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.     

Financial consequences of joining a Medicare HMO: an application of the illness episode approach to estimating out-of-pocket costs

To reduce Medicare costs, Medicare beneficiaries are being encouraged to enroll in "risk contract" HMOs. This paper explores the financial consequences to the elderly of joining a Medicare risk HMO. Using a new method for estimating consumer financial vulnerability called the illness episode approach, we modeled the out-of-pocket costs associated with thirteen illnesses of varying severity for beneficiaries with traditional Medicare coverage only and for beneficiaries who join one of two Los Angeles HMOs which charge no additional premium. The typical total charges for a year's treatment of these thirteen illnesses in Los Angeles in 1986 ranged from a low of $856 for moderate hypertension to a high of $28,411 for care of a severe stroke. For beneficiaries with traditional Medicare whose providers did not accept assignment, out-of-pocket costs ranged from $539 to $14,676 and from a low of 7.7 percent to a high of 84.1 percent of total charges. Out-of-pocket costs are considerably reduced in the two Medicare HMOs in this high-cost market; beneficiaries had modeled out-of-pocket costs ranging from $11 to $7,478 and from less than 0.1 percent of total charges to 60 percent of charges. Reductions in financial vulnerability ranged from over 20 percent to 99.3 percent. The relation of these reductions to altered benefit structures and the policy implications of the results are discussed.     

Adoption of retrospective Medicare maximization billing practices by state Medicaid home care programs

Home care services funded by Medicare and Medicaid grew rapidly throughout most of the 1990s. During this period some state Medicaid programs transferred costs for home care claims to the Medicare program to reduce their liability and increase beneficiary access to Medicare coverage. This article reports the findings of the first national study of these Medicare maximization billing practices for home care services. Primary data were collected to determine which states conduct retrospective Medicare billing practices and the amounts recovered from Medicare. Our analysis indicates that seven states recovered as much as dollar 265 million from Medicare in state and federal dollars during the 1990s. Ratios of recovered expenditures-to-costs incurred for retrospective billing practices conducted in Connecticut, New York, and Massachusetts are between 5:1 and 7:1. While retrospective billing practices may aid states in reducing Medicaid outlays and potentially help dual Medicare beneficiaries gain coverage for their home care claims, they increase Medicare expenditures for home care at a time of concern for the long-term financial viability of Medicare and illustrate the need for reforming our national long-term care financing policy.     

Medicare and Medicaid programs; religious nonmedical health care institutions and advance directives. Health Care Financing Administration (HCFA), HHS. Interim final rule with comment period

This rule deletes all references to Christian Science sanatoria and sets forth the Medicare requirements for coverage and payment of services furnished by religious nonmedical health care institutions. It also sets forth the conditions of participation that religious nonmedical health care institutions must meet before they can participate in Medicare. It sets forth the methods we will use to pay religious nonmedical health care institutions and monitor expenditures for religious nonmedical health care institution services. Additionally, the rule presents the rules governing optional coverage of religious nonmedical health care institution services by States under the Medicaid program.     

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.     

Medicare and Medicaid programs; religious nonmedical health care institutions and advance directives. Final rule

This final rule implements requirements under the Balanced Budget Act of 1997, which set forth requirements for the new Religious Nonmedical Health Care Institution program and advance directives. This rule finalizes the Medicare requirements for coverage and payment of services furnished by religious nonmedical health care institutions, the conditions of participation that these institutions must meet before they can participate in Medicare, and the methodology we will use to pay these institutions and monitor expenditures for services they furnish. This rule also finalizes the rules governing States' optional coverage of religious nonmedical health care institution services under the Medicaid program. Additionally, this final rule addresses comments we received on the November 30, 1999, interim final rule and also makes minor changes to clarify our policy. Lastly, this rule incorporates a minor change to the requirements for advance directives.     

Access to health care and equal protection of the law: the need for a new heightened scrutiny

Proposals to reduce national expenditures for health care under Medicare and other programs raise questions about the limits on legislative power to distribute health care benefits. The constitutional guarantee of equal protection has been a weak source of protection for the sick, largely because they fail to qualify for special scrutiny under traditional equal protection analysis. Recent decisions of the United States Supreme Court suggest that the Justices seek a newer, more flexible approach to reviewing claims of unequal protection. This Article examines the application of the equal protection guarantee to health-related claims. It argues that traditional equal protection analysis is too rigid and newer rationality review too imprecise to provide just eligibility determinations. The Article concludes that courts should subject claims of unequal protection in the health care context to heightened scrutiny, as health care plays a special role in assuring equality of opportunity.     

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.     

Capital cost reimbursement to community hospitals under Federal health insurance programs

Issues in current capital cost reimbursement to community hospitals by Medicare and Medicaid are described, and options for change analyzed. Major reforms in the way the federal government pays for capital costs--in particular substitution of other methods of payment for existing depreciation reimbursement--could have significant impact on the structure of the health care system and on government expenditures. While such reforms are likely to engender substantial political opposition, they may be facilitated by broader changes in the reimbursement system.     

