1. “We’re in the cross hairs like never before.”
The Centers for Medicare, Medicaid Services, or CMS, the federal agency that administers Medicare and other health programs, got smacked with cuts early this month as lawmakers failed to avert the sequester, $1.2 trillion in spending cuts designed to help trim the country’s budget deficit. Hospitals and doctors face 2% cuts in the amounts that Medicare reimburses them for services rendered to recipients—cuts of $10.7 billion this year and $118.8 billion over nine years, according to a report by consulting firm Tripp Umbach.
While patients themselves won’t see any direct reduction in their benefits, experts say the ripple effects of the sequester could indeed hit older Americans. Doctors and hospitals had warned that their industries would have to slash more than 200,000 jobs this year alone if the sequester went through.
“It would be disingenuous to think that, if the job losses are that severe, beneficiaries wouldn’t feel it,” says Jeff Smith, assistant director of public policy at the College of Healthcare Information Management Executives, a professional organization for senior hospital information technology professionals. Beneficiaries could face longer wait times for appointments or any number of other negative consequences if those job losses happen, Smith says.
Even if lawmakers were to restore the cuts, Medicare would remain in their sights, experts say. “Whether you’re a Republican or a Democrat, the fact of the matter is that something’s got to give,” says Ross Blair, CEO of PlanPrescriber.com, a Medicare division of eHealth, an online health insurance marketplace. Current and future projected rates of spending, Blair says, are “unsustainable.” The federal insurance program—which covers 49 million Americans, those ages 65-plus and those of any age with disabilities—accounts for 16% of federal spending, or $551 billion in 2012.
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To be sure, spending cuts to the popular program won’t come easy.
While far from perfect, Medicare has provided vital coverage to hundreds
of millions since its inception in the mid-1960s, experts say.
“Medicare is more than a line item in the budget,” says Stuart Guterman,
executive director of the Commission on a High Performance Health
System at the Commonwealth Fund, a private foundation. “It’s one of the
most successful programs ever.”
CMS officials declined to comment on this issue. But as Jonathan
Blum, deputy administrator and director of CMS’s Center of Medicare,
said when he spoke about health-care delivery-system reform before the
Senate Committee on Finance in February, CMS “has been working
diligently to implement the changes and innovations” that lawmakers
outlined in President Obama’s signature health-care legislation, the
Affordable Care Act. CMS “has already made real progress, demonstrated
by decreasing readmissions to hospitals and a reduced growth in Medicare
costs,” Blum said.
2. “Think Social Security is broke? Just look at Medicare.”
With the debate raging over the astronomical cost of entitlement
programs, experts say, it’s easy to forget that Medicare and Social
Security are two different programs under very different financial
strains. In the short term, at least some parts of Medicare are worse
off than Social Security, according to a 2012 report from the Social
Security and Medicare Boards of Trustees. The Medicare hospital trust
fund—which funds Medicare Part A—“faces depletion earlier than the
combined Social Security Trust Funds,” according to a summary of the
report. Hospital trust funds are expected to run out completely in 2024,
versus in 2033 for Social Security. Medicare Part B, which funds
doctors’ visits and other outpatient expenses, and Part D, which covers
prescription drug benefits, are funded differently and “will remain
adequately financed into the indefinite future,” according to the
report.
It’s easy to see why parts of Medicare are in such bad shape,
experts say. A couple earning average annual wages of $44,600 each who
turn 65 in 2020 will receive a total of $427,000 in lifetime Medicare
benefits, but will have paid only $153,000 in lifetime Medicare taxes,
according to an analysis by the Urban Institute, a research organization
that studies social and economic issues. (All figures are in 2012
dollars.) By contrast, the couple will receive $632,000 in lifetime
Social Security benefits after paying a total of $700,000 in Social
Security taxes.
The picture doesn’t look much better going forward. Medicare
trustees project that Medicare costs will grow from approximately 3.7%
of gross domestic product in 2011 to 5.7% of GDP by 2035, and will
increase gradually thereafter to about 6.7% of GDP by 2086. And baby
boomers account for a big part of this projected growth. Roughly 10,000
baby boomers will turn 65 every day over the next couple of decades,
according to the nonpartisan Pew Research Center. The vast majority of
people 65 and over rely on Medicare and not employer-based coverage,
experts say.
