Tag Archives: Medicare

Solving the Social Security problem…really

25 Apr

Now that the Trustees have again warned of the declining status of Social Security the rhetoric and finger pointing will begin and the AARP will ramp up its misleading advertising designed to rile up us seniors. What a shame we don’t put our resources to more productive use.

Many ways to deal with the long-term problems of Social Security have been studied and proposed. They do not destroy Social Security, they do not cut the benefits of current beneficiaries or those near retirement. These steps have been proposed by several commissions, some politicians and independent researchers.

Here we sit in 2012 knowing what is coming and doing nothing other than play politics.

President Barack Obama’s re-election campaign used the new data to attack Mr. Romney, with spokesman Ben LaBolt saying the former Massachusetts governor would make “devastating cuts to Medicare and Social Security” which “would end America’s social compact with our seniors.”

The fact is we must do something. The fact is that “something” can be rather modest if it is done soon and the fact is nobody’s current or earned benefits need to be cut.

We need to adjust the full retirement age to reflect a rising life span, we need to adjust future ways of calculating cost of living adjustments and how they are applied and perhaps we need to adjust the payroll tax for some workers.

Does any of that sound draconian, does any of it affect those of us collecting benefits?

Talk about ending America’s social compact with our seniors, do nothing and that compact will surely end.

We should be supporting the politicians who act quickly and responsibly rather than threatening them at the polls as the AARP suggests.

Also read this previous post on fixing Social Security

Related articles

Insurance coverage mandates are nothing new

2 Apr

The United States Supreme Court. The individual mandate to carry health insurance is under the microscope with a very basic question as to whether Congress has the authority to make such a requirement. Frankly, I don’t know the legal answer and given a unanimous verdict by the Supreme Court is unlikely, I guess no one else is 100% certain either. However, it seems to me that there is more than one way to create a mandate.

Take Medicare for example. Do you really have a choice of enrolling in Medicare? The obvious answer is yes you do, but hold on, is it a real choice? If you don’t want Medicare, can you buy other coverage instead? No you can’t, nobody can sell such coverage. Even coverage that supplements Medicare is regulated by the federal government and there is talk of trimming the coverage you can buy to pay your Medicare co-pays and deductibles.

Some people in Congress think too much insurance coverage leads to higher costs … they may have a point.

If you continue to work and have employer health coverage, you must keep your employer coverage even when you turn 65, you can’t use Medicare as your primary coverage even if you wanted to. Before this requirement was part of the Medicare law employers generally required you to use Medicare with the employer plan as supplemental.

If you delay enrolling in Medicare beyond your initial enrollment period, there is a penalty to pay. For Part B that penalty is ten percent for each year of delayed coverage; for Medicare Part D the penalty is 1% for each month you delay enrollment. In addition, you may enroll only during a three-month enrollment period held once each year. The reason for all this is simple; to prevent adverse selection when people enroll in coverage only when they anticipate using the benefits.

It seems that rules and regulations and penalties abound regarding your choices of health care, at least when you are as old as I am.

Granted the above are implicit mandates, but in the final analysis are they much different from the requirement to carry health insurance contained in the Affordable Care Act? This is the same logic used for the individual mandate under the Affordable Care Act; if you don’t take coverage, you pay a penalty to partially offset the additional cost created by those who enroll only when they expect to use the coverage. I am still free to not enroll for health insurance, but rather than pay a surcharge or suffer a delay in coverage when I decide I need it, I am required to pay an upfront penalty.

Such limitations and penalties are designed not to protect the individual, but the pool of insured that must eventually carry the cost burden for less responsible citizens. Boy, I’m glad I am not on the Supreme Court.

This debate all comes down to these rather simple words crafted by our Founders in the Constitution outlining the rights of Congress:

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

The essence of the argument seems to be whether Congress is creating commerce by requiring coverage and then regulating what it created.  Frankly, I think I could argue this either way and that’s scary. What is even scarier is that a one sided Congress hell bent on getting its way could not craft a better way to reach the same goal of expanded coverage without creating a Constitutional crisis. Arrogance has its unintended consequences too.

