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How politicians “fix” a problem – you will ultimately pay for the Medicare “doc-fix”

22 Feb

A problem that has existed for many years is the automatic adjustment that triggers cuts in physician payments under Medicare. Each year Congress puts a band aid on the problem. This year is no exception. The recent deal on this is most interesting in how it works, basically taking from one hand to give to another and ultimately shifting more costs to individual Americans… and the fix is only for the next ten months.

Don't get me wrong the scheduled cuts in payments to physicians was not viable, but solving that problem by cutting payments to someone else is no answer either. The real issue now and always is the total affordability or lack thereof for Medicare as currently constituted.

This from Kaiser Health News:

The proposal would cut Medicare payments to hospitals and other providers for “bad debt,” Medicare payments to clinical laboratories and Medicaid “disproportionate share” payments to hospitals that serve many poor patients, and divert $5 billion from the health law’s $15 billion prevention fund.

In addition, Louisiana would not receive $2.5 billion in additional Medicaid funds included in the health law, according to a GOP aide…A summary circulating Wednesday notes that cuts to health law funding comprise a large portion of the savings funding the Medicare spending in the agreement. The package would cost about $50 billion over the next decade, with about $20 billion going towards the Medicare doc fix and Medicare extenders package.

The negotiators plan to take $9.6 billion from areas that include payment cuts for clinical laboratory services and Medicare “bad debt,” payments Medicare makes to hospitals and nursing homes when patients cannot pay for their medical care. The tentative deal would reduce Medicaid “disproportionate share” payments to hospitals by more than $4 billion.

So, when patients can't pay (like the deductible and co-pay days), where will the money come from? The hospital will simply eat the loss. Does that have any consequences and if not, why were the payments being made in the first place?

Here we have another example of short term thinking, ignoring the unintended consequences, passing the buck to the next generation and passing the real cost to every citizen in the US.

Congress does not need to raise taxes to get you to pay more. Our illustrious Congress has now pushed past the next election, the 2% payroll tax cut, the doc fix and dealing with the tax system. What a way to run … Just about anything.

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FREE preventive health care services may end up costing you

26 Jan

A word of caution about those “free” preventive health care services mandated by the Affordable Care Act …they may quickly turn from preventive to diagnostic and that means your coinsurance, co-pays and possibly a deductible apply. This can happen for significant procedures but also for a simple office visit.

Read more about this in my post on Health Insurance Illuminated

Why you should care about your governments long term liabilities for Medicare

24 Jan

Defense, foreign aid, a bloated bureaucracy don’t matter at all.

The reality is that while we hear lots of rhetoric about debt and deficits, what really matters is long term liabilities. If you don’t believe me consider what happened with General Motors and it’s liabilities to retirees mostly with regard to health benefits. The latest example is Kodak filing bankruptcy during which the promise of retiree health benefits is likely to disappear along with some pension promises for higher paid workers who are affected by income limits on pension funding. Losing a substantial portion of your pension after you have already retired sounds like more than ones fair share to me ( and we are not talking about CEOs).

If you want more examples of this liability thing causing trouble just look to the various states that have agreed to unrealistic pension and health benefit commitments to state workers. And then you look at the results of all this. In Wisconsin the unions have gotten 1,000,000 signatures to force a recall election of the governor who did the right, albeit painful, thing to correct the State’s problems.

What is the most significant problem affecting the U.S., it is the same as I have just described above; long term liabilities for health care first and pensions second. That means Medicare, Medicaid and Social Security, but mostly Medicare.

So now the question is what will you do for the politician who tells you the truth (assuming you can find one)? Chances are you won’t vote for him because it is far easier to ignore a long term problem than deal with it. It is more abstract to believe foreign aid is the culprit than something that affects you directly. It is less stressful to agree with a politician who claims to have a solution while leaving Medicare and Social Security untouched.

The difficult part is accepting the truth. The U.S. has made open ended, demographic based commitments that it can’t control and can’t pay for. Twenty to thirty years from now there will be hell to pay. The longer it takes to implement corrective action the worse it will be… and that’s the truth like it or not

 

Medicare premiums 2014, the bogus rumor persists. $247 per month is ridicules

8 Jan

 

An Internet e-mail still circulates that come 2014 the Medicare Part B standard premium will be $247 per person. That’s nonsense for several reasons.

