Paying for the Medicare program

Although the hospital insurance (HI) trust fund acted as a source of strength for the old-age, survivors, and disability insurance program during its recent financial crises, projections by HCFA and CBO reveal that the Medicare program will experience financing problems of its own within the next decade. No one would argue that Medicare's financing problems should be solved simply by raising more money. However, the prospect of insolvency in the HI trust fund and the increasing strain on general revenues from the Supplementary Medical Insurance trust fund require policymakers to survey the options for increasing Medicare revenues while cost-control devices are being developed. Indeed, even if cost-control efforts are completely successful, additional revenues may be needed in the future to finance new initiatives in the Medicare program. Therefore, this paper will look briefly at current efforts to regain control of soaring hospital and physician costs and then examine some of the more feasible options for increasing Medicare revenues.     

The role of Medicare reimbursement in contemporary hospital finance

A hospital, while performing its major function of providing health care, is also viewed as a business. It needs capital from a wide variety of sources, many of which are government regulated. Over the past few years, federal expenditures for Medicare have increased dramatically, as has regulation of hospital revenue sources. Congress enacted the Medicare Prospective Payment System (PPS) to curb hospital cost inflation. This Note examines historical trends in health care financing and analyzes the Medicare reimbursement system, with emphasis on PPS and its impact on hospital revenues. The Note suggests that hospitals, due to the effects of PPS, will be forced to reduce their levels of financial leverage and will have to look for corporate financial alternatives. PPS may signal a new era in hospital finance. Survival mandates an increased focus on efficient corporate, financial and managerial policies.     

Health care financing among the elderly: who really pays the bills?

This paper investigates the issue of who pays the health care bills of the elderly by considering the types of subsidized health insurance protection enjoyed by the noninstitutionalized elderly and the way that increased Medicare cost-sharing efforts in the 1980s are affecting those without additional health insurance subsidies. In making this examination we estimate the out-of-pocket health care expenditures of the elderly either directly or as nonsubsidized medigap premiums by income level, taking into account four types of health insurance subsidies received by elderly persons: Medicare, Medicaid, Veterans Administration health care, and subsidized health insurance from either current or former employers. We find that increased cost sharing is likely to fall most heavily on those elderly least likely to afford it: the poor and near-poor elderly who have only Medicare as a health insurance subsidy, particularly those who are older and sicker and who use Medicare services more heavily. These persons are caught between well-intentioned federal cost-cutting efforts and the often confusing panoply of health insurance programs for the aged, and they will bear an inequitably large portion of any future Medicare cost-sharing initiatives.     

Has PPS increased Medicare expenditures on physicians?

We use data from 1983 and 1985 on the volume of Medicare physician services to analyze whether Medicare's Prospective Payment System (PPS), which resulted in a significant decline in hospital spending, led to a partially offsetting increase in real expenditures for physician services. We also analyze the effect of increases in assignment rates, increasing incomes of the elderly, and other factors on real expenditures during this period. Our main conclusion is that PPS has at most a small positive effect on real physician expenditures. Because people spent less time in the hospital, Medicare physician spending declined; but because of incentives to shift radiology and other services out of the hospital, some of this decline was offset. We also conclude that the sharp increase in Medicare assignment rates over this period, along with the rising incomes of the elderly during this period, contributed to the observed growth.     

Medicare revisited: a look through the past to the future

This paper examines the elderly's out-of-pocket health care expenditures by category of expense, before and after the inception of Medicare. It describes the shifting of out-of-pocket expenses from hospital care to nursing-home care, while physician services and drugs have remained prominent components of out-of-pocket expenditures. Recent corrosive trends in the protection against out-of-pocket liability are discussed and analyzed. The author contends that the raging debate over the Medicare program must include and recognize the concerns of the elderly consumer.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1999--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1999 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae used to determine these amounts. The inpatient hospital deductible will be $768. The daily coinsurance amounts will be: (a) $192 for the 61st through 90th day of hospitalization in a benefit period; (b) $384 for lifetime reserve days; and (c) $96 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and skilled nursing facility coinsurance amounts for 1992--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and skilled nursing facility coinsurance amounts for services furnished in calendar year 1992 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $652. The daily coinsurance amounts will be: (a) $163 for the 61st through 90th days of hospitalization in a benefit period; (b) $326 for lifetime reserve days; and (c) $81.50 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1996--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1996 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $736. The daily coinsurance amounts will be: (a) $184 for the 61st through 90th days of hospitalization in a benefit period; (b) $368 for lifetime reserve days; and (c) $92 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1994--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1994 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $696. The daily coinsurance amounts will be: (a) $174 for the 61st through 90th days of hospitalization in a benefit period; (b) $348 for lifetime reserve days; and (c) $87 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1995--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1995 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $716. The daily coinsurance amounts will be: (a) $179 for the 61st through 90th days of hospitalization in a benefit period; (b) $358 for lifetime reserve days; and (c) $89.50 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1993--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1993 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $676. The daily coinsurance amounts will be: (a) $169 for the 61st through 90th days of hospitalization in a benefit period; (b) $338 for lifetime reserve days; and (c) $84.50 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1998--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1998 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $764. The daily coinsurance amounts will be: (a) $191 for the 61st through 90th days of hospitalization in a benefit period; (b) $382 for lifetime reserve days; and (c) $95.50 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; inpatient hospital deductible and hospital and extended care services coinsurance amounts for 1997--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in calendar year 1997 under Medicare's hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $760. The daily coinsurance amounts will be: (1) $190 for the 61st through 90th days of hospitalization in a benefit period; (b) $380 for lifetime reserve days; and (c) $95 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; notification of hospital discharge appeal rights. Final rule

This final rule sets forth requirements for how hospitals must notify Medicare beneficiaries who are hospital inpatients about their hospital discharge rights. Notice is required both for original Medicare beneficiaries and for beneficiaries enrolled in Medicare Advantage (MA) plans and other Medicare health plans subject to the MA regulations. (For purposes of this preamble, these entities will collectively be known as "Medicare health plans"). Hospitals will use a revised version of the Important Message from Medicare (IM), an existing statutorily required notice, to explain the discharge rights. Hospitals must issue the IM within 2 days of admission, and must obtain the signature of the beneficiary or his or her representative. Hospitals will also deliver a copy of the signed notice prior to discharge, but not more than 2 days before the discharge. For beneficiaries who request an appeal, the hospital will deliver a more detailed notice.     