Medicare officials say the program is working hard to address its
many challenges. “The Affordable Care Act included important reforms to
improve the quality of health care for Medicare and Medicaid
beneficiaries and, in doing so, lower costs for taxpayers and patients,”
Blum testified before the Senate Committee on Finance.
3. “Marketing isn’t our strong suit.”
In 2011, Medicare launched a free, new benefit: annual “wellness”
visits for recipients. Only 9% of beneficiaries took advantage of this
benefit in 2012. And in a poll released last spring by the John A.
Hartford Foundation, a philanthropy focused on training and research on
geriatric health care, more than half of respondents said they had never
heard of the wellness visit.
Experts say it can take time for a new benefit to gain traction with
both patients and doctors, but there’s another issue at play: When
Medicare communicates with the public, the program’s written materials
tend to be on the hefty side. “Medicare & You,” the official
handbook for 2013, runs 140 pages. Some elder advocates praise the
booklet as clearly written and relatively jargon-free—making it helpful
for those who bother to crack the cover. Still, Medicare’s mailings are
“intimidating by size,” says Mary Dale Walters, senior vice president of
Allsup Medicare Advisor, a Belleville, Ill.-based provider of Medicare
consultation services. “People look at the envelope and panic.” What’s
more, those with private Medicare Advantage plans usually get a thick
packet from their own plan each year, adding to the overload, Walters
says. Those who took the time to look would discover that the wellness
visit is mentioned on pages 50 and 51 of “Medicare & You.” (The
booklet has an index.)
But there are ways to cut through the paperwork, some experts point
out. Retirees and caregivers can visit Medicare.gov to find details like
whether a particular service is covered, how much premiums cost, and
other information. People can call 800-Medicare, or 800-633-4227, for
help with a variety of issues; those who are placed on hold will hear a
recording mentioning the new wellness visit.
4. “Don’t expect a five-star plan.”
Medicare’s five-star quality-rating system, outlined in the
Affordable Care Act, ranks Medicare policies sold by private insurers,
known as Medicare Advantage plans. These plans are referred to
collectively as Part C, and beneficiaries can choose a Medicare
Advantage policy in lieu of traditional Parts A and B, which are often
referred to as “original Medicare.”) These scores are based on multiple
performance measures—in 2011, for example, CMS used 53 different
measures derived from plan and beneficiary surveys and administrative
data, according to the Kaiser Family Foundation, a nonprofit foundation
that analyzes major health care issues.
For 2013, there are about 11 five-star plans nationwide, according
to CMS data. Consumers can switch to a five-star plan at any time during
the year—they don’t have to wait for the annual open enrollment period.
But “it’s a challenge” for beneficiaries to research all the offerings
to see whether a five-star plan is available in their area, Walters
says. There are an average of 22 Medicare Advantage plans in each market
nationwide, she notes.
A spokesperson for CMS says “a five-star rating is Medicare’s
highest mark of excellence, and can only be obtained by those plans that
are truly providing the highest quality care to beneficiaries.” More
than 37% of Medicare Advantage enrollees are now in a four- or five-star
plan, Blum said in his Senate testimony.
In 2012, Medicare Advantage plans that receive four or five stars
began to receive bonus payments aimed at encouraging more plans to meet
the standards. Baby boomers, who have become accustomed to rankings in
other aspects of their consumer lives, will likely embrace this system
as they age into Medicare, experts say. “You see how consumers flock to
cars that Consumer Reports rates highly,” says Joe Baker, president of
the Medicare Rights Center, an advocacy group. “The expectation is that
it will happen in the Medicare Advantage market as well.”
Indeed, Blum testified that the quality ranking system has already
gained traction among beneficiaries: The higher the quality ranking, he
said, the more likely it is that a beneficiary will enroll in a specific
program.
5. “We’re not popular with many doctors.”
Roughly 20% of physicians across all disciplines limit the number of
Medicare patients they will take on at any given time, according to a
2010 study by the American Medical Association, the organization’s most
recent look at the issue. For primary care physicians, this number jumps
to 31%.
