Objective 3 (C): Government Programs Flashcards
(36 cards)
Individuals eligible for Medicare coverage (4)
1) Aged - at least age 65 and eligible for Social Security or Railroad Retirement benefits
2) Disabled - entitled to Social Security or Railroad Retirement disability benefits for at least two years
3) End-stage renal disease (ESRD) - insured workers with ESRD, including spouses and children with ESRD
4) Some other aged and disabled individuals who pay mandatory premiums
Types of Medicare coverage (5)
1) Part A - hospital insurance (HI) - eligible persons receive coverage automatically with no premium charge
2) Part B - supplementary medical insurance (SMI)
a) Requires a monthly premium ($99.90 in 2012, except higher for high incomes)
b) Beneficiaries can decline coverage, but a premium penalty (10% per year) applies if coverage is elected at a later date
3) Part C - Medicare Advantage
a) Alternative to Parts A and B. Offered by private plans, which receive a capitation from Medicare, which varies by county and enrollee risk.
b) Typically offer lower cost sharing plus coverage for some services not covered under Medicare
4) Part D - covers most prescription drugs. Provided through private insurers
5) Medicare Supplement - private insurance to cover out-of-pocket costs and some other benefits not covered by Medicare
Services covered by Medicare Part A (4)
1) Inpatient hospital - semi-private room and ancillary services and supplies
2) Skilled nursing facility (SNF) - semi-private room, meals, skilled nursing, and rehabilitative services after a related three-day inpatient hospital stay
3) Home health agency - services following discharge from a hospital or SNF
4) Hospice care - provided to terminally ill patients with life expectancies less than six months
Medicare Part A cost sharing and coverage limits
Based on a benefit period, which starts at admission and ends 60 days after discharge from hospital or SNF. The dollar amounts are indexed, and values shown are from 2015.
1) Inpatient hospital
a) Cost-sharing: $1,260 deductible per benefit period; $315 per day for days 61-90 each benefit period; $630 per day for days 91-150 each lifetime reserve day
b) Coverage limits: 60 lifetime reserve days; no coverage beyond lifetime reserve
2) SNF
a) Cost-sharing: $157.50 per day for days 21-100 of each benefit period
b) Coverage limits: No coverage after 100 days each benefit period
3) Home health agency
a) Cost-sharing: None
b) Coverage limits: 100 visits per illness
4) Hospice care
a) Cost-sharing: None
b) Coverage limits: None
5) Blood
a) Cost-sharing: Cost of first 3 pints of blood
b) Coverage limits: None
Services covered by Medicare Part B (14)
1) Outpatient hospital (including emergency room)
2) Medical care by qualified health practitioners (including diagnostic tests, supplies, and durable medical equipment)
3) An initial preventive care visit within 12 months of enrolling in Part B and yearly wellness visits thereafter
4) Ambulance
5) Clinical laboratory and radiology
6) Physical and occupational therapy
7) Speech pathology
8) Outpatient rehabilitation
9) Radiation therapy
10) Transplants
11) Dialysis
12) Home health care beyond that covered by Part A
13) Drugs and biologicals that cannot be self-administered
14) Certain preventive services (such as an annual flu shot and cancer screenings)
Medicare Part B cost sharing (2)
1) Calendar year deductible ($147 in 2015)
2) Coinsurance after the deductible (usually 20% of the Medicare-approved amount, but does not apply to clinical lab and certain preventive care services)
Drug types excluded from standard Part D coverage (7)
1) Drugs covered by Part A or B
2) Anorexia and weight loss drugs
3) Fertility drugs
4) Cosmetic drugs (including hair loss)
5) Drugs used to relieve cough and cold symptoms
6) Vitamins and minerals (except for prenatal vitamins and fluoride)
7) Over-the-counter drugs
Funding sources for the Medicare program (3)
1) Medicare is funded on a pay-as-you-go basis
2) SMI
a) Part B is financed through contributions from the general fund of the Treasury (75%) and beneficiary premiums (25%)
b) Part D is financed through a separate account in the SMI trust fund, from general revenues (74.5%) and premiums (25.5%)
3 HI (Part A)
a) Payroll tax rate is 1.45% of all earnings (not capped), with a matching employer tax
b) The ACA added an additional 0.9% payroll tax and 3.8% tax on investment income for high-income taxpayers
Approaches for improving Medicare solvency (6)
1) Increase taxes
2) Reduce or eliminate some covered services
3) Increase Medicare cost sharing through higher deductibles and copays
4) Raise the eligibility age for benefits to age 66 or 67
5) Adjust reimbursement to providers of care
6) Encourage new initiatives and expand existing initiatives that lower trend
Medicare provider reimbursement (3)
1) Hospitals - reimbursed on a prospective payment system basis using the diagnosis-related grouping (DRG) methodology. Paid a set amount for each admission (which encourages hospitals to provide services efficiently) based on the patient’s condition and the services provided.
