Medicare provides healthcare for over 40 million Americans. So it’s not surprising that strengthening and improving that program is a major goal of healthcare reform in the United States and the Affordable Care Act (the Act) passed in March 2010. According to Kathleen Sebelius, Secretary of Health & Human Services, rather than change or diminish your current Medicare benefits, the Act hopes to improve Medicare by introducing new benefits and savings with an emphasis on delivering quality care.
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Dr. Peter L. Duffy pinpoints key provisions in the Affordable Care Act for patients with cardiovascular disease.
Many people confuse Medicare and Medicaid. Although some people receive benefits from both, Medicare and Medicaid are two different programs. Created in 1965, Medicare is a health insurance program run by the Centers for Medicare & Medicaid Services, a federal government agency. Medicare helps to pay healthcare costs for people 65 or older or those who have qualifying, debilitating diseases, such as renal failure or Lou Gehrig’s disease. (See Medicare & You for specific information about what is covered by Medicare.)
If you qualify for Medicare, you have a choice of receiving benefits directly from the Federal government, which is called original or traditional Medicare, or you can enroll in Medicare Advantage plans, which are health plans offered by private companies, much like HMOs or PPOs. Medicare Advantage plans offer the same benefits as original Medicare, except for hospice care, but they vary in terms of cost and coverage of the other benefits offered.
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Dr. Peter L. Duffy outlines some of the benefits for Medicare patients under the Affordable Care Act.
Medicare has four different parts, each one providing a specific category of services:
• Part A primarily pays for inpatient hospital or nursing facility care
• Part B provides medical insurance for doctors’ visits, medical services, and supplies
• Part C is Medicare Advantage, the plans through private insurers that cover the same services provided by Medicare parts A and B
• Part D provides coverage for prescription drugs through private insurance companies
If you would like to learn more about eligibility, applying, and receiving benefits, visit www.Medicare.gov.
The Affordable Care Act and Medicare Reform
In keeping with the goal of improving quality of care and eliminating waste without reducing benefits, the Act has many provisions designed to improve and strengthen Medicare for the 40 billion of us who benefit from it today. If you do not currently receive Medicare benefits, you are still affected by changes to Medicare because they are funded by your tax dollars. And, as someone who may become a Medicare beneficiary one day in the future, you may also be interested in how your coverage will improve in the years to come under the Affordable Care Act if plans to extend the solvency of Medicare prove to be effective. Read on to learn how the new law is intended to extend the life of Medicare and improve coverage in the years to come.
Extending Solvency of Medicare Trust Fund until 2029
According to the Centers for Medicare & Medicaid Services, Medicare is the second largest social insurance program in the United States. It has 46.3 million beneficiaries and total expenditures of $509 billion in 2009. As you can imagine, maintaining such a program is a challenging and costly task, and the country is running out of time and money to do it.
• Eliminating Waste, Fraud, and Inefficiency. It is hoped that provisions of the new law will extend the solvency of the underlying trusts that fund Medicare until 2029 by slowing the rate of spending and reducing payment errors, waste, fraud, and inefficiency.
New regulations under the Act scheduled to go into effect in October 2012 are intended to reduce the paperwork and administrative costs incurred with today’s standard billing practices. For example, many doctors still rely on paper records of their patients’ medical histories. The new law provides incentives to transition to electronic records known as an Electronic Health Record (EHR). EHRs reduce errors, such as ordering duplicate tests, and help doctors and patients make better decisions because their records are readily available for review.
Bundling payments for services is another way the new law attempts to address inefficiencies in the current system. For example, if you’ve ever had bypass surgery, you probably received separate bills from each provider involved in your care and for each test and service provided. As a way to cut costs and improve care, the Act calls for a five-year, voluntary pilot program that will attempt to streamline the billing process by billing for each “episode of care” (e.g., bypass surgery) instead of each service (e.g., administering anesthesia). If the pilot program is successful, it will be expanded to include all healthcare providers,
The Act also sets aside $350 million over the next 10 years to prevent, detect, and fight fraud in Medicare and other government health insurance programs with the specific goal of reducing Medicare fraud 50 percent by 2012. It is anticipated that the cost for this part of the program will more than pay for itself. You can help by visiting Stop Medicare Fraud to learn more and click here if you’re a senior interested in getting involved.