Medicare program; physician fee schedule update for calendar year 1997 and physician volume performance standard rates of increase for Federal fiscal year 1997--HCFA. Final notice

This final notice announces the calendar year 1997 updates to the Medicare physician fee schedule and the Federal fiscal year 1997 volume performance standard rates of increase for expenditures for physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1848 (d) and, (f), respectively, of the Social Security Act. The fee schedule updates for calendar year 1997 are 1.9 percent for surgical services, 2.5 percent for primary care services, and -0.8 percent for other nonsurgical services. While it does not affect payment for any particular service, there was a 0.6 percent increase in the update for all physicians' services for 1997. The physician volume performance standard rates of increase for Federal fiscal year 1997 are -3.7 percent for surgical services, 4.5 percent for primary care services, -0.5 percent for other nonsurgical services, and a weighted average of -0.3 percent for all physicians' services.     

Medicare program; physician fee schedule update for calendar year 1996 and physician volume performance standard rates of increase for federal fiscal year 1996--HCFA. Final notice

This final notice announces the calendar year 1996 updates to the Medicare physician fee schedule and the Federal fiscal year 1996 volume performance standard rates of increase for expenditures for physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1848 (d) and (f), respectively, of the Social Security Act. The fee schedule update for calendar year 1996 is 3.8 percent for surgical services, -2.3 percent for primary care services, and 0.4 percent for other nonsurgical services. While it does not affect payment for any particular service, there was a 0.8 percent increase in the update for all physicians' services for 1996. The physician volume performance standard rates of increase for Federal fiscal year 1996 are -0.5 percent for surgical services, 9.3 percent for primary care services, 0.6 percent for other nonsurgical services, and a weighted average of 1.8 percent for all physicians' services. In our July 26, 1995 proposed rule concerning revisions to payment policies under the Medicare physician fee schedule for calendar year 1996, we proposed using category-specific volume and intensity growth allowances in calculating the default Medicare Volume Performance Standard (MVPS). We received 20 comments on this proposal. Since this proposal is related to the MVPS and this notice deals with MVPS issues, we are responding to those comments in this notice instead of in the final rule for the fee schedule entitled "Medicare Program; Revisions to Payment Policies and Adjustments to the Relative Value Units Under the Physician Fee Schedule for Calendar Year 1996" published elsewhere in this Federal Register issue.     

Medicare program; physician fee schedule conversion factor for calendar year 1998 and sustainable growth rate for fiscal year 1998--HCFA. Final notice

This final notice announces the calendar year 1998 Medicare physician fee schedule conversion factor and the fiscal year 1998 sustainable growth rate for expenditures for physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1846(d) and (f), respectively, of the Social Security Act. The 1998 Medicare physician fee schedule conversion factor is $36,6873. The sustainable growth rate for fiscal year 1998 is 1.5 percent.     

Medicare program; sustainable growth rate for fiscal year 1999--HCFA. Notice with comment period

This notice announces the fiscal year 1999 sustainable growth rate (SGR) for expenditures for physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by section 1848(f) of the Social Security Act. The SGR for fiscal year 1999 is -0.3 percent. The negative fiscal year 1999 SGR is driven by the projected drop in Medicare fee-for-service enrollment.     

Physician performance standard rates of increase for federal fiscal year 1994 and physician fee schedule update for calendar year 1994--HCFA. Final notice with comment period

This notice announces the calendar year (CY) 1994 updates to the Medicare physician fee schedule and the Federal fiscal year (FY) 1994 performance standard rates of increase for expenditures and volume of physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1848 (d) and (f), respectively, of the Social Security Act. The physician performance standard rates of increase for Federal FY 1994 are 8.6 percent for surgical services, 10.5 percent for primary care services, 9.2 percent for other nonsurgical services, and 9.3 percent for all physicians' services. The fee schedule update for CY 1994 is 10.0 percent for surgical services, 7.9 percent for primary care services, and 5.3 percent for other nonsurgical services. This notice also references the surgical and nonsurgical designations for new and revised procedure codes in the Physicians' Current Procedural Terminology, to be used in applying the CY 1994 updates and for establishing and measuring expenditures under the MVPS for FY 1994. These designations appear in Addendum C of the final rule with comment period entitled "Medicare Program; Revisions to Payment Policies and Adjustments to the Relative Value Units under the Physician Fee Schedule for Calendar Year 1994 (BPD-770-FC)," published elsewhere in this Federal Register issue. The new and revised surgical and nonsurgical designations are subject to public comment. In addition, this notice addresses public comments on the "initial" procedure-specific list of surgical services published in our November 25, 1992, notice.     

