coverage

Answer 4

1. Aged - age 65+ and eligible for Social Security or Railroad Retirement benefits
2. Disabled - entitled to Social Security or Railroad Retirement benefits for at least 2 years
3. End-stage renal disease (ESRD)
   Some other aged and disabled individuals who pay mandatory premiums

Question 5

Types of Medicare coverage and funding

Answer 5

1. Part A - hospital insurance (HI):
   a. Eligible persons receive coverage automatically with no premium charge
   b. Funded through payroll tax rate of 1.45% of all earnings, with a matching employer tax
2. Part B - supplementary medical insurance (SMI)
   a. Requires a monthely premium ($99.90 in 2012, higher for high incomes)
   b. Beneficiaries can decline coverage, but a premium penalty (10%/yr) applies if coverage is elected at a later date
   c. Financed through general revenues (75%) and beneficiary premiums (25%)
3. Part C - Medicare Advantage:
   a. Alternative to Parts A and B. Offered by private plans, which receive a capitation from Medicare, which varies by county and enrollee risk.
   b. Typically offer lower cost sharing plus coverage for some services not covered under Medicare
4. Part D - covers most prescription drugs. Provided through private insurers. Funded through general revenues (74.5%) and premiums (25.5%)
5. Medicare Supplement - private insurance to cover out-of-pocket costs and some other benefits not covered by Medicare

Question 6

Services covered by Medicare Part A

Answer 6

1. Inpatient hospital
2. Skilled nursing facility (SNF)
3. Home health agency
4. Hospice care

Question 7

Medicare Part A cost sharing and coverage limits

Answer 7

Based on a benefit period, which starts at admission and ends 60 days after discharge from hospital or SNF. Dollar amounts are indexed (these are from 2012):

1. Inpatient hospital:
   a. Cost-sharing: $1,156 deductible/benefit period; $289/day for days 61-90 each benefit period; $578/day for days 91-150 each lifetime reserve day
   b. Coverage limits: 60 lifetime reserve days; no coverage beyond lifetime reserve
2. SNF:
   a. Cost-sharing: $144.50/day for days 21-100 of each benefit period
   b. Coverage limits: No coverage after 100 days each benefit period
3. Home health agency:
   a. Cost-sharing: None
   b. Coverage limits: 100 visits/illness
4. Hospice care: no cost-sharing or coverage limits
5. Blood:
   a. Cost-sharing: cost of first 3 pints of blood
   b. Coverage limits: None

Question 8

Services covered by Medicare Part B

Answer 8

1. Outpatient hospital (including ER)
2. Medical care by qualified health practitioners
3. One-time initial wellness physical within 6 months of enrolling in Part B
4. Ambulance
5. Clinical laboratory and radiology
6. Physical and occupational therapy
7. Speech pathology
8. Outpatient rehabilitation
9. Radiation therapy
10. Transplants
11. Dialysis
12. Home health care beyond that covered by Part A
13. Drugs and biologicals that cannot be self-administered
14. Certain preventive services

Question 9

Medicare Part B cost sharing

Answer 9

1. Calendar year deductible ($140 in 2012)

2. Coinsurance after the deductible (usu. 20% of Medicare-approved amount; waived for some services)

Question 10

Approaches for improving Medicare solvency

Answer 10

1. Increase taxes
2. Reduce or eliminate some covered services
3. Increase Medicare cost sharing through higher deductibles and copays
4. Raise the eligibility age for benefits to age 66 or 67
5. Adjust reimbursement to providers of care
6. Adopt other initiatives to lower cost trend, such as ACOs

Question 11

Medicare provider reimbursement

Answer 11

1. Hospitals - reimbursed on a prospective payment system basis using the diagnostic-related grouping (DRG) methodology; paid a set amount for each admission based on the patient’s condition and services provided
2. Physicians - relative values to services are assigned based on a complex fee schedule. reimbursement = area-adjusted unit values * nationwide conversion factor. Unit values for the procedures are based on:
   a. Work value
   b. Practice expense
   c. Malpractice value
3. Outpatient services - reimbursed on a prospective payment system known as ambulatory payment classification

Question 12

Categories of Medicaid-eligible individuals

Answer 12

1. Children
2. Parents or other caretakers with dependent children
3. Pregnant women
4. Individuals with disabilities
5. Seniors
6. States also often extend coverage to medically-needy individuals
   Income and asset requirements must also be satisfied.