2) Physicians - uses a complex fee schedule to assign relative values to services. Reimbursement equals the sum of area-adjusted unit values, multiplied by a nationwide conversion factor. Unit values for the procedures are based on:
a) Work value - measuring the time and skill required
b) Practice expense - reflecting the cost of rent, staff, supplies, equipment, and overhead
c) Malpractice value - measuring the associated professional liability costs
3) Outpatient services - reimbursed on an outpatient prospective payment system known as ambulatory payment classification
Categories of Medicaid-eligible individuals (4)
1) Categorically eligible groups
a) These groups include children, parents, or other caretakers with dependent children, pregnant women, individuals with disabilities, and seniors
b) Individuals in these categories must also meet income and asset requirements (the minimum criteria is set by the federal government). For example, states must cover all pregnant women and children under age 6 with incomes below 138% of the federal poverty level (FPL).
2) Medically-needy individuals - states often extend coverage to these individuals, who qualify when their medical expenses reduce income below defined limits
3) The State Children’s Health Insurance Program (CHIP) allows states to expand coverage to uninsured children from low-income families not eligible for Medicaid, typically with an upper limit of 200% of FPL
4) The ACA expanded eligibility to everyone under age 65 with income up to 138% of FPL (in states that choose to expand)
Workers in the US who are not covered by Social Security (5)
1) Federal employees hired before 1984
2) About one-fourth of state and local government workers (those who are covered by plans that are comparable to Social Security)
3) A very small number of people who object to receiving governmental benefits on religious grounds
4) Certain agricultural and domestic workers
5) Railroad employees, who are covered by a program similar to Social Security
Requirements for insured statuses under Social Security (3)
One credit is earned for each $1,200 of wages (year 2014, amount is indexed), up to a maximum of four per year. All four credits can be earned at any time during the year
1) Disability-insured status - requires between six credits (at young ages) to 40 credits (at ages 62 or older). Some credits must have been earned recently, as follows:
a) For those required to have 20 or more credits, 20 credits must be from the last 40 quarters
b) For those required to have more than 6 and less than 20 credits, at least half must have been earned after age 21
c) For those required to have 6 credits, all must be from the last 12 quarters
2) Fully-insured status - requires credits equal to the worker’s age minus 22, with a minimum of 6 and a maximum of 40
3) Currently-insured status - requires 6 credits in the 13 calendar quarters ending with the quarter of death
Eligibility and benefit amounts for Social Security disability and survivor benefits (2)
1) Disabled-worker benefits
a) Eligibility - must be disability insured and fully insured and be unable to engage in any “substantial gainful activity” because of a physical or mental impairment that has lasted or is expected to last for 12 months or to result in death
b) Benefit amounts - calculated using essentially the same procedures used for retired-worker benefit amounts, using an assumed age of 62 and no early-retirement reduction factor
2) Survivor benefits
a) Eligibility - family members may receive benefits if the worker was either fully insured or currently insured at time of death
b) Benefit amounts - the worker’s primary insurance amount (PIA) is computed using the standard procedures and assuming an age of 62. Survivors receive a percentage of the PIA:
i) 75% for eligible children
ii) Grading linearly from 71.5% at age 60 to 100% at normal retirement age for eligible widows or widowers
iii) 82.5% for an eligible surviving parent, or 75% each for two parents
iv) A family maximum applies, which is typically 175%
Types of Part D plans (2)
1) Prescription drug plans (PDPs) - private stand-alone plans that offer drug-only coverage
2) Medicare Advantage prescription drug plans (MA-PDs) - plans that offer both prescription drug and health coverage
Requirement for both PDP and MA-PD plans (6)
1) It must offer a basic drug benefit called the “defined standard benefit”
2) It may offer supplemental benefits called “enhanced benefits”
3) It can be flexible in benefit design
4) It must follow marketing guidelines
5) It must meet fairly restrictive formulary guidelines
6) Mandatory mail-order is not permitted
Late enrollment penalty for Part D plans (4)
1) Applies to those who do not sign up for Part D when they are first eligible
2) Is 1% of the base beneficiary premium for every month the person waited to enroll
3) Is paid every month for the beneficiary’s lifetime
4) Does not apply if the individual had creditable coverage through another source (such as an employer or retirement plan). Coverage is creditable if it is at least as good as Medicare Part D.
