Objective 4 - Government Programs

Question 1

Workers in the US who are not covered by Social Security

Answer 1

1. Federal employees hired before 1984
2. About one-fourth of state and local government workers (those covered by plans comparable to Social Security)
3. Very small number of people who object to receiving governmental benefits on religious grounds
4. Railroad employees, who are covered by program similar to Social Security

Question 2

Requirements for insured statuses under Social Security

Answer 2

1. Disability-insured status - requires between 6 credits (at young ages) to 40 credits (62 or older). Some credits must have been earned recently:
   a) For those required to have 20+ credits, 20 credits must be from last 40 quarters
   b) For those required to have 6-20 credits, at least half must be earned after age 21
   c) For those required to have 6 credits, all must be from last 12 quarters
2. Fully-insured status - requires credits equal to workers’ age minus 22, min 6 max 40
3. Currently-insured status - requires 6 credits in 13 calendar quarters ending with 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 unable to engage in any “substantial gainful activity”
   b) Benefit amounts - calculated using essentially same procedures for retired-worker benefit amounts, using assumed age of 62 and no early-retirement reduction factor
2. Survivor benefits
   a) Eligibility - family members may receive if worker was either fully insured or currently insured at time of death
   b) Benefit amounts - worker’s primary insurance amount (PIA) computed using standard procedures, assuming age of 62. Survivors receive percentage of PIA:
   i) 75% for eligible children
   ii) 71.5-100% for eligible widows, widowers
   iii)82.5% for eligible surviving parent, or 75% each for 2 parents
   Family max applies, typically 175%

Question 4

Individuals eligible for Medicare coverage

Answer 4

1. Aged - 65+, eligible for Social Security or Railroad Retirement benefits
2. Disabled - entitled to Social Security or Railroad Retirement disability benefits for 2yr +
3. ESRD - insured workers with ESRD, including spouses and children with ESRD
4. Other aged and disabled individuals who pay mandatory premiums

Question 5

Types of Medicare coverage and funding

Answer 5

1. Part A - HI
   a) Eligible persons covered automatically, no premium
   b) Funded through payroll tax of 1.45% of earnings, with matching employer tax
2. Part B - SMI
   a) Requires monthly premium ($99.90 in 2012, higher for higher incomes)
   b) Beneficiaries can decline coverage, but premium penalty (10% per year) applies if coverage elected at later date
   c) Financed through general revenues (75%) and beneficiary premiums (25%)
3. Part C - MA
   a) Alternative to parts A and B. Offered by private plans, which receive capitation from Medicare, varying by county and enrollee risk
   b) Typically lower cost sharing plus covg for some non-Medicare covered services
4. Part D - covers most prescription drugs. Thru private insurers. Funded through general revenues (74.5%) and premiums (25.5%)
5. Med Supp - private insurance to cover out-of-pocket costs, some benefits not covered by Medicare

Question 6

Services covered by Medicare Part A

Answer 6

1. Inpatient hospital - semi-private room and ancillary
2. SNF - semi-private room, meals, skilled nursing, rehab services, after 3-day IP stay
3. Home health - services following discharge from hospital or SNF
4. Hospice care - provided to terminally ill patients with life expectancies less than 6 months

Question 7

Part A cost sharing and coverage limits

Answer 7

Based on benefit period, starting at admission and ending 60 days after discharge from hospital or SNF. Dollar amounts are indexed; values shown are for 2012.
Type of Service / Cost Sharing / Covg Limits
1. IP Hosp / $1156 deductible, $289/days 61-90, $578/days 91-150 (lifetime reserve days) / 60 lifetime reserve days. No covg beyond lifetime reserve.
2. SNF / $144.50/days 21-100 / No coverage after 100 days per benefit period
3. Home Health / no copay / 100 visits per illness
4. Hospice / none / none
5. Blood / cost of first 3 pints / none

Question 8

Services covered by Medicare Part B

Answer 8

1. Outpatient hospital (including Emergency Room)
2. Medical care by qualified health practitioners (including dx tests, supplies, equipment)
3. One-time initial wellness physical within 6 months of enrolling in Part B
4. Ambulance
5. Clinical lab and radiology
6. PT/OT
7. ST
8. OP rehab
9. Radiation therapy
10. Transplants
11. Dialysis
12. Home health beyond part A covered
13. Drugs and biologicals that cannot be self-admin
14. Certain preventive services (annual flu shot, cancer screenings)