The reason? Among doctors who limit Medicare patients, 85% say they
think Medicare payment rates are often too low, according to the study.
And 78% say they think “the ongoing threat of future payment cuts makes
Medicare an unreliable payer.” The threat of future payment cuts stems
largely from Congress’s inability to permanently fix the formula that
Medicare uses to reimburse doctors to allow for increased payments,
according to some critics, including the AMA.
Although some doctors limit the
number of Medicare patients, very few don’t accept the insurance at all,
experts say. This group primarily includes those in wealthy urban areas
who have decided not to take any insurance—government or
commercial—Baker says.
6. “We get ripped off a lot.”
Thousands of doctors and other medical professionals have sharply
increased the rates at which they bill Medicare for treating older
patients, according to an investigation released last fall by the Center
for Public Integrity, a nonprofit investigative news organization.
Medicare allows doctors to pick from among five different codes to bill
their services, from a low number for a simple visit to a higher number
for a complex visit; the system largely relies on the honor system of
doctors choosing the billing code that accurately reflects their level
of service. From 2001 to 2010, this practice padded practitioners’ fees
by $11 billion or more, signaling possible medical billing abuse, the
study found.
According to the Center for Public Integrity investigation, doctors
have increasingly abandoned the lower-level codes for the better paying
ones, a practice known as “upcoding.” The study—which analyzed a
representative 5% sample of Medicare patients and their claims,
submitted by more than 400,000 medical practitioners and 7,000 hospitals
and clinics starting in 2001—found no evidence that Medicare patients
are sicker and older than in the past, which if true might have
justified doctors billing at the higher rates. “Medicare is susceptible
to fraud not only because of its size and complexity, but because the
system itself makes it easy to defraud the government,” says Ken Nolan, a
partner at Nolan & Auerbach, a health-care fraud law firm. “Most of
the scrutiny, if any, is made after the payment is made—not before, as
in traditional business transactions.” Dr. Jeremy A. Lazarus, president
of the American Medical Association, said in a statement that more
analysis was needed on the issue: “Attributing the trend solely to
fraudulent and abusive behavior remains an unproven assumption.”
That said, fraud recoveries have increased to a record $4.2 billion
collected in 2012, and $14.9 billion over the past four years, Blum told
the Senate Committee on Finance. In addition, the Centers for Medicare
& Medicaid Services recently launched a fraud prevention system,
which aims to identify aberrant and suspicious billing patterns before
payment, he said.
7. “We don’t cover a lot of the care seniors need most.”
If your aging mother needs care in a nursing home or even in her own
home, she will have to meet some strict criteria to get Medicare to
cover it. For the most part, Medicare pays for nursing home care only
for those who were hospitalized for at least three days for an illness
or injury and who require “skilled” care that only a medical
professional like a registered nurse can provide. Even then, it only
covers or partially covers up to 100 days per benefit period. (A benefit
period begins the day you’re admitted as an inpatient to a hospital or
skilled nursing facility and ends after you haven’t had any inpatient
hospital care, or skilled nursing care, for 60 days in a row.)
Qualifying to get reimbursement for home health care is also
difficult, as you must meet all of the following criteria: be homebound;
require skilled nursing care, physical therapy, speech-language
pathology services or continued occupation therapy; and be getting
regular services from your doctor under a plan of care he or she has
ordered. Medicare does not cover meals delivered to a home, cleaning and
laundry services or, in most cases, help with personal care like
bathing, dressing or using the bathroom.
What’s more, original Medicare doesn’t cover hearing aids, dentures
or most dental services. (Medicare Advantage plans vary and may cover
some of the services not covered by traditional Medicare.)
Many people are shocked when they learn of these restrictions: “It’s
a big knowledge gap,” Walters says. But the onus to educate shouldn’t
fall only on the government, some say: Companies could do a much better
job of teaching their employees what to expect once they retire, so
there are fewer such surprises, says Edmund F. Murphy III, head of
defined contributions at Putnam Investments, which oversees companies’
401(k) plans.
A spokesperson for CMS notes that the organization aims to engage
with members of Congress, aging and disabled community members, and
experts to “explore solutions to the nation’s long-term care needs.”
