Medicare Present and Future

What is Medicare?  A Health Insurance Program for the aged and disabled, and people of with End-Stage Renal Disease  Administered by The Centers for Medicare & Medicaid Services (CMS)  44.1 million people were covered by Medicare last year

Parts of Medicare  Medicare Part A (Hospital Insurance)  inpatient care in hospitals  skilled nursing facility, hospice, and home health  no monthly premium  Medicare Part B (Medical Insurance)  doctors’ services  outpatient care  most beneficiaries pay a premium  annual deductible  Medicare Part C (Medicare Advantage Plans)  combines Part A, Part B, and, sometimes, Part D coverage  managed by private insurance companies  must cover medically-necessary services  can charge different copayments, coinsurance, or deductibles for these services  Medicare Part D (Medicare Prescription Drug Coverage)  Covers prescription drugs

Medicare Plan Choices  Original Medicare  managed by the Federal government  provides Medicare Part A and Part B coverage  can add drug coverage (Part D) by joining a Medicare Prescription Drug Plan  can choose to buy a Medigap (Medicare Supplement Insurance) policy  Medicare Advantage (MA) Plans (like HMO or PPO)  Plan options approved by Medicare and run by private companies  must follow rules set by Medicare  provides Part A and Part B coverage, and maybe Part D  may offer extra benefits, such as vision, hearing, dental, and/or health and wellness programs  Plans generally have provider networks  Other Medicare Plans  Medicare Cost Plans  Demonstrations/Pilot Programs  Programs of All-Inclusive Care for the Elderly (PACE)

Types of Medicare Advantage (MA) Plans  Three basic types of MA plans  coordinated care plans (CCPs)  private fee-for-service (PFFS) plans  Medical Savings Account (MSA) plans

Coordinated Care Plan (CCP)  A plan that includes a network of contracted providers to provider covered services. Characteristics of CCPs  Network that is approved by CMS  may include mechanisms to control utilization  plans offered by health maintenance organizations (HMOs)  plans offered provider-sponsored organizations (PSOs) and,  regional or local preferred provider organizations (PPOs)

Health Maintenance Organization (HMO)  HMO  generally the most restrictive of the CCP models in controlling utilization  requiring referrals from a gatekeeper/PCP  restricting the network of providers  May offer a point of service (POS) benefit option  can limit out-of-network coverage to a specific service or services  can limit the dollar amount of coverage that will be provided

Provider Sponsored Organization (PSO)  Provider Sponsored Organization (PSO)  a public or private entity that is established or organized, and operated by a provider or group of affiliated providers.  provides a substantial proportion of the health care services under the MA contract directly through the provider or affiliated group of providers.

Preferred Provider Organization (PPO)  Preferred Provider Organization (PPO)  Plan has a network of providers  Provides for covered benefits whether in or out of network  Local PPOs - service area that may consist of a county, partial county, or multiple county service areas.  Regional PPOs (RPPOs) - can only be offered in an MA Region, defined as an area within the 50 States and the District of Columbia.  CMS established 26 regions for MA PPOs

Special Needs Plans (SNP)  What is a Special Needs Plan (SNP)  Any type of CCP that meets CMS' requirements as a SNP  offers Part D  Special needs individuals defined by CMS  Institutionalized Individuals  those entitled to Medical Assistance under a State Plan under Title XIX (Medicaid) - “dual eligibles”  other high-risk groups of chronically ill or disabled individual  CMS allows flexibility for specialized MA plans  Plans may enroll  exclusively a targeted population of the special needs individuals  a disproportionate share of special needs individuals

Private Fee For Service (PFFS) Plan  Pay providers fee for service at a rate determined by the plan  Does not vary the rates for a provider  Enrollees in a PFFS plan are not limited to a provider network  Members can go to any doctor or hospital in the U.S. that is eligible to be paid by Medicare and is willing to accept the plan’s terms of payment.  if the PFFS has a network of providers, the enrollee’s cost-sharing may be higher if s/he seeks care from non-network providers.  May offer Part D or not