Employer and union options to provide retiree Rx coverage (3)
1) Employer group waiver plan (EGWP) two options are:
a) Direct contract EGWP - contract directly with CMS to become a PDP
b) “800” series EGWP - outsource to a third-party PDP or MA-PD, who performs the administrative and financial functions of the plan
2) Medicare non-EGWP plan - The payer provides funds for members to enroll in an individual PDP plan
3) Retiree drug subsidy (RDS)
a) The plan sponsor offers its benefit plan as a substitute for Part D
b) The government reimburses the sponsor for 28% of prescription drug spending otherwise covered by Part D for drug costs between the deductible and the RDS cost limit
c) Drug rebates are subtracted from the amount eligible for the subsidy
d) This option is now less attractive after the ACA eliminated the employer tax deduction for the subsidy
Beneficiary cost sharing for the standard Part D benefit design
Note that deductible, initial coverage limit, TrOOP, and catastrophic copays are all indexed annually. Values shown are for 2018.
1) Deductible of $405
2) Initial coverage limit of $3,750, beneficiary pays 25% coinsurance in this range (after deductible)
3) True out-of-pocket cost (TrOOP) of $5,000. In the coverage gap (“donut hole”) between initial coverage limit and TrOOP, beneficiary pays 44% coinsurance for generics and 35% coinsurance for brand drugs.
a) In the coverage gap, manufacturers pay a percentage of brand drug costs that count towards meeting the beneficiaries TrOOP
b) Coinsurance percentages listed are gradually decreasing until they reach 25% in 2020, due to the ACA
4) Catastrophic coverage: After TrOOP, beneficiary pays greater of 5% coinsurance or a copay of $3.35 for generics and preferred multiple source drugs or $8.35 for other drugs
Low-income beneficiaries have a different benefit design
Impact of regulations on the Medicare Advantage (MA) program (4)
MA is the current name of this program wherein Medicare contracts with private plans to provide benefits to seniors and the disabled
1) The Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982 authorized the Medicare program to pay HMOs on a capitated basis. These HMOs were able to lower costs and use the savings to offer more comprehensive benefits than FFS Medicare, so these plans grew steadily.
2) The Balanced Budget Act (BBA) of 1997 significantly reduced health plan payments. About half of the beneficiaries in Medicare health plans exited over the next few years.
3) The Medicare Modernization Act (MMA) of 2003 reignited enrollment by:
a) Creating the Medicare Part D drug benefit
b) Creating regional MA PPOs
c) Creating special needs plans (SNPs)
d) Dramatically increasing payment for MA plans
e) Introducing competitive bidding and risk-adjusted payments
4) The ACA made dramatic changes to MA:
a) MA plans suffered cuts of $136 billion over 10 years
b) A new payment methodology was introduced, reducing county benchmark rates to between 95% and 115% of FFS Medicare rates
c) Bonus payments were introduced for plans that achieve at least four stars under a new star rating system. High-quality plans will receive a bonus of 5% of the new benchmark payment rate, with certain counties being eligible for double bonuses. Rebates were also tied to quality ratings.
