Session 5 Hour 1

Question 1

History of Medicare and Beneficiaries

Answer 1

• 1965 during Johnson’s administration to provide health/economic security to seniors
• 1972 expansion to cover individuals with permanent disabilities and end-stage renal disease
• Original structure of 2 types of coverage:
• Hospital services—funded by Hospital Insurance trust fund—Medicare Part A
• Physician services—funded by Supplementary Medical Insurance—Medicare Part B
• 2003, GWB, Congress expanded Medicare to cover prescription drugs – Medicare Part D
• Financed similarly as Part B
• Medicare is a federal program administered by the Centers for Medicare and Medicaid Services (CMS)

Question 2

Financing of Medicare: Where Does the Money Come From

Answer 2

Part A is financed by payroll taxes
- Paid by employers and employees (1.45% each)

Parts B and D financed by:

• Beneficiary-paid premiums
• General tax revenue

Question 3

• 4 parts of medicare

Answer 3

• Part A: Hospital Insurance
• Part B: Medical Insurance
• Part C: Medicare Advantage Plans
• Part D: Prescription Drug Plans

Question 4

Medicare Part B

Answer 4

• Individuals eligible for Part A are automatically eligible for Part B
• Voluntary program, but nearly everyone enrolls (93% uptake)
• Financing:
  75% from general tax
  25% from premiums
  Premiums deducted from Social Security checks

Coverage:
– Physician services
– Outpatient hospital care
– Preventive services
– Mental health services
– Home health visits 
– X-rays, diagnostic tests, durable medical equipment
– Drugs administered in physician offices!!***

Co-insurance: 20% of Medicare reasonable fees

Question 5

Medicare Part C

Answer 5

• Medicare Advantage
• Administered by private plans (UnitedHealthcare, Humana, etc)
• Individuals with Part A and Part B may choose to take Part C instead of traditional A and B
• Enrollment has increased over time, now 39%
• Typically more coverage but narrower range of providers
• Majority of plans also offer prescription drug coverage; they are called MA-PD
• 2 forms: HMOs and PPOs

Question 6

Medicare Part D

Answer 6

• Available for members eligible for Medicare Part A (and B)
• Voluntary but late enrollment penalty – 1% * national base premium *# of months eligible that beneficiary did not sign up for Part D
• Covers outpatient prescription drugs
• As reminder, prescription drugs administered in physician offices are covered under Part B
• Around 48 million (77% of 62 million Medicare beneficiaries) enrolled in Part D in 2021

Question 7

Medicare Part D: 2 forms

Answer 7

Stand-Alone Prescription Drug Plans (PDP)

• Beneficiaries with traditional Parts A and B can opt to enroll in a plan that only covers drugs
• Administered by private insurer

Medicare-Advantage + Prescription Drug (MA-PD)

• Medicare Advantage (Part C) plan that also provides prescription drug benefits
• Parts A+B+D covered under same insurer

Question 8

Medicare Part D Benefits

Answer 8

CMS set guidelines:

Minimum coverage criteria: 2 drugs per therapeutic category/class

All drugs in 6 protected drug classes:

• Antidepressants
• Antipsychotics
• Anticonvulsants
• Antiretrovirals
• Immunosuppressants
• Antineoplastics

Some classes are specifically excluded :
- OTC
- “Part B drugs”
Excluded drug categories:
- weight loss/weight gain
- fertility agents
- agents for cosmetic purposes or hair growth
- agents for symptomatic relief of cough and colds
- Rx vitamins and minerals
- erectile dysfunction
- Barbiturates & benzodiazepines until 2013

Question 9

Coverage of Drugs Medicare Part B vs Part D

Answer 9

Certain medications may be covered under Medicare Part B or D depending on the circumstances

Part B covers:

• Drugs requiring a DME for administration
• Immunosuppressive drugs
• Certain oral drugs for cancer treatment
• Certain oral anti-emetic drugs
• Certain vaccines
• Drugs for ESRD
• Insulin used with pumps
• Parenteral and enteral nutrition
• Blood clotting factors
• Drugs furnished administered predominantly by a physician or under their direct supervision

Some drugs have dosage forms such as vials predominantly covered under Part B and self-injectable dosage forms (pre-filled syringes) mostly covered under Part D

Question 10

Gaps in Medicare Benefits and Supplemental Coverage

Answer 10

Medicare has high cost sharing for certain services
- Ex: hospital deductible under traditional Part A

Medicare coverage is limited in key areas

• Not a long-term care program
• No hearing aids, eyeglasses, or dental care

Most Medicare beneficiaries have some form of supplemental insurance:

• Employer-sponsored insurance provides retiree health coverage to ~30% traditional Medicare beneficiaries
• Medigap: Medicare Supplement Insurance provided by private insurers: cover (fully or partially) Part A and Part B deductibles and cost-sharing requirements
• Medicaid for individuals who qualify for Medicare and Medicaid beneficiaries “dual eligible” (Typically covers Part B premium, May pay deductibles and cost sharing)

Question 11

Medicare Part A

Answer 11

• Eligibility is determined like Social Security: Individuals eligible if they have paid payroll taxes for 10 years

• Trust fund—Those currently working are paying for current retirees

• Coverage:
– Hospital, skilled nursing home, health care and other inpatient services
– Coverage is per spell of illness
• Begins on hospitalization date
• Ends 60 days after discharge
• Agnostic to disease
– Coverage per spell of illness:
• Up to 90 days on inpatient hospital care
– $1,364 deductible per spell of illness (in 2018)
– $0 copay for days 1–60, $341 copay per day for days 61–90
• Up to 100 days of skilled nursing facility care following a hospitalization of 3 days or more– $0 copay for days 1–20, $170.50 copay per day for days 21–100
• Lifetime reserve of 60 additional inpatient hospital days, $682 copay for each day
• Up to 100 home health visits following a hospitalization of 3 days or more
• Lifetime limit of 100 days of inpatient psychiatric care
• Hospice care
• Blood