1. The calculation of the premium is set by law and that law has not changed.

2. There is nothing in the Affordable Care Act (Obamacare) that affects the Medicare premium calculation.

3. The President does not, as has been alleged, have the ability to unilaterally change any of this.

4. The standard 2012 premium for Medicare Part B is $99.90 (higher for the 5% higher income beneficiaries). If you used the highest rate of inflation to hit Medicare in the last forty years for both 2012 and 2013 you would get a premium of less than $130.00. The likelihood of that kind of inflation in the next two years is non-existent.

5. There is nothing in the 2011 Medicare Trustees report to indicate other than normal rates of cost increases over the next several years. In fact, the Trustee’s project that by 2020 the Part B premium will be $158.60. Even that is based on a premium for 2012 of $106.60 (not $99.90).

6. Most Medicare beneficiaries (95%) are protected from high increases in Medicare premiums under the Social Security hold harmless provision. This means that an increase in Medicare premiums cannot cause a net reduction in the Social Security payments. So, for example, if you are receiving $1,000 a month in Social Security benefits and you receive a 3% COLA increase, your Part B premium cannot increase my more than $30. Do the math and you will see there would have to be whopping COLA increases in Social Security in the next two years to get most people anywhere near $247 and that ain’t gonna happen.

English: President signing the Medicare Bill a...

1965

Are any of these projections 100% accurate? Certainly not, there are too many unknowns. However, before you pass along some outrageous story about Medicare premiums (or a tax on the sale of your home, or that the value of health benefits is now taxable income or that Obama was stopping the 2011 Social Security COLA – all of which were circulated in the last year), get the facts.

Unfortunately too many people out there are so obsessed with opposition to this or that, their judgement is clouded …or they are simply ignorant and that’s scary because they can still vote.

By the way, the story about a brain surgeon being at a meeting in Washington where denying care to Americans 70 and over was discussed is also a lie. There was no such meeting, there is nothing in the Affordable Care Act remotely related to that and the caller to a talk show giving the story was not a brain surgeon.

Read other articles related to Medicare under the “Medicare” and “Healthcare” categories on this Blog. 

A decline in the Medicare Part B deductible is a poor long-term strategy

6 Jan

Spend now, worry later!

Through 2005 the Medicare Part B deductible was set by statute. Thereafter it reflects the per capita cost for Medicare beneficiaries. In 1967 the Part B deductible was $50.00. Today after decreasing for 2012 it is only $ 140.00.  

However, if the deductible had been allowed to increase at the rate of general inflation (not even medical inflation) it would be $338.00.         

As a result of the Medicare Modernization Act, the Part B deductible was increased to $110 in 2005 and is indexed thereafter by the annual percentage increase in the Part B actuarial rate for aged beneficiaries.  In 2012, the Part B deductible will be $140, a decrease of $22 from 2011.  (The actuarial rate is set by law at one-half of the total estimated per-enrollee cost of Part B benefits and administrative expenses, adjusted as necessary to maintain an adequate contingency reserve.)

This seems to mean that the per-enrollee cost of Part B is expected to decrease by 13.5%, is that really a likely occurrence?   Did the contingency reserve used in calculating the Part B deductible consider the likely reversal of cuts to physician payments as was apparently the case with the Part B premium?  Regardless, a deductible that should by simple math be $338, should not be decreased under any circumstances, that is simply poor long-term planning.   

Medicare Part B covers a portion of the cost of physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. By law, the standard premium is set to cover one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over, plus a contingency margin. The contingency margin is an amount to ensure that Part B has sufficient assets and income to (i) cover Part B expenditures during the year, (ii) cover incurred-but-unpaid claims costs at the end of the year, (iii) provide for possible variation between actual and projected costs, and (iv) amortize any surplus assets.  Most of the remaining Part B costs are financed by Federal general revenues.  (In 2012, about $2.9 billion in Part B expenditures will be financed by the fees on manufacturers and importers of brand-name prescription drugs under the Affordable Care Act.) 

The largest factor affecting the contingency margin for 2012 is the current law formula for physician fees, which will result in a payment reduction of about 29 percent in 2012.  For each year from 2003 through 2011, Congress has acted to prevent smaller physician fee reductions from occurring. The 2012 reduction is almost certain to be overridden by legislation enacted after Part B financing has been set for 2012. In recognition of the strong possibility of increases in Part B expenditures that would result from similar legislation to override the decrease in physician fees in 2012, it is appropriate to maintain a significantly larger Part B contingency reserve than would otherwise be necessary.  The asset level projected for the end of 2012 is adequate to accommodate this contingency.  