Independent Payment Advisory Board (IPAB) under attack from all sides; who has a better idea? Rationing, you say, you betcha!

16 Mar
OBAMACARE WATCH:.....CONGRESSIONAL BUDGET OFFI...

About that $3.1 billion

The Independent Payment Advisory Board contained in the Affordable Care Act has come under fire since it was first floated as an idea. The purpose of the IPAB is to find ways to control the cost of Medicare when certain expense targets are exceeded. The Board is limited in what it can do to affect this control, but that doesn’t seem to matter to critics. It is perceived as government control over health care and an initiative that is counter to allowing the markets to dictate costs through competition. 

First the IPAB was the dreaded “death panel,” now it will exercise too much bureaucratic control over the health care system and finally there is H.R. 452, the Medicare Decisions Accountability Act of 2011, a bill to repeal the Board entirely. The repeal believe it or not has (or had) some bi-partisan support until Republicans tied other changes to the legislation.  Now there is another snafu because the Congressional Budget Office reported that repealing the IPAB would increase direct spending. Here is what the CBO said on March 7.

SUMMARY 

H.R. 452 would repeal the provisions of the Affordable Care Act (ACA) that established the Independent Payment Advisory Board (IPAB) and created a process by which that Board (or the Secretary of the Department of Health and Human Services) would be required under certain circumstances to modify the Medicare program to achieve certain specified savings.

CBO estimates that enacting H.R. 452 would not have any budgetary impact in 2012 but would increase direct spending by $3.1 billion over the 2013-2022 period. That estimate is extremely uncertain because it is not clear whether the mechanism for spending reductions under the IPAB authority will be triggered under current law over the next 10 years. However, it is possible that such authority would be triggered in one or more of those years; thus, repealing the IPAB provision of the ACA could result in higher spending for the Medicare program than would occur under current law. CBO’s estimate represents the expected value of a broad range of possible effects of repealing the provision over that period.

An opinion piece in the Wall Street Journal, March 9, 2012 is less than friendly to the IPAB and less accurate than one would hope. However, most disturbing about ongoing criticism are both the lack of viable alternatives and a lack of understanding about how the system works. These factors coupled with a misplaced faith in market forces and competition is getting us nowhere fast both with Medicare and the health care system in general.

…IPAB really does embody ObamaCare’s innermost values and beliefs—to wit, that health decisions are too important to leave to the people receiving the care (patients), the people providing the care (doctors and hospitals), the people paying for the care (taxpayers), or even the people who got the government involved in the first place (politicians).

Instead, supposedly independent experts will run a battery of small experiments, figure out which ones “work” and then impose them through Medicare’s price controls on all U.S. medicine. When health spending in a given year exceeds a budget benchmark, as it always does and will, the 15 White House-appointed wise men will work their miracles…

Those “experiments”  will be changes in the way we pay for health care, perhaps similar to what is already being tried in the form of Accountable Care Organizations, bundled payments, hospital readmission programs, medical homes, etc.  Will they all work, probably not, but what’s new. If they don’t work, I can tell you one thing, it will be in large part because neither patients not providers want them to work.

The WSJ also says this:

“It’s also among the reasons Paul Ryan’s Medicare reform is so much better than Mr. Obama’s. Beneficiaries would receive a “premium support” payment to buy insurance, and insurers and providers would compete for business on value for money. What “works” is what millions of consumers decide.”

“Premium” and “support” are two words that also mean “defined contribution”, a tact now being taken by more and more employers which is merely a form of cost shifting.  Simply put, the beneficiary gets a fixed amount of money to spend on health care or the purchase of insurance.  They are then free to buy what they want with the fixed amount of money while any additional expenses come from their pocket.  In the case of Medicare the theory is that with this payment beneficiaries will be free to buy traditional Medicare or any of a number of other private plans that will “compete” for the fixed pool of money.  But how does all this competition save money?  Medicare is already the lowest payer except for Medicaid. Do we expect private plans to exert stronger oversight over claims and services provided, like tighter medical necessity controls, tighter networks, etc?  Sounds like another form of the dreaded rationing, either that or more interference between patient and their doctor.  Isn’t that what we have been accusing insurers of doing and what we don’t like?