Question 13

Equivalence requirements for Part D employer group waiver plans (EGWPs)

Answer 13

1. Benefits must be at least as rich as standard Part D benefits
2. Deductible must be no greater than the standard Part D deductible
3. Catastrophic coverage must be at least as rich as standard Part D catastrophic coverage

Question 14

Types of Part D plans

Answer 14

1. Prescription drug plans (PDPs) - private standalone plans that offer drug-only coverage
2. Medicare Advantage prescription drug plans (MA-PDs) - plans that offer both prescription drug and health coverage

Question 15

Late enrollment penalty for Part D plans

Answer 15

1. Applies to those who do not sign up for Part D when they are first eligible
2. 1% of the base beneficiary premium for every month the person waited to enroll
3. Paid every month for the beneficiary’s lifetime
4. Does not apply if the individual had creditable coverage through another source. Coverage is creditable if it is at least as good as Medicare Part D

Question 16

Options provided by CMS to incentivize employers to participate in Part D

Answer 16

1. Retiree drug subsidy (RDS):
   a. To qualify, the plan must provide an actuarial attestation that it provides coverage at least as rich as Part D (gross test) and with a subsidy at least as great as the Part D subsidy (net test)
   b. Gov’t reimburses the sponsor for 28% of prescription drug spending otherwise covered by Part D for drug costs between the cost threshold ($310 in 2011) and cost limit ($6,300 in 2011)
   c. Drug rebates are subtracted from the amount eligible for the subsidy
   d. Easiest and potentially most lucrative option, but PPACA eliminated the employer tax deduction for the subsidy as of 2013
2. Employer group waiver plan (EGWP) - conceived to be superior to RDS. 2 options:
   a. Direct contract EGWP
   b. “800” series EGWP
3. Coordinate benefits in a wraparound plan
   a. Employer plan fills in benefit voids not covered by Part D
   b. A concern with this is that pharmacies may not be prepared to manage patients with two benefits

Question 17

Advantages of using EGWP instead of RDS

Answer 17

1. Cost savings
2. Minimal disruption to membership
3. Tax obligations are treated equally between EGWP and RDS
4. Direct monthly subsity is received from CMS
5. Governmental Accounting Standards Board Statements 43/45 liability is reduced
6. Part D benefit provides catastrophic coverage
7. Additional advantages of using an “800” series EGWP
   a. Administrative functions are handled by the third-party sponsor
   b. Risk avoidance
   c. The employer has no direct contract with CMS
   d. The third-party will handle compliance and regulatory issues

Question 18

Beneficiary cost sharing for the standard Part D benefit design

Answer 18

Drug cost range Level Beneficiary pays
$0-$320 Deductible 100%
$320.01-$2,930 Initial coverage 25%
Until $4,700 TrOOP Coverage gap 86% generic
50% brand*
After TrOOP Catastrophic coverage **
* These % will gradually decrease until they reach 25% for brand and generic in 2020 due to PPACA
** Greater of 5% or $2.60 generic copay or $6.50 for other drugs
1. TrOOP = true out-of-pocket cost
2. Deductible, initial coverage limit, TrOOP, and catastrophic copays are indexed annually. These are 2012.
3. Low-income beneficiaries have a different benefit design.

Question 19

Guidelines for developing Part D formularies

Answer 19

1. 146 therapeutic categories must be included
2. If a generic is available, it must be included in the formulary
3. Preferred drug rebates must go to the payer
4. Must include at least 2 drugs in each therapeutic category and class of covered drug
5. May include prior authorizations, step therapy, generic drug requirements, and preferred brand drugs
6. Must include all or substantially all antidepressants, antipsychotics, anticonvulstants, anticancer, immunosupressants, and HIV/AIDS medications
7. May offer tiered formularies

Question 20

Tools used in the electronic prescribing process

Answer 20

1. Formulary and benefit transactions
2. medication history transactions
3. Fill status notifications

Question 21

CMS requirements for medication therapy management (MTM) programs

Answer 21

1. All Part D sponsors must establish an MTM program to ensure that drugs are used appropriately to optimize therapeutic outcomes
2. Must be designed to reduce risk of adverse events
3. Enrollment must be only through an opt-out method
4. Must target beneficiaries for enrollment at least quarterly each year
5. Must target beneficiaries with multiple chronic disease, taking multiple Part D drugs, and likely to incur annual costs for covered Part D drugs in excess of $3,000
6. Must offer minimum level of services, including interventions for beneficiaries and prescribers and medication reviews for the beneficiary
7. Must measure and report details on the interventions and medication reviews

Question 22

Services included in MTM programs

Answer 22

1. Patient health status assessments
2. Medication “brown bag” reviews
3. Formulating, monitoring, and adjusting prescription drug treatment plans
4. Patient education and training
5. Collaborative drug therapy management
6. Special packaging
7. Refill reminders

Question 23

Service offered by LTC pharmacies

Answer 23

1. Drug packaging, labeling, and delivery systems for LTC medication use
2. Pharmacy operations and prescription ordering
3. Drug delivery service on a routine, timely basis
4. Access to urgent medications on an emergency basis
5. Pharmacist on-call services around the clock
6. Emergency boxes and log systems
7. Standard ordering systems and medication inventories
8. Drug disposition systems for controlled and noncontrolled drugs
9. Ability to provide intravenous medications
10. Compounding or alternative forms of drug composition
11. Miscellaneous reports, forms, and prescription ordering supplies