In summary, benefits have increased, the deductible is lower, the premium increase is extremely modest, nothing related to the Affordable Care Act has been implemented that would measurably lower Medicare costs or future trends, the planned cut in physician payments will not happen and all is right with the world.  In many ways CMS has little discretion in administering Medicare because most provisions are set by law, but that is the point.   Setting something as massive as Medicare on automatic pilot is not the best way to administer such a program.  It replaces prudent budget decisions with political decisions.

Accountable Care Organizations (ACO) and the promise of savings without managed care or patient limitations.. I wish you all the best.

20 Dec

 Here is a text of an e-mail I received from HHS:

 Affordable Care Act helps 32 health systems improve care for patients, saving up to $1.1 billion

12/19/2011 12:01 AM EST

Thirty-two leading health care organizations from across the country will participate in a new Pioneer Accountable Care Organizations (ACOs) initiative made possible by the Affordable Care Act, HHS Secretary Kathleen Sebelius announced today.  The Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years

That headline really grabs you doesn’t it.  Seems like it’s a done deal and the savings are in the bank.  That’s far from the truth, of course. There is no new information here other than we know the names of some health care systems that will participate in this trial (“Pioneer”) effort for Accountable Care Organizations.  

Don’t get me wrong, this is a good idea because if there is one thing we need, it is more coordinated care, but we have a long way to go before we start patting ourselves on the back with a success under the Affordable Care Act.  We need it to work in terms of saving money and improving the care people receive.  That’s a tall order even for spin doctors.

I have one major reservation on the ability for this program to succeed and that is the limited involvement by the patient and the limited ability for the ACO to manage all of a patient’s care.  Working efficiently, the process should be virtually invisible to the patient, but that assumes the patient only uses health care providers within a given ACO.  Will the ACO that receives financial incentives to provide efficient care be reluctant to make outside referrals thereby losing some of the control over patient care?  In the long run there is no benefit to the ACO to do so, but this is one of the criticisms made of HMOs.  Here is what HHS says about patient rights.  I am concerned that we are again trying to have it both ways; efficient management of care and total freedom when seeking care.  I don’t think that can work, let’s hope I am wrong.

Beneficiary Participation

Under the Pioneer ACO Model, beneficiaries do not enroll in an ACO.    Primary care providers and other healthcare providers make the decision to participate in ACOs, meaning a beneficiary will not need to take proactive action to receive the benefits offered through an ACO.  ACOs are required to notify beneficiaries of their participation, ensuring the beneficiary is aware of the new arrangement, and his or her rights described in this document.  In addition, beneficiaries may affirmatively attest that their primary provider is in a Pioneer ACO, and can then be aligned with the ACO and benefit from the enhanced care coordination that it offers.

Beneficiary Rights and Protections

A beneficiary aligned to an ACO maintains complete freedom to visit any healthcare provider accepting Medicare, just as all Medicare beneficiaries participating in original, fee-for-service Medicare do.  These beneficiaries do not need a referral to see a specialist outside the ACO.   Unlike a managed care arrangement, like an HMO or a Medicare Advantage plan, a beneficiary aligned to an ACO is free to see any healthcare provider accepting Medicare at any time.  In addition, beneficiaries maintain all the benefits to which they are entitled in original, fee-for-service Medicare. 

Beneficiaries will have direct channels of communication to CMS to ask questions and relay concerns.  Through the initial notice of participation, beneficiaries will be informed that they can call 1-800 MEDICARE at any time to ask questions about the program,   alert CMS of any concerns they may have about the ACO.  Beneficiaries will also be surveyed each year to assess their experience with the new program.

 Here is a link to the list of the 32 organizations

Wyden-Ryan Medicare reform … Ah, not so much

15 Dec
English: Photograph of President signing the M...

With a stroke of the pen

I just did a quick read of this plan, so there is more to come.  However, let’s get one thing over now. It has no impact on current Medicare beneficiaries or anyone who will retire in ten years.

 
Beyond that I must say I am not impressed. That is unless you gauge achievement by the number of times you can use “quality, “affordability” and “competition” in a proposal.

 
The plan  relies on private insurers competing for Medicare customers and that is supposed to lower costs and improve quality.  We’ll see, but let’s not forget that even if you have five insurers in a state competing for customers, for all practical purposes they all must use the same doctors and hospitals as does Medicare.

A thought comes to mind, will the quality of care you receive from one doctor vary based on your insurer?  Will any innovative efficiency by Medicare or a private insurer not be used by all?
And what about the competition we already have among Medicare Advantage plans, why hasn’t that kept Medicare costs under control?