We have well-intentioned dreamers out there who sincerely believe that empowered patients will seek efficiency forcing prices down and that somehow private insurers have a magic bullet that allows them to control costs.  If all that is true and if we are truly concerned about health care costs why hasn’t competition already worked?  Insurers compete for business among employers, there are many different insurers in a given area, patients are free to change coverage and in large employers to choose among several health plans. In many cases spouses can choose between two different employer plans. In other words, there is a lot of choice out there already.  Is cost a motivator?  Employees of employers large and small are paying thousands of dollars a year in premiums and that’s only a small portion of the cost, but you would think that paying $4,000 to $6,000 in premiums would provide motivation to shop around.

In addition to the fact that health care purchases are like no other purchases, there is one factor none of the current proposals consider. Pricing is left to the health care providers.  Medicare and Medicaid set prices which are 20% or so below market, each private carrier then negotiates an acceptable fee with providers and providers who do not accept an in-network fee charge the patient whatever they want and the patient has no recourse.  It’s the pricing stupid!

The only alternative, and the IPAB’s true end game, is harsher and more arbitrary price controls and eventually limits on the care patients are allowed to receive. The New England Journalists (of Medicine) deny this reality because ObamaCare has a clause that prohibits “rationing,” even as the law leaves that term undefined. But reducing treatment options will be inevitable as government costs explode.

Yes, WSJ, that is the end game.

Note to America: Whether it is price controls, premium support, or limits on what will be paid for, it is all “rationing.”  If we are going to save money and lower the future trend for health care costs, we must spend less money.  If anyone thinks we are all going to get the same, unlimited, open-ended health care we now think we need, or that providers will have the same level of income, then we are just kidding ourselves or we are outright fools… go ask the rest of the world.

Related articles

Is an Accountable Care Organization in your future? Let’s hope so

15 Mar

The New York Times, March 13, 2012 contains an article on the growth of Accountable Care Organizations (ACO) spurred by the Affordable Care Act with regard to Medicare patients. The article says in part:

A.C.O.’s, as they are known, are collections of medical providers who band together under one business umbrella. The organization can include primary care doctors, specialists, social workers, pharmacists and nurses. The difference is in how these providers are paid: Instead of an insurance company or the government reimbursing each provider for each service provided to each patient, the A.C.O. is paid simply to care for a group of patients.

If the ACO can reduce the cost of caring for the patients while maintaining their health, it gets to keep and divide up some of the savings — a powerful incentive to do things differently, experts hope. But if the A.C.O. cannot meet quality measures and costs rise, the providers in the organization may well receive lower payments.

For those of you who have been around awhile this may sound strikingly like an HMO and in many ways it is. HMOs paid either salaries to physicians or a capitation, a fixed fee per patient per month to provide all needed care. One big difference with the ACO is that the patient is free to seek medical care outside the ACO at any time without prior approval. However, this freedom may be a shortcoming as it violates this main goal of coordinated care.

Medicare patients will be placed into an ACO without their knowledge and may never know their providers are within the ACO. ACOs are slowly growing for the non Medicare population as well.

Before you jump all over this as a violation of your Constitutional rights, consider the benefits to better coordinated, more efficient care. Forget the potential cost savings, what you should really care about is better health care, less duplicate tests and unnecessary care, more coordination among your doctors and other providers. Saving money is a side benefit.

Will the ACO model work? That is open to debate. However, in my view changing the system in this way is the last best hope before outright price controls as used in most other countries. The problem is that it will be a decade or more before ACOs are sufficiently widespread to measurably affect health care quality and cost for the general population.