Question 24

Definition of Part D covered drugs

Answer 24

1. Available only by prescription, approved by the FDA, used and sold in the US, and used for a medically-accepted indication
2. Includes prescription drugs, biological products, insulin, and vaccines
3. Includes medical supplies associated with the injection or inhalation of insulin, and fees for vaccine administration

Question 25

Medications that are excluded from Medicare Part D

Answer 25

1. Medications available under Medicare Parts A or B
2. Drugs that are excluded or restricted under Medicaid, with the exception of smoking cessation agents
3. Prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations
4. Nonprescription drugs
5. Outpatient drugs where the associated tests or monitoring services must be purchased exclusively from the manufacturer
6. Barbituates
7. Benzodiazepines
8. Drugs used to treat erectile dysfunction
9. Drugs used to treat morbid obesity
10. Drugs used to relieve cough and cold symptoms

Question 26

Medicaid federally-mandated services

Answer 26

1. Hospital (IP & OP)
2. Physician
3. Early and periodic screening, diagnostic, and treatment
4. Family planning
5. Federally-qualified health center
6. Freestanding birth center
7. Home health
8. Laboratory and x-ray
9. Nursing facility
10. Nurse midwife
11. Rural health clinic
12. Tobacco cessation counseling and pharmacotherapy for pregnant women
13. Non-emergency transportation

Question 27

Medicaid optional services most commonly covered

Answer 27

1. Medical or remedial care provided by licensed practitioners under state law
2. Intermediate care facility for individuals with mental retardation
3. Clinic services
4. Nursing facility (ages < 21)
5. Occupational therapy
6. Optometry and eyeglasses
7. Physical therapy
8. Prescribed drugs
9. Targeted case management
10. Prosthetic devices
11. Hospice
12. Inpatient psychiatric
13. Dental
14. Services for individuals with speech, hearing, and language disorders
15. Audiology

Question 28

Key characteristics of an effective Medicaid managed health care plan

Answer 28

1. Comprehensive network of providers who are responsive to Medicaid consumers
2. Effective utilization programs
3. Targeted and effective disease management programs
4. Targeted and effective case management programs for pregnancies, neonatal services, chronic illnesses, and childhood illnesses such as asthma
5. Excellent and effective call center support
6. Effective outreach that is both culturally and linguistically sensitive and addresses health literacy
7. Coordination of any service that may be carved out, such as behavioral care, pharmacy, and LTC
8. Capability for patient-centered medical home and health homes
9. Ability to work with ACOs
10. Robust quality program to meet and exceed state requirements
11. Operational excellence for providers, such as claims payment accuracy and timeliness
12. Innovation with providers as it relates to use of electronic medical records and pay for performance
13. Compassion

Question 29

Elements to ensure success of managed LTC programs

Answer 29

1. Population - as broad as possible
2. Benefits - all Medicaid and waiver benefits, if possible
3. Program authority - no participation limits
4. Program design
5. Rate design - to incentivize appropriate utilization
6. Clinical delivery - manage care to reduce utilization of costly services
7. Identification and intervention - identify at-risk individuals ASAP to impact community placement
8. Comprehensive care management - tie PCP to Specialist care and home supports
9. Transition management - from acute care to new setting to reduce nursing home placements
10. Network development and increased access - including non-traditional providers

Question 30

Long-range financing challenges for the Medicare program

Answer 30

1. Income to the HI trust fund is inadequate. HI trust fund is projected to be depleted in 2024, at which time payroll tax revenues are projected to cover only 87% of program costs
2. Increases in SMI costs put pressure on beneficiary household budgets and the federal budget. The SMI trust fund is projected to remain solved because its financing is tied to projected future costs, but increases in beneficiary premiums and general revenue contributions will be required.
3. Increases in total Medicare spending threaten the program’s sustainability. Total Medicare expenditures were 3.7% of GDP in 2011 and are expected to grow to 6.7% of GDP in 2085.

Question 31

PPACA provisions to address Medicare’s financial condition

Answer 31

1. Reductions to provider payment updates
2. Medicare Advantage plan payments will be reduced gradually relative to FFS costs
3. Health care payment and delivery system improvements
4. Increases in Medicare revenues
5. Creation of the Independent Payment Advisory Board

Question 32

(Added) Medicare-Medicaid financial alignment demonstration models

Answer 32

1. Capitated model - health plan receives prospective capitation payments reflecting anticipated program savings. Plan is responsible for providing fully-integrated care for dual-eligible beneficiaries.
2. Managed FFS model - the state is responsible for establishing programs to coordinate care for dual-eligibles and will then be eligible to share in overall federal savings on retrospective basis.

Question 33

(Added) Calculation of capitation rates under the Medicare-Medicaid capitation model

Answer 33

1. Project baseline costs in absence of the demonstration
2. Apply savings percentages
3. Apply withhold percentages
4. Apply any prospective risk adjustment mechanisms
5. Apply any retrospective risk mitigation mechanisms