 
As I said,  there is much more to come as we get into the details, but it appears once again we are barking up the wrong “competition” tree.

Threatening politicians if they cut Medicare, it’s not only the elite who influence for self interest at our collective peril. What would you do to rein in Medicare costs?

20 Nov
WI: Then-Senator Barack Obama and AFSCME membe...

Lobbying by any other name

Twenty-six year old history majors are protesting on Wall Street, the influence of the wealthy is decried, lobbyists are bedeviled and yet when a politician even thinks of trying to fix problems that were caused by the promises of past politicians and the actions of us all, they are targeted and threatened with unemployment.  

We are shocked at influence peddlers for one group and then do exactly the same thing in the name of seniors, or teachers or public employees.  The answer is not that one group of the other is bad or good, deserving or not, it is that we are unable to grasp the concept that everything we do is connected.  There are consequences, unintended or not, to the promises we make, the policies we establish, the money we borrow, the decisions we make.

In the quest to deal with the deficit, both Medicare and Social Security must be addressed.  They are the two largest components of federal spending and growing.  To ignore that is irresponsible and yet we have groups like the AARP and the unions listed below who choose to ignore the realities of our spending and inability to fulfill unrealistic promises.  You simply cannot look at one element of spending in isolation and expect to solve a spending problem as desirable as that spending may be.

Take a look at this report from Capsules the KHN Blog 

TV Spots Target Three Republicans On Medicare Cuts

By Karl Eisenhower

November 16th, 2011, 4:16 PM

The AFSCME and SEIU trade unions, along with the liberal advocacy group Americans United for Change, are warning Sen. Dean Heller, R-Nev., Sen. Scott Brown, R-Mass. and Rep. Denny Rehberg, R-Mont., that votes in favor of Medicare and Medicaid budget cuts will be unpopular with seniors.

The groups launched ads today featuring the voice of a woman who sounds as though she’s old enough to be eligible for Medicare.  The script of each version is the same, with only the name of the targeted member of Congress changing.  Heller and Brown are seeking reelection, and Rehberg is running for the Senate against Democratic incumbent Jon Tester.

The ad targeting Sen. Brown, embedded below, is running only in the Boston market, and only on cable television.  The Heller ad is running on broadcast stations in Reno, and the Rehberg ad is running on broadcast stations in Billings and Missoula.  All three spots will run through the end of this week.

A transcript follows:

If you vote to cut Medicare, Sen. Brown, I will remember it every time I visit my doctor. I’ll remember you cut Medicare and Medicaid every time I fill a prescription. I’ll remember you cut Medicare if I fall or get hurt. I’ll remember you chose protecting millionaires over protecting my health. My friends will remember it too –- all of them. Call Senator Heller. Tell him to protect Medicare and Medicaid.

Here is a quote from the Americans United for Change website:

For decades, seniors have relied on Medicare being a guaranteed benefit and those less fortunate have depended on Medicaid to provide long-term care and coverage for children. These programs need to be strengthened to ensure they remain available for future generations, which means not gutting and decimating benefits, leaving low-income children, seniors, and people with disabilities out in the cold. The key to making Medicare sustainable is reining in costs, not dumping more expenses onto seniors. We are working to set the right priorities for an economically secure future while continuing to protect health care coverage for those who can least afford it.

They are right, the key to making Medicare sustainable is reining in costs.  Ok, now just tell us how or more important, who will receive less when those costs are reined in?  Here is a check list of possibilities:

 [] doctors [] hospitals [] drug companies [] patients [] high-tech equipment manufacturers [] nursing homes 

The Affordable Care Act already claims to have saved over $400 billion in Medicare costs, plus raising an additional $100 billion plus from new taxes on the wealthy and employers.  The Act contains 160 programs and projects designed to lower costs over time and all this is still not enough.  Doctors are supposed to see their payments cut  27% in January 2012, but that will never happen. 

So, let’s have suggestions for “reining in costs!”

Related articles

Raising Medicare eligibility age above 65; where are the savings?

14 Nov

The special congressional committee is looking for ways to reduce the deficit. That really means taking more of your money and giving you less for it, but that’s ok if it is in our long-term best interest … it is, right?

One idea that keeps surfacing is raising the Medicare eligibility age to 67 or some other number above 65. That is supposed to save money, a good thing I guess. But remember, saved money has to come from someplace. In this case it will come from individuals, employers and guess what, it will still come from the federal government as well.