HMOs failed because patients didn’t like closed networks and because we perceived skimping on care to save money (a sad commentary on the faith we put in our health care providers). Let’s hope the same questionable allegations do not kill the ACO before it gets a fair chance. Some providers see it unfair to place the financial risk mostly on providers and fear payments will be insufficient to cover costs. Only time will tell if we get it right this time.

Price fixing may save money in the short run, but it will do nothing to improve or perhaps even sustain our quality of health care.

Medicare premium $247 in 2014 – false information won’t go away

13 Mar

I am beginning to become disillusioned about the ability of people to think and reason and not be blinded by prejudices  [i]. . . he said with tongue in cheek.  It seems that people will believe what they want to believe and not be deterred by the facts.

I have written frequently that the rumor about the Medicare Part B premium increasing to $247 in 2014 is not true and yet I still get comments to the contrary.  The latest is that Snopes.com says it is true. No, Snopes does not say that at all.  Here is what it says:

From Snopes:

As for future Medicare Part B premium rates, the information cited above is wrong on two counts: No provision of the health care legislation passed during the Obama administration sets Medicare premium rates, nor is a whopping jump of over 100% to a $247.00 monthly premium in 2014 a realistic figure.

Many people, it seems, just want to believe that so-called Obamacare is responsible for a tremendous jump in Medicare premiums (and no doubt the tornadoes in the mid-west as well).  That is not true; there is nothing in the Affordable Care Act that talks about the Medicare premium.

So far I have been accused of lying, of being a liberal, of being a supporter of President Obama and I forgot what else because of posting the truth about the Part B premium rumor.  Frankly, I am none of those, but I am one thing.  I am scared to death that some of these people are going to vote.

If you want to believe rumors and Internet nonsense that is your right, but for Pete’s sake, don’t spread false information or any information without checking out the facts.  You can go to Snopes, Fact Checker and other sources if you like.  In this case you can read the Medicare Trustees Report and you can easily get the full text of the Affordable Care Act.  You can do all kinds of productive things before you spread rumors, try it sometime.

Here is a tip. Just because it is on the Internet or you receive an e-mail along with another four million people, does not make it true.

[i] a preformed opinion, usually an unfavorable one, based on insufficient knowledge, irrational feelings, or inaccurate stereotypes

Related articles

CMS announces new Medicare Summary Notice (sometimes referred to as an Explanation of Benefits)

8 Mar

I am an experienced health benefits professional yet at times I have trouble understanding what Medicare paid on a claim, what my supplemental coverage will pay and what I am responsible to pay. Medicare has looked at this issue and has redesigned the statement beneficiaries receive explaining their benefits.

I have to say, good job! Many private carriers can take a hint from this design. At the bottom of this post you can link to the new Summary Notice.

Medicare redesigns claims and benefits statement

As part of National Consumer Protection Week, the Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), Marilyn Tavenner, announced the redesign of the statement that informs Medicare beneficiaries about their claims for Medicare services and benefits. The redesigned statement, known as the Medicare Summary Notice (MSN), will be available online and, starting in 2013, mailed out quarterly to beneficiaries.

This MSN redesign is part of a new initiative, “Your Medicare Information: Clearer, Simpler, At Your Fingertips,” which aims to make Medicare information clearer, more accessible, and easier for beneficiaries and their caregivers to understand. CMS will take additional actions this year to make information about benefits, providers, and claims more accessible and easier to understand for seniors and people with disabilities who have Medicare. This MSN redesign reflects more than 18 months of research and feedback from beneficiaries to provide enhanced customer service and respond to suggestions and input.

“Consumer protection starts with making sure consumers not only get timely and accurate information, but that they understand what services they’re receiving from Medicare,” said Acting Administrator Tavenner. “The new Medicare Summary Notice empowers Medicare’s seniors and people with disabilities. The statement is easier to understand and navigate, and makes clear what information to check and how to report potential fraud. The new MSN also makes it easier for people with Medicare to understand their benefits and file appeals if a claim is denied.”