Question 9

Medicare Part B cost sharing

Answer 9

1. Calendar year deductible ($140 in 2012)

2. Coinsurance after deductible (usually 20% of allowed, but does not apply to clin lab or preventive)

Question 10

Approaches for improving Medicare solvency

Answer 10

1. Increase taxes
2. Reduce/eliminate some covered services
3. Increase cost sharing thru higher deductibles/copays
4. Raise eligibility age for benefits to 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. IP - IPPS, DRG-based payment
2. Phys - fee schedule RVUs. Reimb equals sum of area-adjusted units times nationwide conversion factor.
   a) Work value - time and skill required
   b) Practice expense - cost of rent, staff, supplies, equipment, overhead
   c) Malpractice value - associated prof liability costs
3. OP - OPPS, APC-based

Question 12

Categories of Medicaid-eligible individuals

Answer 12

1. Children
2. Parents or caretakers with dependent children
3. Pregnant women
4. Individuals with disabilities
5. Seniors
6. Many states, medically-needy individuals
   Individuals must meet income and asset requirements set by federal government. For instance, states must cover all pregnant women and children under 6 with incomes below 133% of FPL.

Question 13

Equivalence requirements for Part D EGWPs

Answer 13

1. Benefits at least as rich as standard Part D benefits
2. Deductible no greater than standard Part D deductible
3. Catastrophic coverage at least as rich as standard Part D cat covg

Question 14

Types of Part D plans

Answer 14

1. PDPs

2. MA-PDs

Question 15

Late enrollment penalty for Part D plans

Answer 15

1. Applies to those who don’t sign up for Part D when first eligible
2. 1% of base beneficiary premium for every month they wait to enroll
3. Paid every month of beneficiary’s lifetime
4. Does not apply if ind had creditable coverage (thru employer, retirement plan). Creditable = 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. RDS
   a) To qualify, plan must provide actuarial attestation that coverage is at least as rich as Part D (gross test) with subsidy at least as great as PD subsidy (net test)
   b) Gov’t reimburses sponsor for 28% of Rx spending otherwise covered by PD between cost threshold ($310 in 2011) and cost limit ($6300 in 2011)
   c) Rebates are subtracted from amount eligible for subsidy
   d) Easiest and potentially most lucrative, though PPACA eliminated employer tax deduction for subsidy as of 2013
2. EGWP - conceived to be superior to RDS. 2 options:
   a) Direct contract EGWP - contract directly with CMS as PDP
   b) “800” series EGWP - outsource to 3rd party PDP or MA-PD, who performs admin and financial functions
3. Coordinate benefits in wraparound plan
   a) Employer plan fills benefit voids not covered by Part D (deductible, percent of covg gap or total OOP costs)
   b) Pharmacies may not be prepared to manage patients with 2 separate benefits (PD and wraparound)

Question 17

Advantages of using EGWP instead of RDS

Answer 17

1. Cost savings - about 15-20% in RDS vs 19-35% under EGWP
2. Minimal disruption to membership - can usually mantain current design
3. Tax obligations are treated equally between EGWP and RDS
4. Direct monthly subsidy received from CMS
5. GASB statements 43/45 liability reduced
6. Part D benefit provides catastrophic coverage
7. Additional advantages of “800” series EGWP
   a) Admin functions handled by 3rd party
   b) Risk avoidance
   c) Employer has no direct contract with CMS
   d) 3rd party will handle compliance and regulatory issues

Question 18

Beneficiary cost sharing for the standard Part D benefit design

Answer 18

1. Deductible - $0-$320, beneficiary pays 100%
2. Initial coverage - $320.01-$2,930, beneficiary pays 25%
3. Coverage gap - until member reaches TrOOP of $4,700, beneficiary pays 86% generic, 50% brand (gradually decreasing to 25% for both brand and generic in 2020 due to PPACA)
4. Catastrophic coverage - after TrOOP, beneficiary pays greater of 5% or $2.60 for generics/pref multisource or $6.50 other drugs
   Amounts shown are for 2012, indexed annually
   LI beneficiaries have different benefit design. DEs pay no premium, have no deductible, and pay only small copay

Question 19

Guidelines for developing Part D formularies

Answer 19

1. 146 therapeutic categories that must be included
2. Available generics must be included in formulary
3. Pref drug rebates must go to payer
4. Must include at least 2 drugs in each therapeutic category and class of covered drug
5. May include prior auth, step therapy, generic reqs, pref brand drugs
6. Must include all/substantially all antidepressants, antipsychotics, anticonvulsants, anticancer, immunosuppressant, and HIV/AIDS medications
7. May offer tiered formularies, with lowest cost share on tier 1, subsequent tiers higher

Question 20

Tools used in the electronic prescribing process

Answer 20

1. Formulary and benefit transactions - shows which drugs are covered by the plan
2. Medication history transactions - shows which medications a beneficiary is already taking (reduce adverse drug events)
3. Fill status notifications - prescribers receive notice from pharmacy when Rx is filled (to monitor adherence for chronic)