That is because many, if not most, of the new young elderly will be getting their health care through the government subsidized exchanges and depending on their income will receive a substantial subsidy toward the premiums. Is that what we call taketh with one hand and giveth with the other?

Let’s assume you are 66 with an income (perhaps Social Security) equal to 133% of the poverty level, that’s about $14,483 for a single person in 2011. Your cost for health insurance is capped at 3% of income so your premium above $434 a year is paid for by the government. What do you think the premium will be for a 66-year-old? Well today the full cost of Medicare Part B alone is about $400 per month; add to that hospital and drug coverage and you get a total cost in excess of $10,000 a year of which in this example, $9,566 will be paid for by the government. Of course smaller subsidies apply on incomes up to 400% of the poverty level, but you get the idea, costs go from Medicare to PPACA, while the risk goes to the insurers and all their policyholders.

Now you know where the savings come from.

More “free” benefits under Medicare; creating new services when it is not necessary, can we legislate common sense?

12 Nov

Medicare has announced a new service that it will pay for in full.  I have highlighted in bold and red below the new service. Is it a good service, I guess.  So, let’s think about this, why wouldn’t this be part of a normal office visit?  Why wouldn’t this type of discussion take place during the course of ongoing treatment or following with one’s doctor?  Perhaps it does in many cases; certainly there is a great deal of promotion of a healthy diet.  And I have another question, at age 65 and over just how much prevention can take place, can a life’s worth of poor habits be wiped out to the extent there is prevention of potential cardiovascular disease? 

My objection with all this is not with the goal of helping people, rather it is with the idea that making more and more “free” is helpful to anyone.  In addition, we continuously fail to conduct a real cost benefit analysis on what we do.  This benefit would make more sense for forty-five year olds would it not, yet we seem to direct more and more of our limited resources at the oldest segment of our population at the expense of the other 250 million Americans.

 Medicare expands coverage of cardiovascular disease prevention services

New, free preventive services for Medicare beneficiaries support Million Hearts initiative  

The Centers for Medicare & Medicaid Services (CMS) today announced that Medicare is adding coverage for a number of preventive services to reduce cardiovascular disease.  This new coverage policy will add to the existing portfolio of free preventive services that are now available for people with Medicare, thanks to the Affordable Care Act.  It contributes to the Million Hearts initiative led jointly by CMS and the Centers for Disease Control and Prevention in partnership with other HHS agencies, communities, health systems, nonprofit organizations, and private sector partners across the country to prevent one million heart attacks and strokes in the next five years. 

“Access to preventive services helps Medicare beneficiaries identify health risk factors and disease early to provide greater opportunities for early treatment,” said CMS Administrator Donald M. Berwick, M.D.  “CMS continues to carefully and systematically review the best available medical evidence to identify those preventive services that can keep Medicare beneficiaries as healthy as possible for as long as possible.”  

Under this coverage decision, CMS will cover one face-to-face visit each year to allow patients and their care providers to determine the best way to help prevent cardiovascular disease. The visit must be furnished by primary care practitioners, such as a beneficiary’s family practice physician, internal medicine physician, or nurse practitioner, in settings such as physicians’ offices.  During these visits, providers may screen for hypertension and promote healthy diet as part of an overall initiative to reduce the burden of cardiovascular disease in the United States. 

Cardiovascular disease characterizes conditions affecting the heart and blood vessels, including hypertension, coronary heart disease, heart failure and stroke.  Cardiovascular disease is also the leading cause of mortality in the United States. Today’s new coverage policy does not change current Medicare coverage for beneficiaries diagnosed with cardiovascular disease to receive assessment and intervention services.     

Earlier this year, the U.S. Department of Health and Human Services announced its Million Hearts national initiative, aimed at preventing a million heart attacks and strokes in the U.S. by 2017. Through Million Hearts, CMS, the CDC and other HHS agencies are working together with public and private sector organizations to make a long-lasting impact against cardiovascular disease. 

“This coverage decision reinforces CMS’ commitment to the work of the Million Hearts initiative,” said Patrick Conway, M.D., CMS chief medical officer and director of the Agency’s Office of Clinical Standards and Quality. “One of the main ways we will prevent cardiovascular disease in this country is to empower Americans to make heart-healthy lifestyle changes, and Medicare’s new cardiovascular disease preventive services will allow more beneficiaries to do just that.” 

For more information about Million Hearts, please visit  millionhearts.hhs.gov. To read the new policy, visit the CMS website at: http://www.cms.gov/medicare-coverage-database/details/nca-decision-memo.aspx?NCAId=248

Medicare physician fees to be cut by 27%. . . or not. Is this the first unworkable law Congress ever passed?