To see a side-by-side comparison of the former and redesigned MSNs, please visit:

New Medicare Summary Notice

The redesign of the MSN includes several features not currently available to Medicare beneficiaries with the current MSN:
· A clear notice on how to check the form for important facts and potential fraud;
·
· Clearer language, including consumer-friendly descriptions for medical procedures;
· Definitions of all terms used in the form;
· Larger fonts throughout to make it easier to read;
·

Starting later this week, the redesigned MSN will be available to beneficiaries on mymedicare.gov, Medicare’s secure online service for personalized information regarding Medicare benefits and services; and, in early 2013, paper copies of the redesigned MSN will start to replace the current version being mailed.

# # #

2012 Retirement Security Survey Ha! Ha! Ha! LOL

24 Feb
 
English: A member of the audience holds a &quo...

Thank you indeed, we will take all we can get, even from the millionaires and billionaires

I recently received the “2012 Retirement Security Survey” in the mail.  Great I thought; somebody is really looking at this important subject.  I will fill this one out for sure.  Oops, upon closer examination the document turns out to be propaganda from Democratic National Headquarters and a request for a donation.  There is no serious attempt to gain any valuable information.

Of course, Democrats are not alone with such nonsense, but some of the text of the “survey” really caught my eye because it is so outrageous in its claims and more than anything else it panders to people (mostly elderly) while ignoring the consequences for us all of staying a course of unlimited entitlements, irresponsible spending and long-term growing liabilities.

Here is an example:

“Republicans are working to turn back the clock on civil rights, destroy trade unions and the right to collective bargaining, deny women health care and vital family planning services, dismantle the Environmental Protection Agency, slash investments in education and medical research and to repeal President Obama’s historic health care reform.”

Another few examples:

“They (Republicans) abandoned seniors who fall into the prescription drug “donut hole” to give tax breaks to millionaires and billionaires. And they’ve developed plans to cut Social Security by slashing benefits and raising the retirement age.”

I’m still trying to figure out how much of this has to anything do with a retirement survey, but of course I know the real purpose of this mailing which is to scare the hell out of people, especially seniors.  This message and misleading information is not unlike that frequently issued by the AARP.

Then we have the objective questions contained in the actual survey:

  • Do you oppose the decision by House Republicans to end Medicare while protecting tens of millions of dollars in subsidies for Big Oil?
  • Do you oppose the Republican Party’s position of cutting Medicare for future retirees so they can extend the Bush tax cuts for millionaires and billionaires?
  • The health care reform law passed last year closes the Medicare prescription drug benefit donut hole.  Do you support this plan to help seniors pay for expensive prescription drugs?

How is all that for an objective set of survey questions?  Hey, doesn’t everyone love Big Oil, billionaires and donut holes? 

Within this blog I have addressed many of these issues over the last few years, especially why it is so important to future generations for this generation to fairly and prudently address the growing costs of Medicare and Social Security.  Any political party that panders to people creating the we can have it all expectation and the only thing that needs to change is to place higher taxes on millionaires and billionaires (defined as families earning $250,000 or more) is doing a great disservice to this Country and its citizens.

Extreme right Republicans who believe that the average American can do without many government programs is equally irresponsible.  The left underestimates Americans and sees them as totally dependent on government and the right over estimates the American ability or willingness for self-sufficiency.  Dare I say that puts us some place in the center?

I see no purpose in addressing the other side of some of these claims, but I can’t resist pointing out a few items.

A few Republican governors have taken on public employee unions and rightly so and in the best interests of all of a state’s citizens. 

Republicans are the ones who started Medicare drug coverage in the first place, albeit with no funding to pay for it.

Nobody is denying women health care or vital family planning services, not even a big bad insurance company denies anyone health care . . . think about it.

Nobody is proposing to slash Social Security benefits, but rather to slow the growth in future benefits, quite modestly as a matter of fact once you look at the numbers.

Nobody is going to destroy Medicare or Social Security, but to keep denying the need for meaningful reform will cause just as much harm.

You may want to review the Social Security, Health Care and Medicare categories on this blog for additional discussions on these topics.