• Reducing annual payment increase to insurance companies, hospitals, and nursing homes. In addition to attempting to save billions of dollars by eliminating waste, fraud, and inefficiency, the Act also extends the life of Medicare by reducing annual payment increases to insurance companies, hospitals, and nursing homes from Medicare.
Improvements in Coverage
The cost of healthcare takes a particularly heavy toll on Americans who have fixed and in many cases limited income, as is often the case for retirees and anyone suffering from a debilitating disease that makes it difficult to work. The Act provides some relief by
• eliminating the “doughnut hole” in prescription coverage,
• eliminating coinsurance for preventive services, and
• providing a comprehensive “Welcome to Medicare” physical and annual wellness exam, without cost to you if you are a Medicare beneficiary.
Elimination of “doughnut hole” in prescription coverage. One of the most significant expenses faced by seniors in the United States is the cost of prescription drugs. As we get older, we typically need more medication to stay healthy, which is certainly the case when it comes to our cardiovascular health. One way that the Act addresses this problem is by having Medicare Part D pay more of the cost of prescription drugs by providing discounts on name-brand prescription drugs and closing the gap in prescription drug coverage (the “doughnut hole”) by 2020. The doughnut hole is the gap in coverage that occurs after your plan stops paying for your drugs and before you reach the benchmark required for catastrophic coverage ($4,550 in 2011). While you are in the doughnut hole you are responsible for paying 100 percent of the cost of your medication.
The Act created a Medicare Coverage Gap Discount Program to help people pay for their medication while they’re in the doughnut hole. To qualify for the Medicare Coverage Gap Discount Program you must—
• be enrolled in the Medicare Prescription Drug Plan or a Medicare Advantage plan that includes prescription drug coverage
• NOT receive Extra Help, a Medicare and Social Security program that helps Medicare beneficiaries with limited incomes and resources pay for their prescription drugs
• have reached the gap in coverage (“doughnut hole”) that qualifies you for the discount
If you qualified in 2010, you may have already received a one-time, tax-free rebate of $250 from Medicare when you entered the doughnut hole. And in 2011, the Act provides for a 50 percent discount on brand-name prescription drugs and 7 percent discount on generics for relief of your out-of-pocket expenses while you’re in the doughnut hole.
The percentage discount you receive will continue to increase each year until 2020 when you will be responsible for paying 25 percent for covered brand-name and generic drugs while you are in doughnut hole and until you reach the out-of-pocket spending limit ($4,550 in 2011). Check your Explanation of Benefits (EOB) statement on a regular basis to see how much you’ve spent on covered prescription drugs and to help you determine when you entered the doughnut hole and can expect to receive discounts on your covered medications.
Be aware that prescription drug coverage under Medicare can be affected by other factors, such as other insurance coverage or assistance, including but not limited to state aid or other discount drug programs, and whether the company that makes your drug has agreed to participate in the Act’s discount drug program. Download “Closing the Coverage Gap— Medicare Prescription Drugs Are Becoming More Affordable” for helpful examples that may apply to your specific situation and for a chart of the exact discounts that apply each year until the gap closes in 2020.
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Understand the “doughnut hole” once and for all. Dr. Peter L. Duffy, Pinehurst Cardiology Consultants, North Carolina, explains what it is and how the Affordable Care Act addresses this gap in coverage.
Ask for Help. Still confused? If you have any questions, ask. Mistakes are common and it’s up to you and your family to make sure that you receive all your entitled benefits according to your plan and personal situation. Contact your plan administrator when you need more information. And, if you cannot reach an agreement with your drug plan about a benefit you should have received, you can always appeal. Call your State Health Insurance Assistance Program (SHIP) or 1-800-MEDICARE (1-800-633-4227) for assistance.