Medicare's fiscal problems: an imperative for reform

Many observers have noted that Medicare expenditures will significantly outstrip projected revenues over the course of the next 25 years. This paper examines the economic and demographic assumptions behind forecasts of Medicare hospital insurance and supplementary medical insurance expenditures and revenues and analyzes various strategies for closing the impending gap. It is argued that the present forecasts already assume considerable success in controlling hospital costs and physician payments, making substantial further savings unlikely. Shifting more of the burden onto the elderly through increased cost sharing or higher premiums also will not solve the program's fiscal problems over the long term. The remaining alternative--imposing higher income or payroll taxes on the under-65 population--is also unlikely to be a welcome solution. The authors argue that, eventually, the nation must choose between some form of a two-tier system of benefits or a Canadian-style national health insurance system.     

Physician fee schedule update for calendar year 1995 and physician volume performance standard rates of increase for federal fiscal year 1995--HCFA. Final notice

This final notice announces the calendar year (CY) 1995 updates to the Medicare physician fee schedule and the Federal fiscal year (FY) 1995 volume performance standard rates of increase for expenditures for physicians' services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1848(d) and (f), respectively, of the Social Security Act. The fee schedule update for CY 1995 is 12.2 percent for surgical services, 7.9 percent for primary care services, and 5.2 percent for other nonsurgical services. While it does not affect payment, there was a 7.7 percent increase in the update for all physicians' services for 1995. The physician volume performance standard rates of increase for Federal FY 1995 are 9.2 percent for surgical services, 13.8 percent for primary care services, 4.4 percent for other nonsurgical services, and a weighted average of 7.5 percent for all physicians' services. In our December 2, 1993 notice announcing the CY 1994 update to the Medicare physician fee schedule and FY 1994 volume performance standard rates of increase, we invited public comment on the update indicators for surgical and nonsurgical procedures that were new or revised in 1994. There were no public comments on those indicators. We have decided not to establish a public comment period for the codes that are new and revised in 1995 since, although these codes are initially classified as surgical or nonsurgical based on the clinical judgment of our medical staff, that classification ultimately rests on charge data that we use when they become available to determine whether the codes classified as surgical meet the criteria specified in our December 1993 notice.(ABSTRACT TRUNCATED AT 250 WORDS)     

TRICARE; changes included in the National Defense Authorization Act for Fiscal Year 2003(NDAA-03). Final rule

This final addresses eliminating the requirement for TRICARE preauthorization of inpatient mental health care for TRICARE/Medicare eligible beneficiaries where Medicare is primary payer and has already authorized the care; approving a physician or other health care practitioner who is eligible to receive reimbursement for services provided under Medicare as a TRICARE provider if the provider is also a TRICARE authorized provider; and, expanding the TRICARE Dental Program (TDP) eligibility for dependents of deceased members.     

Physician fee schedule update for calendar year 1992 and physician performance standard rates of increase for federal fiscal year 1992--HCFA. Notice

This notice announces the calendar year 1992 update to the Medicare physician fee schedule and the Federal fiscal year 1992 performance standard rates of increase for expenditures and volume of physician services under the Medicare Supplementary Medical Insurance (Part B) program as required by sections 1848 (d) and (f) respectively of the Social Security Act. The fee schedule update for calendar year 1992 is 1.9 percent. The physician performance standard rates of increase for Federal fiscal year 1992 are 10.0 percent for all physician services, 6.5 percent for surgical services, and 11.2 percent for nonsurgical services.     

Medicare Program; establishment of the Medicare+Choice Program--HCFA. Interim final rule with comment period

The Balanced Budget Act of 1997 (BBA) establishes a new Medicare+Choice (M+C) program that significantly expands the health care options available to Medicare beneficiaries. Under this program, eligible individuals may elect to receive Medicare benefits through enrollment in one of an array of private health plan choices beyond the original Medicare program or the plans now available through managed care organizations under section 1876 of the Social Security Act. Among the alternatives that will be available to Medicare beneficiaries are M+C coordinated care plans (including plans offered by health maintenance organizations, preferred provider organizations, and provider-sponsored organizations), M+C "MSA" plans, that is, a combination of a high deductible M+C health insurance plan and a contribution to an M+C medical savings account (MSA), and M+C private fee-for-service plans. The introduction of the M+C program will have a profound effect on Medicare beneficiaries and on the health plans and providers that furnish care. The new provisions of the Medicare statute, set forth as Part C of title XVIII of the Social Security Act, address a wide range of areas, including eligibility and enrollment, benefits and beneficiary protections, quality assurance, participating providers, payments to M+C organizations, premiums, appeals and grievances, and contracting rules. This interim final rule explains and implements these provisions. In addition, we are soliciting letters of intent from organizations that intend to offer M+C MSA plans to Medicare beneficiaries and/or to serve as M+C MSA trustees.