Medical Savings Account (MSA)  Medical Savings Account (MSA) Plans  Combines a high-deductible insurance policy and a savings account for health care expenses  Do not offer Part D  Non contracted providers are required to accept Medicare payment amount  CMS pays premiums for the insurance and makes a contribution to the MSA

Medical Savings Account (MSA)  Medical Savings Account (MSA) Plans (continued)  Beneficiary will only have a premium to pay if supplemental benefits are offered by the plan.  Beneficiaries will use the money in their MSAs to pay for their health care before the high deductible is reached.  Once the deductible is met, the plan will be responsible for payment of 100 percent of the expenses related to covered services.  For 2008, an MSA plan’s deductible, set by law, may not exceed $10,050.

Value Based Purchasing Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU)  RHQDAPU  For hospitals paid under the Inpatient Prospective Payment System (IPPS)  a voluntary program that began in 2005 with a set of 10 measures.  Hospitals must register as participants  Effective with FY 2007 and after, payment for hospitals is reduced by 2.0% if they do not report measures.  Participating hospitals currently report on 27 measures for FY 2008.

Value Based Purchasing Hospital Acquired Conditions  Affects only hospitals paid under IPPS  Hospital Acquired Conditions (HAC) Definition  high cost or high volume or both  result in the assignment of a case to a DRG that has a higher payment when present as a secondary diagnosis  could reasonably have been prevented through the application of evidence ‑ based guidelines.  Eight conditions selected and published in the FY2008 final rule  Payment implications October 1, 2008.

Value Based Purchasing Present on Admission Indicator  Present on Admission (POA) Indicator  Hospitals began reporting this indicator for both primary and secondary diagnoses on claims for discharges on or after October 1,  Effective April 1, 2008 claims submitted for payment that did not contain the POA indicator were returned  For discharges occurring on or after October 1, 2008, hospitals will not receive additional payment for cases in which one of the selected conditions was not present on admission. The eight conditions are listed on the CMS web site at: Acquired%20Conditions.asp#TopOfPage  POA Indicators  Y = Yes = present at the time of inpatient admission  N = No = not present at the time of inpatient admission  U = Unknown = the documentation is insufficient to determine if the condition was present at the time of inpatient admission  W = Clinically Undetermined = the provider is unable to clinically determine whether the condition was present at the time of inpatient admission or not  1 = Unreported/Not used – Exempt from POA reporting

Value Based Purchasing Physician Quality Reporting Initiative (PQRI)  1.5% bonus payment on paid allowable professional charges subject to a cap (for 2007)  Professionals may report quality measures on their claims  Professionals do not need to register  There are 74 CMS reportable quality measures for the 2007 period (July 1, 2007 through December 31, 2007)  must meet a reporting threshold to qualify for payment  Payout for 2007 expected mid 2008

Value Based Purchasing Physician Quality Reporting Initiative (PQRI) Calendar Year 2008  2008 reporting period began January 1, 2008 to December 31, 2008  1.5 percent payment on total allowed charges with no cap  New alternative reporting periods and criteria for satisfactorily reporting measures groups  New registry-based data submission  Reportable measures changed −There are 119 quality measures for 2008

Hospital Insurance (HI) Trust Fund  Medicare is growing faster than we can afford  The Hospital Insurance (HI) Trust Fund will no longer be able to pay full benefits eleven years from now  In 2007, Part A expenditures exceeded dedicated tax revenues by $4.7 billion  Expenditures are projected to exceed dedicated revenues by $10.6 billion this year  major reform of the Medicare program is necessary to preserve its future  CMS strives to move providers toward greater efficiency  financial incentives for providers to slow cost growth  improvements in productivity and efficiency

Additional Performance Standards  CMS is proposing to increase the RHQDAPU program measures to a total of 72 measures for FY  Nine additional Hospital Acquired Conditions (HACs) are proposed for FY2009 and if approved, will be effective October 1,  CMS is committed to enhancing these value-based purchasing programs  development and use of new measures for quality reporting  expanded public reporting  greater and more widespread incentives in the payment system for reporting on such measures  and performance on those measures  Similar programs rolled out to other settings other than IPPS is possible, such as ambulatory surgery centers (ASCs), SNF and HHAs.

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