8. “And you’ll pay for the coverage we do provide.”
Many people reach age 65 thinking Medicare is free, according to
Baker, of the Medicare Rights Center. In reality, it’s anything but.
Premiums for Part B (medical insurance for doctors’ visits and other
outpatient expenses) are $104.90 monthly if a recipient’s annual income
is $85,000 or less; beneficiaries pay on a sliding scale after that,
with the highest monthly premium $335.70 for those with gross incomes
above $214,000. Beneficiaries don’t pay a monthly premium for Part A
(hospital insurance) if they paid Medicare taxes and earned 40 Social
Security credits while working (people can earn a maximum of four
credits a year; for 2013, $1,160 earns one credit). The average premium
for Part D, or optional drug coverage, is around $30 per month.
On top of the premiums, seniors in original Medicare pay 20% of the
cost of all doctors’ visits aside from some preventative services that
are free. (That percentage climbs higher if a doctor doesn’t accept
Medicare’s reimbursement rate for a given procedure, and also for
certain treatments, like mental health coverage.) Hospital coverage, or
Part A, requires a deductible of $1,184 for each benefit period in 2013
and then various coinsurance payments depending on the length of stay.
The annual Part B deductible is $147.
Many beneficiaries buy a supplemental, or Medigap, policy to help
cover these out-of-pocket costs. But these don’t come cheap either: a
comprehensive supplemental policy that eliminates almost all
out-of-pocket expenses can cost as much as $350 a month, Blair of
PlanPrescriber.com says.
To be sure, in most cases, these costs remain much lower than what
people ages 55 to 64 currently pay for individual health insurance. The
average individual policy for someone in that age range (with a $3,194
deductible) cost $588 monthly in 2012, according to eHealth, although
costs can run much higher in states that have more stringent rules for
insurers.
And Medicare is hardly stockpiling the cash: As Blum testified,
every workday, Medicare pays out more than $1 billion from some 4.6
million claims.
9. “Paws off that cash, Grandpa: Your settlement is ours.”
Let’s say something goes terribly wrong, you sue your doctor for
malpractice and win. Don’t go counting the money just yet. If Medicare
paid some of your doctor bills, it can recoup out of the malpractice
settlement what it paid out in claims, says Joan Robert, a partner at
elder law firm Kassoff, Robert & Lerner. (Medicare only gets money
for what it paid, not a percentage of punitive damages, she says.) A
spokesperson for CMS says that claims are handled in this manner “in
order to protect the Medicare trust funds when other sources of payment
are available.”
The lawyers involved in the case should make sure that Medicare gets
repaid as part of any malpractice settlement, says Glenn Jarrett, an
elder law attorney in Burlington, Vt. This will help ensure that
malpractice victims don’t get surprised if CMS tries to collect later,
after they have already spent the money on something else, he notes.
Medicare must be paid within 60 days of the receipt of the settlement
from the “third party,” according to a fact sheet for attorneys on the
CMS website. (The “third party” is usually the insurance company of the
doctor or other person found liable.) If Medicare isn’t repaid in a
timely manner, the fact sheet notes, interest may be assessed.
10. “Did we turn you down? Keep trying.”
When Medicare denies a claim, experts say, recipients will often
simply pay out of pocket, even if they can’t afford it. That’s the wrong
strategy. Oftentimes, it’s better to appeal, says Judith Stein, the
executive director of the Center for Medicare Advocacy. “People are
denied Medicare like any other kind of insurance,” she says. “Insurance
wants your money and doesn’t want to give it back.” Only about 2.5% of
people with original Medicare appealed their denied claims in 2011, but
of those that did, 33% were granted a full overturn of their denial with
Part A, and 50% were granted a full overturn with Part B, according to
CMS data.
Filing an appeal is not hard,
experts say. Those with original Medicare need only fill out a
Redetermination Request Form and send it to their Medicare administrator
within 120 days of the date they received their Medicare Summary Notice
(the form that Medicare sends when it pays or denies a claim). Those in
a Medicare Advantage plan need to read the materials the plan sends
each year to learn how to appeal. ( MarketWatch )