10 Nov
Secretary of Health and Human Services, Kathle...

27% you say? Tempting, but no.

Unless Congress intervenes, Medicare physician pay rates will be cut by 27.4% beginning January 1, 2012. This is a result of the 1997 law related to the sustainable growth rate for physician fees.  Congress has to date never allowed the cuts called for in the law to actually take place.  The law may be flawed, but it is interesting that when it comes to cutting costs via laws it passed, Congress picks its winner and losers. 

At the same time some politicians on the right have no problem proposing changes in Medicare that will fix government payments and transfer excess increases to Medicare participants.  These cuts in physician payments that never happen were originally part of the health care reform law and were counted as savings but were separated from the law before its enactment. They are still counted as savings to Medicare for budget purposes even though the Trustees note they are unlikely to occur.

Here is what the 2011 Trustees Report says.  Talk about between a rock and hard place, do you think Congress knows what it is doing?

Total Medicare expenditures were $523 billion in 2010 and are projected under current law to increase in future years at a somewhat faster pace than either workers’ earnings or the economy overall. As a percentage of GDP, expenditures are estimated to increase from 3.6 percent in 2010 to 6.2 percent by 2085 (based on our intermediate set of assumptions). If Congress continues to override the statutory decreases in physician fees, and if the reduced price increases for other health services under Medicare become unworkable and do not take effect in the long range, then Medicare spending would instead represent roughly 10.7 percent of GDP in 2085. Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal Budget.

Here is what HHS recently said about the situation:

A Statement from U.S Department of Health and Human Services Secretary Kathleen Sebelius

On the need to fix the Sustainable Growth Rate issue upon release of the final Medicare physician fee schedule rule

America’s physicians are the backbone of our health care system.  Physicians are there for us throughout our lives, helping us improve our health and fight off disease.  Unfortunately, while Medicare remains strong, physicians are facing steep payment cuts as a result of a flawed 1997 law. Almost every year for more than a decade, doctors have faced this annual threat and the Congress has in turn acted to temporarily prevent these deep reductions from taking effect. We have not and will not let deep cuts to doctors’ payments occur.  The Obama Administration is 100 percent committed to fixing the flawed Medicare payment system and protecting Medicare beneficiaries’ access to doctors.

Earlier this year, President Obama presented a deficit reduction plan in which he once again called for a permanent fix to the sustainable growth rate (SGR) provision so that our nation’s physicians would no longer have to face the threat of draconian cuts year after year.  Today we again call on the Congress to quickly and permanently pass the so-called ‘doc fix’ and we pledge to work with legislators on both sides of the aisle to address this issue once and for all.  The pattern of threatened SGR cuts and last-minute Congressional rescues is in itself not a sustainable solution and must be remedied. Patients and physicians will both benefit when we take the action recommended by the President and permanently address this issue.

Setting physician fees under Medicare is an immensely complicated, even bizarre process.  If you have nothing to do for a week or two why not meander through the proposed regulations released by HHS or just glance at them to get a sense of what a massive bureaucracy can create.  A warning though, they comprise 1235 pages, but not to worry, you will be asleep within the first three.

Regulations for physician payment policies and fee schedules

Medicare reform and the Romney plan . . .utter nonsense

8 Nov

Like most, if not all, politicians, Romney has it all wrong.  His basic concept for reforming Medicare is to set the amount the government pays for each person’s coverage, turn seniors loose on the private insurance market with any difference in cost for the insurance selected a benefit or risk to the individual.  Brilliant!

Just like under PPACA the focus is not on managing health care costs, but on cutting government spending.  That solves very little for individuals.  In effect, Romney and other Republicans so adamant in opposing tax increases are doing far worse by placing Americans at additional risk for ever-increasing health care costs.

You can easily see Romney does not know what he is talking about by looking at one sentence from his website:

“These reforms will encourage insurers to lower costs and compete on the quality of their offerings”

Or how about this one:

“All insurance plans must offer coverage at least comparable to what Medicare provides today”

The politicians still control the coverage that must be offered while insurers are supposed to compete, but can’t do so by offering less costly benefit packages? 

What utter nonsense.  Exactly how does one expect insurers to lower health care costs…deny claims, tighten up on medical necessity rules so there are more patient complaints, cut the payments to providers so that they do not participate in the plans? If competition among insurers worked to control costs, if self-insured employer and union plans (covering over 70 million Americans) could control their costs, why do we still have a problem?

