Week 12 and 14 Flashcards
Prepare for final exam
Congress has ____ to create a form of national health insurance, but partial national health insurance has included
Failed! [Medicare, medicaid, medicare inclusion of end stage renal disease (ESRD) patients, SCHIP, Medicare Part D Drug Coverage]
In ____, the U.S. congress passed and President Lyndon Johnson signed a law adding Titles XVIII and XIX to the Social Security Act
1965
What did title XVIII do
Created medicare, a universal and mandatory health insurance program for the elderly, which was subsequently expanded to include persons permanently disabled for at least two years and persons with otherwise fatal kidney disease
What did Title XIX do
Created federal-state partnerships to establish insurance plans for low-income people, broadly called Medicaid
Describe the initial structure of the medicare program
original medicare had a standard appearance for the time, hospitals would receive highest priority with “first dollar” coverage. physician care included an initial deductible with a coinsurance provision and a “usual, customary, and reasonable” fee schedule to set provider fees
describe Part A of medicare
Part A paid for services provided by hospitals (enrollment in part A was mandatory for every person receiving social security benefits, the entire cost of Part was paid for by the Medicare Family Trust, a separate government account funded by general (income tax) revenues and earmarked the “medicare tax”)
describe Part B of medicare
Part B (covering physician services) was called the supplemental medical insurance was made voluntary, although the premiums paid by enrollees were so low that enrollment had been nearly 100% from the beginning of the program
according to current law, the basic Part B premium is intended to cover [xx] percent of the program’s cost, with the remaining [xx] coming from general tax revenue
25%, 75%
Beginning in {xxxx}. Congress established a _______ for _______
2010, sliding income scale, Part B premiums
Assess Medicare Part A from an economic perspective
The structure is completely “upside down” because it provides nearly “first-dollar” coverage but offers no serious protection against “catastrophic” financial risks. The part A deductible generally tracks with the CPI.
compare the medicare Part B deductible to the CPI
New law keeps the deductible a constant proportion of average Part B spending into the future, which means that it is increasing faster than the CPI in general
what would be the economically appropriate deductibles?
indexing with the CPI, the proper deductibles should be about $307 for Part A and $383 for Part B
What is the economically efficient co-pay for hospital care?
Given that the optimal coinsurance for hospital care is approximately C= 0.05, a per-hospitalizing copay of about $750 per hospitalization seems appropriate
Describe the way Medicare Advantage works
Through medicare advantage, enrollees continue to pay their appropriate part B premium, and medicare pays the private insurance plans using from Part A and Part B pools which provide insurance coverage to enrollees, usually for no additional charge. These plans commonly cover prescription drug costs as well, matching Part D insurance and obviating the need for an enrollee to purchase a separate Part D plan.
What is the most commonly chosen plan in Medicare Advantage?
Medicare HMO, a “classic” capitation insurance plan
How was Medicare Advantage initially named? How did this change?
The 1997 BBA legislation initially named the program Medicare + Choice (commonly M + C), which was eventually incorporated as Part C of medicare. In 2003, it took on the name Medicare Advantage.
Who are tweeners, and how was SCHIP designed to support them? How did SCHIP operate?
Tweeners were known as individuals from families who made too much to qualify for medicaid, but had limited access to private health insurance. The Supplemental Children’s Health Insurance Program was designed to support them with an allocation of about 40 billion dollars. Federal-State partnership.
What was a unique feature of the original design for Part D of medicare, and how was this feature addressed through the Affordable Care Act
Part D is intended to support individuals who need help with drug expenses. Part D began with an unusual design, employees had strong coverage for initial expenses, there was a “donut hole” where coverage all but vanished, then there was protection from very large annual drug expenses (i.e. catastrophic risk) . The ACA put in place a phasing out of the donut hall by 2020, although this donut hole will close faster for unbranded drugs).
Why do Medigap programs exist? How many Americans are enrolled?
Medicare Advantage enrollees are not allowed to purchase Medigap plans, and medicare coverage leaves large gaps and holes in the extent of coverage. 12 million Americans are currently enrolled.
How does Medigap coverage work? Explain the stop-loss feature, and the relation to medicare HMOs
Medigap “fills in gaps” through private insurance contracts and often have a private array of choices - two of the plans have initially more limited coverage, but eventually have a “stop-loss” feature (which is also shared in Medicare HMOs). For these reasons, higher Medigap premiums are associated with higher medicare HMO enrollment.
How many people are treated by medicare in the U.S.?
About 48 million.
Describe the 4 parts of medicare, and if they are mandatory or not
Part A: Enrollees’ hospital care (mandatory)
Part B: Outpatient care and physician services (voluntary but highly subsidized)
Part C: option for medicare enrollees to receive health insurance from a private plan rather than through plans A and B (most are built on HMO models)
Part D: pays for an enrollees’ prescription drugs
Describe the DRG as a cost control mechanism in Medicare
DRG (diagnosis resource group) pays a fixed amount to hospitals based on the diagnosis (Prospective payment system) rather than length of care or extent of care given
Describe the effects of the Prospective payment system
Has substantially shortened the length of stay (LOS) for patients. Substantial treatment has shifted to “ambulatory surgical centers” (ASCs) and through the substitution of other facilities, such as skilled nursing facilities and home health care.
How have hospital readmissions and mortality changed since the shift to the prospective payment system?
Re-admittance rates remain about the same, mortality rates are also the same. Seems that the implementation of PPS did not create any systematic degradation in patients’ health and safety, despite reduction in LOS.
What prevents a hospital from benefitting financially from discharging patients and then re-admitting them?
If the readmission takes place within 7 days, it is counted as the same spell of illness, consequently the hospital receives no new DRG payment
What are the consequences of the prospective payment system for hospitals?
Declining profit margins, decreasing intensity of treatment
- improved profit margins on medicare cases from ‘91 - ‘97 were accompanied by improved operating efficiency at around a 17% margin
- hospitals briefly in the red
Lower occupancy rates, lower admissions rates
What have been the consequences of the prospective payment system on small hospitals?
Ambulatory surgery as an increasingly popular alternative. Small hospitals typically carry out procedures that are relatively uncomplicated and relieve competition from ASC-like organizations. PPS system may have contributed somewhat to the growth of the ASCs, but at least some of the economic hardship facing small hospitals comes from other directions than the PPS.
Describe the changes made and the subsequent response to the Balanced Budget of 1997
- BBA was passed in response to increased hospital profitability and growing medicare costs, payment reductions caused by the BBA greatly increased financial problems of many U.S. hospitals, congress amended with the BBRA which restored about 11 billion dollars in payments
Define the logic behind Resource-Based Relative Values (RBRVS) in medicare payments to physicians
The motivating logic is to pay physicians according to the time and complexity of their effort equally whether completing neurosurgery, psychiatric consultation, or removing warts.