Other Resources. Visit the following sites for more useful information about Medicare, its programs, and how they will change with the new law:
• www.medicare.gov or call 1-800-MEDICARE (general information about Medicare)
• http://go.usa.gov/3GG (view or download “Your Guide to Medicare Prescription Drug Coverage” for general information about Medicare prescription drug coverage)
• http://go.usa.gov/loF (view or download “Bridging the Coverage Gap” for information on how to lower your prescription drug costs)
• www.socialsecurity.gov or call 1-800-772-1213 (for information on qualifying for the Extra Help program from Medicare to help pay your prescription drug costs)
• Visit www.stopmedicarefraud.gov to learn how to prevent, detect, and report Medicare fraud and abuse.
Elimination of coinsurance for preventive services. Before the Affordable Care Act was passed, most Medicare beneficiaries would expect to pay 20 percent for many preventive services and office visits. But as of January 1, 2011, the Act makes staying healthy less expensive by eliminating coinsurance for preventive services, such as colorectal cancer screening, mammograms, and cardiovascular screening such as cholesterol checks and screening for diabetes. You are eligible for this benefit if you have Medicare or Medicare Advantage (check with your plan to be sure) and your doctor or other healthcare provider agrees to participate.
Other qualifying services include -
• Tobacco use cessation counseling. (A coinsurance and deductible will apply if you have already been diagnosed with a tobacco-related illness).
• Screenings, such as the following, if certain coverage criteria apply:
o Bone mass measurement
o Cervical cancer screening, including Pap smear tests and pelvic exams
o Cholesterol and other cardiovascular screenings
o Colorectal cancer screening (except for barium enemas)
o Diabetes screening
o Flu, pneumonia, and hepatitis B shots
o HIV screening for people at increased risk or who ask for the test
o Medical nutrition therapy to help people manage diabetes or kidney disease
o Prostate cancer screening (except digital rectal examinations)
Addition of annual physical exam benefit. The Act’s changes to Medicare also allow seniors to have an annual physical exam at no cost to them. If you are new to Medicare, that includes your “Welcome to Medicare” physical during your first year of coverage under Medicare Part B. The purpose of this exam is to review your current state of health and discuss other preventive services you should consider. After this first visit you can then take advantage of the free annual “Wellness Exam” to reassess and continue with your plan to live a healthy lifestyle.
Changes in Medicare Advantage
Nearly 25 percent of all seniors receive Medicare benefits through Medicare Advantage Plans (Medicare Part C), which are health plans similar to HMOs or PPOs that are run by Medicare-approved private insurance companies. Medicare Advantage plans provide the same services covered by Medicare Parts A and B, just like original Medicare, but they typically offer additional coverage for services such as vision, dental, hearing, health and wellness, and many include prescription drug coverage (Medicare Part D).
The Affordable Care Act has made the following changes to these plans with the goal of lowering costs and providing better benefits and higher quality care:
- Phasing out of extra payments to Medicare Advantage plans. Medicare pays over $1,000 more on average, per person to Medicare Advantage plans than it spends per person for Medicare, which in turns hikes up the cost of everyone’s premiums, including the 77 percent of seniors enrolled in original Medicare. Beginning in 2011 the Act provides for payments from Medicare to Medicare Advantage to be phased out over the next several years until 2018. It is a plan that is projected to save Medicare more than $150 billion over 10 years. Advantage plans that provide high-quality care and services will receive bonus payments.
- Plans may eliminate optional services. To reduce costs, Medicare Advantage plans may choose to reduce optional services, for example benefits toward purchasing glasses or joining a gym, but they may not eliminate any items or services covered by traditional Medicare.
- Medicare Advantage Plans must still cover all items and services offered by traditional Medicare. Medicare Advantage plans will continue to offer the same benefits of Parts A and B of Medicare and offer other benefits. By 2014 the plans will be required to lower their costs and spend at least 85 percent of every dollar on health care rather than administrative costs or profits.