Keep this in mind, to control health care costs somebody has to be paid less.  That somebody is doctors, hospitals, drug and all medical device manufacturers, nurses, physical therapists, nursing homes, etc.  They must be paid less by not providing as many health care services and by not charging as much for the services they do provide.

That means you pay more and/or receive less health care…take your choice.

That is not an insurance problem, it is a system problem.

Spending on U.S. healthcare as a percentage of...

What we spend

In countries with national health care, they control costs (to some extent) by fixing budgets and accepting all the consequences and inconvenience of doing so. Doctors receive lower incomes, patients wait longer for services, and a cost benefit analysis is performed on health care procedures, they fix drug prices and more. Meanwhile in America we still think the cost of birth control pills is unaffordable and must be covered by insurance at 100%.  We are fools.

The Romney plan and others like it are nothing more than a giant cost shift to individuals with the false notion that insurance companies can somehow find a way to absorb those costs.  Don’t bet on it. 

If A – B = C where A is the cost of health care and B is what government pays and C is what you pay, if B is fixed while A increases what do you think happens to C? I failed algebra twice and even I can figure that out.

 From the Romney website:

(more…)

Cutting Medicare and Social Security benefits: senior citizens do not have a right to special treatment. AARP is doing America a great disservice.

31 Oct

While the AARP runs TV ads threatening politicians that 50 million seniors will get even on election day if they touch Social Security or Medicare, there are a few of us who see it differently.  Take this comment from a blog post of mine that I fully agree with.

Keep up the good work. Some of us older folks who have been on “senior wefare” enjoying the unwarranted payments from Medicare and Social Security look in horror at the bills to be paid by our kids and grandkids. AARP, the largest special interest group in the country, has just sent out a request to contact our representatives to preserve our Social Security and Medicare benefits. It seems as if seniors should not have to share in the effort to reduce our national debt.

* * * * * * * * * * * *

From the AARP website:

AARP’s new national television ad tells lawmakers to cut waste and tax loopholes, not Social Security and Medicare. It urges lawmakers not to treat seniors like line items in a budget and lets them know that 50 million seniors are counting on them to protect their benefits.

Cuts to Medicare and Social Security benefits could:

dramatically increase health care costs for seniors and future retirees.
threaten seniors’ access to doctors and hospitals.
reduce the benefit checks seniors rely on to pay their bills.

Watch the latest advocacy video from AARP telling lawmakers that “before you even think” about cutting Medicare or Social Security, remember the 50 million seniors who have earned their benefits. Seniors are putting Washington on notice that they will speak out as long as Medicare and Social Security benefits are threatened .

Those of us who paid our Social Security taxes for decades must realize that those taxes paid the benefits of Social Security recipients during those decades and the surplus purchased special treasury bonds. Today the incoming taxes are insufficient to pay our benefits and those payments are supplemented by interest on bonds…there is no surplus to purchase bonds for our children.

Social Security Protestors

Oops, the next generation wants theirs too.

Medicare is funded by a combination of payroll taxes, general revenue and current premiums. We may count on these benefits because we assume they will always be there, but we have been and are paying only a fraction of the cost.

Consider this from Bloomberg.com

“In 1959, seniors were the poorest demographic cohort, with 35 percent living in poverty, compared with 27 percent of children in poor families. In 2010, only 9 percent of people age 65 and older were poor, while 22 percent of those under 18 were living in poverty, according to U.S. Census Bureau data.

The trend coincides with a generational gap in federal spending. In 2008, per capita federal spending on those 19 and younger was $3,660, compared with $23,900 for those 65 and older, according to a report by the Urban Institute and Brookings in Washington.”

Have we “earned” our benefits any more than younger people have earned the right to support their families and save for their futures?  Have we earned these benefits so that we have a right to take more from future generations?

The AARP wants to cut waste and loopholes, so does everyone else. Except even if that is done, less spending and more revenue is needed for many areas of the federal budget, not just Social Security and Medicare although those two items equal more than forty percent of federal spending.

We seniors have a right to be treated fairly along with all other Americans. We do not have a right to be protected as a special class. We do not have a right to have our benefits protected to the detriment of others.

Nobody is talking about reducing benefits for existing beneficiaries, or reducing benefit checks. What has to be done is to reduce the future long-term liability of these programs and that means changing the growth of future benefits and asking future generations to pay more for these generous benefits. It may also mean that us seniors who no longer pay Social Security or Medicare taxes will have to give up some of our health care flexibility and pay a bit more for services. Why should it be otherwise for the common good?