Medicare program; Part A premium for 1992 for the uninsured aged and for certain disabled individuals who have exhausted other entitlement--HCFA. Notice

This notice announces the hospital insurance premium for calendar year 1992 under Medicare's hospital insurance program (Part A) for the uninsured aged and for certain disabled individuals who have exhausted other entitlement. The monthly Medicare Part A premium for the 12 months beginning January 1, 1992 for individuals who are not insured under the Social Security or Railroad Retirement Acts and do not otherwise meet the requirements for entitlement to Medicare Part A is $192. Section 1818(d) of the Social Security Act specifies the method to be used to determine this amount.     

Medicare program; changes to the hospital outpatient prospective payment system and calendar year 2003 payment rates; and changes to payment suspension for unfiled cost reports. Final rule with comment period

This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In addition, it describes changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2003. This rule also allows the Secretary to suspend Medicare payments "in whole or in part" if a provider fails to file a timely and acceptable cost report. In addition, this rule responds to public comments received on the November 2, 2001 interim final rule with comment period (66 FR 55850) that set forth the criteria the Secretary will use to establish new categories of medical devices eligible for transitional pass-through payment under the Medicare's hospital outpatient prospective payment system. Finally, this rule responds to public comments received on the August 9, 2002 proposed rule for revisions to the hospital outpatient prospective payment system and payment rates (67 FR 52092). CMS finds good cause to waive proposed rulemaking for the assignment of new codes to Ambulatory Payment Classifications and for the payment of influenza and pneumococcal vaccines under reasonable cost; justification for the waiver will follow in a subsequent Federal Register notice.     

Medicare program; inpatient hospital deductible and hospital and skilled nursing facility coinsurance amounts for 1991--HCFA. Notice

This notice announces the inpatient hospital deductible and the hospital and skilled nursing facility coinsurance amounts for services furnished in calendar year 1991 under Medicare's hospital insurance program (part A). The Medicare statute specifies the formulae to be used to determine these amounts. The inpatient hospital deductible will be $628. The daily coinsurance amounts will be: (a) $157 for the 61st through 90th days of hospitalization in a benefit period; (b) $314 for lifetime reserve days; and (c) $78.50 for the 21st through 100th days of extended care services in a skilled nursing facility in a benefit period.     

Medicare program; prospective payment system for hospital outpatient services--HCFA. Proposed rule

As required by sections 4521, 4522, and 4523 of the Balanced Budget Act of 1997, this proposed rule would eliminate the formula-driven overpayment for certain outpatient hospital services, extend reductions in payment for costs of hospital outpatient services, and establish in regulations a prospective payment system for hospital outpatient services (and for Medicare Part B services furnished to inpatients who have no Part A coverage). The prospective payment system would simplify our current payment system and apply to all hospitals, including those that are excluded from the inpatient prospective payment system. The Balanced Budget Act provides for implementation of the prospective payment system effective January 1, 1999, but delays application of the system to cancer hospitals until January 1, 2000. The hospital outpatient prospective payment system would also apply to partial hospitalization services furnished by community mental health centers. Although the statutory effective date for the outpatient prospective payment system is January 1, 1999, implementation of the new system will have to be delayed because of year 2000 systems concerns. The demands on intermediary bill processing systems and HCFA internal systems to become compliant for the year 2000 preclude making the major systems changes that are required to implement the prospective payment system. The outpatient prospective payment system will be implemented for all hospitals and community mental health centers as soon as possible after January 1, 2000, and a notice of the anticipated implementation date will be published in the Federal Register at least 90 days in advance. This document also proposes new requirements for provider departments and provider-based entities. These proposed changes, as revised based on our consideration of public comments, will be effective 30 days after publication of a final rule. This proposed rule would also implement section 9343(c) of the Omnibus Budget Reconciliation Act of 1986, which prohibits Medicare payment for nonphysician services furnished to a hospital outpatient by a provider or supplier other than a hospital, unless the services are furnished under an arrangement with the hospital. This section also authorizes the Department of Health and Human Services' Office of Inspector General to impose a civil money penalty, not to exceed $10,000, against any individual or entity who knowingly and willfully presents a bill for nonphysician or other bundled services not provided directly or under such an arrangement. This proposed rule also addresses the requirements for designating certain entities as provider-based or as a department of a hospital.     

From shared cost to block funding and beyond: the politics of health insurance in Canada

This paper takes as its starting point recent major changes in arrangements between the federal and provincial government in Canada concerning the sharing of costs for health insurance programs. The switch from a shared cost (conditional grant) to a modified block funding system was motivated by federal desires to limit and make predictable their expenditures, by provincial desires to increase the flexibility of their allocation of funds and by a mutual desire to limit any growth of health care costs as a proportion of GNP. Concerns related directly to improving medical care delivery were insignificant The changes will effectively centralize responsibility for program financing and program delivery, thus providing a powerful incentive for provincial governments to apply very strong measures to control costs. For reasons largely external to the relationship between public sector insurers and the suppliers of medical services, these attempts are unlikely to be successful in the short run. The probable impact of this difficulty on government and members of the health care delivery system is assessed.