d) A minimum medical loss ratio standard of 85% was also imposed
Types of MA plans (3)
1) Coordinated care plans
a) These plans use a network of providers, which CMS must approve to ensure beneficiaries have sufficient access to covered services
b) Other than in an emergency, beneficiaries must use the network in order for the care to be covered
2) Private FFS plans
a) Enrollees can self-refer to any Medicare provider willing to accept the plan’s coverage rules
b) Providers are paid on a FFS basis at Medicare fee schedule rates and do not accept financial risk
3) Medical savings account plans
a) These plans combine a high-deductible MA plan and a medical savings account
b) The account is similar to commercial HSAs, but only Medicare may make a deposit into the account
Types of MA coordinated care plans (5)
1) HMOs - similar to commercial HMOs and represent most MA enrollments. Can offer a POS option to cover services out of network.
2) PPOs - like commercial PPOs, they do not use gatekeepers, have larger networks than HMOs, and provide some coverage for non-contracted providers. Types include:
a) Local PPOs - can choose which counties to operate in
b) Regional PPOs - must serve all counties within their region. They are given more flexibility in meeting access standards
3) Special needs plans (SNPs) - enrollment is limited to individuals with special needs. Most are offered by HMOs. Types include:
a) Dual-eligible SNPs (D-SNPs) - for those eligible for both Medicare and Medicaid. They coordinate the benefits and requirements of the two programs.
b) Institutional SNPs (I-SNPs) - for beneficiaries institutionalized for 90 days (such as in a skilled nursing facility or psychiatric facility)
c) Chronic care SNPs (C-SNPs) - for those with a severe disabling chronic condition (defined by CMS). Must include certain benefits beyond Medicare Part A and Part B services.
4) Religious and Fraternal Benefit Society plans
5) Senior housing facility plans
Payment calculation for MA plans (5)
1) MA plans submit bids to CMS each year, representing their projected costs to cover Part A and B services, net of cost sharing, plus administrative costs and profit
2) The bid amount is normalized to a risk score of 1.0 and then compared to the benchmark. When a plan covers more than one county, the bid and benchmark are calculated as weighted averages of the county-specific amounts.
3) If the bid exceeds the benchmark, the plan must charge beneficiaries a monthly premium to cover the difference
4) If the bid is less than the benchmark, the plan receives a percentage of the resulting savings as a rebate and must use this to provide additional benefits or pay beneficiaries’ Part B or Part D premiums. The rebate is 70% for plans with a rating of 4.5 or 5 stars, 65% for plans with a rating of 3.5 or 4 stars, and 50% for plans with a rating below 3.5 stars.
5) CMS may require changes to the bid if:
a) Beneficiary costs are increasing at an unacceptable rate
b) The proposed profit margin is considered too high
c) The benefit design is considered discriminatory, which could discourage enrollment of sicker beneficiaries
d) The cost sharing design is not at least as generous as FFS Medicare
Payment calculation for Medicare Part D plans (4)
1) Part D plans submit bids to CMS each year, representing their projected costs to provide the standard Part D benefit package, net of cost sharing, plus administrative costs and profit
2) CMS then calculates the following:
a) National average monthly bid = the enrollment-weighted average of all Part D bids received
b) Base beneficiary premium = national average monthly bid * 25.5% / (1 - projected reinsurance payments to Part D plans / projected total claim payments to Part D plans)
c) Direct subsidy - national average monthly bid - base beneficiary premium
3) CMS makes the following payments to plans:
a) Risk-adjusted direct subsidy
b) Low-income premium and cost-sharing subsidies for beneficiaries who qualify for financial assistance
c) Reinsurance to cover 80% of members’ costs in excess of the catastrophic threshold
d) Risk corridor payment
i) The payment is 50% of actual costs that exceed projected costs by between 5% and 10%, plus 80% of the amount exceeding 10% of projected costs
ii) Conversely, the plan must pay CMS using those same percentages when actual costs are at least 5% less than projected costs
4) The plan must charge beneficiaries a premium equal to the difference between the plan’s bid and the direct subsidy