Tell the AARP to go sell insurance.

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2012 Medicare Part B premium increase only 3.6% after three years. Is there mischief afoot? How realistic are the CMS assumptions?

28 Oct

The Center for Medicare and Medicaid Services (CMS) has announced the 2012 Medicare Part B premium to be $99.90.

Me thinks there is mischief afoot.

While I have no figures to support this, but only forty years of experience developing premiums for employer plans, the Part B premium increase doesn’t add up.  Let’s think about this. A premium is $96.40 in 2009 and $99.90 in 2012. That’s a $3.50 increase or 3.6% (coincidently the same percentage as the increase in Social Security benefits) after three years of health care trend inflation or about 1.2% a year. Does that sound reasonable?  The Part B premium increase is constrained to some extent because the cost increase is spread over all beneficiaries unlike the past several years, bet even so, what’s up?  Keep reading.

On top of that the Part B deductible is decreasing by $22. Why?  The Part A hospital deductible increases slightly to $1156.

In 1967, the first year after Medicare had enrolled beneficiaries, the Part B deductible was $50. If that $50 had kept pace with general (not even medical) inflation, it would be $340 today. However, up until 2005 the deductible was fixed by Congress. Thereafter it is indexed to the increase in Part B costs for beneficiaries, so how does it go down even if there is only a modest increase in beneficiary costs?

According to an article in Kaiser Health News:

Officials attributed the premium surprise to several factors, including lower-than-expected use of medical care and slower cost growth. “Some areas of the program where we’ve had high spikes in the past have been virtually flat in spending growth, so I think today’s announcement just confirms a data trend of much lower utilization and spending growth throughout the Medicare program,” said Jonathan Blum, deputy administrator and director for Medicare at the Centers for Medicare and Medicaid Services.

However, the Medicare Trustees said this in their 2011 annual report released only five months ago in May 2011:

Part B costs, however, have been increasing rapidly, having averaged 6.9 percent annual growth over the last 5 years, and are likely to continue doing so. Under current law, an average annual growth rate of 4.7 percent is projected for the next 5 years. This rate is unrealistically constrained due to a physician fee reduction of over 29 percent that would occur in 2012 under current law. If Congress overrides this reduction, as they have for 2003 through 2011, the Part B growth rate would instead average 7.5 percent.

Kathleen Sebelius

You're doing a heck of a job, but how?

Is CMS now saying the trend in utilization is only about 1.2% a year and is expected to stay that way in the foreseeable future? Apparently they are. And why would you ever decrease a deductible, ever even if you had a good experience year? In this case it’s no doubt some shortsighted provision of the law.

Yet at the same time CMS officials are touting the growing use of “free” preventive services by seniors while Medicare benefits have expanded. In addition, CMS officials say the very modest premium increase assumes that Congress will not, repeat will not allow a nearly 30% cut in physician payment to go into effect in January. And no, this “good news” has nothing to do with health care reform.

Nope, something just doesn’t add up. After three years of growth we see only a 3.6% increase in premiums just five months after the Trustees Report say costs were rising at 6.9% and assuming the cut in physician fees does not take place, will rise at 7.5% in the future.   At the same time CMS says its 3.6% increase for 2012 assumes that the physician cut does not take place.

If you don’t believe the figures, read the statement below.

“Because we’ve kept next year’s premium increase lower than the cost of living adjustment to seniors’ Social Security benefits, the typical retired worker will have nearly $40 more per month in their pocket next year,” said HHS Secretary Kathleen Sebelius.

“Because we’ve kept next year’s premium increase lower…”. It’s the “we’ve kept” you have to worry about.

Related articles

2012 Medicare Part B premium announced – lower than projected.

27 Oct

The U.S. Department of Health and Human Services (HHS) announced that Medicare Part B premiums in 2012 will be lower than previously projected and the Part B deductible will decrease by $22. While the Medicare Trustees predicted monthly premiums would be $106.60, premiums will instead be $99.90. Earlier this year, HHS announced that average Medicare Advantage premiums would decrease by four percent and premiums paid for Medicare’s prescription drug plans would remain virtually unchanged.

Medicare Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. In 2012, the “standard” Medicare Part B premium will be $99.90. This is a $15.50 decrease over the standard 2011 premium of $115.40 paid by new enrollees and higher income Medicare beneficiaries and by Medicaid on behalf of low-income enrollees.

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