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.

Obamacare regulations and hidden costs

27 Dec
Senate Passes Insurance Industry Aid Bill

Money, money everywhere

By now we all know that the Affordable Care Act contains thousands of pages of new legislation mostly unread by those who enacted the law. It also contains about 1500 references to discretion to be exercised by the Secretary of Health and Human Services. Since enactment, various government departments have issued a flood of regulations, including in some cases changing provisions of the law (although for the better).

Medicare has initiated scores of pilot programs designed to change the way Medicare operates, pays for services and the way health care is practiced. Rules for employers are in process and of course, the biggy will be the rules operating the health insurance exchanges beginning in 2014. That’s a lot of rules and regulations for a lot of people to comply with.

On December 27, 2011 the Wall Street Journal published an editorial about regulations and this section caught my eye.

Then there’s the Affordable Care Act. Christopher Conover and Jerry Ellig of the Mercatus Center at George Mason University, in a trio of forthcoming papers, systematically examine every rule issued to date to create the new health-care entitlement. They conclude that “the federal government used a fast-track process of regulatory analysis that failed to comply with its own standards, and produced poorly substantiated claims about the ACA’s benefits and costs”—including an upward bias for benefits, a downward bias for costs, and numerous material omissions. Little wonder for a law that contains the phrase “the Secretary shall” 1,563 times. The Mercatus Center evaluates all major rules that cost over $100 million a year on a composite score of a dozen regulatory best practices. The Health and Human Services Department’s highest-scoring ObamaCare rules came in at 25 out of 60 points, the lowest at 13. These are not merely bad grades. They are relative Fs on the regulatory curve—about 35% to 40% lower than the averages for the other rules that the executive branch put out in 2008 and 2009. The ObamaCare rules score lower than other HHS rules in 2009.

You can think what you like about the ACA, but the fact remains it is a complex law and growing more so each day. It is not at all clear that the benefits outweigh the costs nor do we know the true costs, especially those hidden in employer and other entity compliance. The bottom line is that for good or bad the ACA is only the start of what must be done to manage health care costs in America.

We can only hope that first expanding coverage and enhancing benefits does not make the real task impossible to achieve.

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

Putting five million retirees at risk for higher health care costs – why changing the status of the Medicare Part D rebate to employers is a bad idea

26 Mar

 

As companies take the accounting charge related to the loss of the tax deduction for prescriptions drugs under the Medicare Part D rebate, the Administration is spinning the issue as no big deal. Well, yes it is a big deal because five million retirees may lose their company prescription benefits or see them reduced. If they are forced into Medicare Part D drug coverage these retiree’s out of pocket costs for prescription drugs will rise and they will lose the safety net of having their former employer manage their benefits and provide assistance when necessary.

This rebate was crafted not as a windfall for corporations as some in Washington now claim, but to encourage them to keep the coverage and to save the federal government money on Part D subsidies.

The White House press secretary recently said they were just closing a loophole. What nonsense, it is a pure revenue raiser for health care reform. However, keep in mind that the cost of this rebate is less than half of the governments cost per person for Part D. In a joint letter to Sen Harry Reid in December 2009, the American Benefits Council and the AFL-CIO pointed out: 

 

Independent calculations show that if as few as 24 percent of retirees are dropped from employer plans and obtain coverage through Medicare Part D, then Section 9012 will be a net revenue losing provision. 

 

This alert was dismissed out of hand as were many others pointing out the likely unintended consequences of reform as then conceived and now the law of the land.

During the Fall of 2009 I and several colleagues from other companies  met with dozens of House and Senate staffers on this issue trying to explain the impact of the change, it’s implications for retirees and the potential increase in government costs. Not one person we talked to knew about the issue or was aware it was even in the legislation. Several expressed shock, some asked that we talk to other staffers and to budget staff members.

As you can see, the result was simply ignoring all they were told.  Today the White House and others in Washington blame employers for overreacting, who will they blame when retirees lose their prescription coverage…as if we had to ask.

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