Question 21

CMS requirements for medication therapy management (MTM) programs

Answer 21

1. All part D sponsors must establish MTM program to ensure drugs are used appropriately to optimize therapeutic outcomes
2. Must be designed to reduce risk of adverse events
3. Enrollment must be only through opt-out method
4. Must target beneficiaries for enrollment at least quarterly
5. Must target beneficiaries with multiple chronic diseases, taking multiple PD drugs, and likely to incur annual costs for covered PD drugs of over $3,000
6. Must offer minimum level of services, including interventions for beneficiaries and prescribers and medication review for beneficiary
7. Must measure and report details on 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, adjusting Rx treatment plans
4. Patient education and training
5. Collaborative drug therapy management
6. Special packaging
7. Refill reminders

Question 23

Services 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 routine, timely basis
4. Access to urgent medications on 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 IV 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 FDA, used and sold in the US, used for medically-accepted indication
2. Includes prescription drugs, biologicals, insulin, and vaccines
3. Also includes medical supplies associated with injection or inhalation of insulin, fees for vaccine administration

Question 25

Medications that are excluded from Medicare Part D

Answer 25

1. Meds available under Parts A or B
2. Drugs excluded or restricted under Medicaid (fertility, hair growth), with exception of smoking cessation
3. Rx vitamins and mineral products, except prenatal vitamins and fluoride preparations
4. Non-Rx drugs
5. OP drugs where associated tests or monitoring services must be purchased exclusively from manufacturer
6. Barbiturates
7. Benzodiazepines
8. ED drugs
9. Morbid obesity drugs
10. Drugs to relieve cough and cold symptoms

Question 26

Medicaid federally-mandated services

Answer 26

1. Hospital (IP/OP)
2. Physician
3. EPSDT for under 21
4. Family planning
5. FQHC
6. Freestanding birth center
7. Home health
8. Lab/x-ray
9. Nursing facility for 21+
10. Nurse midwife
11. RHC
12. Tobacco cessation counseling/pharmacotherapy for pregnant women
13. Non-emergency transportation

Question 27

Medicaid optional services most commonly covered

Answer 27

Each covered by almost all states

1. Medical/remedial care by licensed practitioners under state law
2. ICF for individuals with mental retardation
3. Clinic services
4. Nursing facility for under 21
5. OT
6. Optometry and glasses
7. PT
8. Rx
9. Targeted case management
10. Prosthetics
11. Hospice
12. IP psych for under 21
13. Dental
14. Services for indiv with speech, hearing, 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, effective disease management
4. Targeted, effective case management for pregnancy, neonatal, chronic illness, childhood illnesses such as asthma
5. Excellent and effective call center support
6. Effective outreach that is both culturally, linguistically sensitive and addresses health literacy
7. Coord of services that may be carved out - BH, Rx, LTC
8. Capability for patient-centered medical homes
9. Ability to work with ACOs
10. Robust quality program to meet/exceed state requirements
11. Operational excellence for providers - 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 - include as broad a pop as possible
2. Benefits - all Medicaid and waiver benefits, if possible
3. Program authority - state should ensure authorization for program does not impose participation limits
4. Program design - for example, can use personalized evaluations to determine appropriate placement and allocation of services
5. Rate design - should be structured to incentivize appropriate utilization (encourage health plans to place as few in NH as possible)
6. Clinical delivery - care managers develop comprehensive care plans and work with multiple providers to ensure reduced utilization of costly services
7. Identification and intervention - use analytic tools and face-to-face assessments to ID individuals at risk as early as possible, to effectively impact community placement
8. Comprehensive care management - care plan should tie primary care to specialty to home supports
9. Transition management - proper management of transition from acute care to new setting can help reduce NH placements
10. Network development and increased access - networks must include nontraditional providers: personal care, adult day care, home-delivered meals

Question 30

Long-range financing challenges for the Medicare program

Answer 30

1. Income to HI trust fund is not adequate to fund HI portion of Medicare benefits. HI trust fund 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 increase pressure on beneficiary household budgets and federal budget. SMI trust expected to remain solvent, because financing is tied to projected future costs. But will require increases in beneficiary premiums and general revenue contributions.
3. Increases in total Medicare spending threaten program’s sustainability. Total Medicare expenditures were 3.7% of GDP in 2011, 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 - to reflect productivity improvements
2. Medicare Advantage plan payments will be reduced gradually relative to FFS costs
3. Health care payment and delivery system improvements - for instance, initiatives on bundled payments and ACOs
4. Increases in Medicare revenues - increasing payroll tax, Part B premiums, Part D premiums for those with higher incomes
5. Creation of Independent Payment Advisory Board - to recommend changes to prov payments if Medicare spending exceeds target per capita growth rate