Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktMedPAC met about a month ago and I’ve been promising a post since well before then. Out of all the sessions at that meeting I think the one on benefit redesign is of the most interest. The full agenda is here and if there’s another issue you’d like to know more about, let me know.
Under the current cost sharing system, in 2009, about 40 percent of Medicare beneficiaries had cost sharing liabilities of less than $500. Six percent of beneficiaries had cost sharing liabilities of more than $5000 and two percent of beneficiaries had cost sharing liabilities of $10,000 or more. These amounts represent the liabilities for the beneficiaries and not actual out-of-pocket expenses, which may have been covered in whole or in part by supplemental insurance. MedPAC will be presenting data on how Medigap effects cost sharing at its next meeting, which is Thursday.
The staff presented a number of alternatives benefit designs to address the flaws in the current benefit structure.
One alternative, called the “coinsurance package” would combine the Part A and B deductible into a single $500 deductible along with 20 percent coinsurance on all Medicare services, including hospital services. Based on a simulation that used data from more than 20 million beneficiaries, the staff concluded that such a benefit structure would raise the average cost sharing liability from $1350 to $1550.
A second option and third options presented are based on a copayment approach. The first approach based on Medicare Advantage features a $5000 out of pocket maximum and a $750 Part A and Part B combined deductible. The other option has a $5000 out of pocket maximum and a $500 deductible. Both of these packages include a $600 copayment per hospital stay, a $20 copayment for physician visits, a $100 copayment for outpatient visits, and a $100 per day copayment for skilled nursing. The options also include a 20 percent coinsurance on durable medical equipment and 5 percent coinsurance on home health.
Because of the out-of-pocket maximum, most beneficiaries would have their liabilities change by less than $500 compared to the current system, while some beneficiaries would have liabilities either increase or decrease by $1,000. For the next MedPAC meeting, the staff will present data on the effect of supplemental coverage on cost sharing liabilities for the alternative benefit models.
This is a key point and one the commissioners spent a great deal of time discussing. There was pretty broad support for changing the overall benefit structure and even more support for reforming Medigap, which is at both times incredibly popular with beneficiaries and typically held responsible for hiding and shifting costs.
It creates a catch-22. Beneficiaries are concerned about the potential for high out-of-pocket coinsurance requirements under the standard Medicare plan, so they buy supplemental policies that help hide that cost, but they pay for it in higher premiums. Paying more to save more — but maybe not.
The other interesting thing that happened was one of the commissioners made the point that health insurance is a financial product. This just isn’t really discussed. “If you’ve got nothing to protect … you don’t buy insurance.” He added that “nothing about insurance makes any sense if you don’t have anything to protect.” But, the reason people are buying these polices and paying the premium is that it gives them the ability to plan and some protection against the unlimited costs they could incur under the traditional fee-for-service Medicare benefit. This came up in focus groups that MedPAC conducted. People liked being about to plan their expenses and the theoretical unlimited cost sharing requirement is of concern. While only 2 percent of the Medicare population incurred liabilities of $10,000 or more, that’s almost 10 million people. I expect to have data on their actual expenses by the end of the week.
My thinking on this is that traditional fee-for-service Medicare is not a system worth defending. In the past one of the commissioners called it “chintzy.” By not offering true protection, it forces those with the ability to buy supplemental policies, which in turn shift care costs around and helps drive utilization. Those who would “end Medicare as we know it” should embrace that.
The slides used during this presentation are here.
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All Things in Moderation 
Thanks NoVA. When I first read it I thought the recommendation was to do away with medigap insurance and move to a 20% coinsurance of all medicare services. Apparently, that's not what they're saying. But then, I don't understand how medigap insurance doesn't still hide the true cost of utilization. Is it primarily fee for service that's creating this? I remember during the health care debate arguing that it was time to move away from this system, so I think we agree on that.I have what is probably a lame question. Can MedPac actually implement any of these changes without congressional approval or are they just making recommendations?
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the option is silent on what to do with medigap. this was based on the concern that the deductibles are uneven across the standard benefit. They'll discuss how Medigap play into all this later this week. and you're right, it's kind of an incomplete discussion without that. MedPAC is advisory only. Congress can do what it pleases with its recommendations. Also, its charter restricts what it can do — it has to deal with Medicare only and can't consider larger budgetary/policy options. For example, "raise taxes and cut defense" is off the table for them. it deals only with making the best use of the available funds, not how to raise them. they probably couldn't even say "raise payroll taxes"
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Assuming the ACA is fully implemented and assuming the Medicare Payment Advisory Board is executed as envisioned (yes I know the likelyhood of either of those two statements), Fee for Service is already dead after 2014? I.e. Medicare (like Medicaid) only pays for the procedure what the Advisory Board says is reasonable?
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the IPAB can't make structural changes. it has one lever — provider reimbursements. The board is prohibited from making any recommendation that would ration care, increase taxes, change beneficiaries’ benefits or eligibility for coverage, increase beneficiary premiums, increase beneficiary cost-sharing, reduce drug subsidies for low-income beneficiaries enrolled in Medicare Part D, or reduce payments to Medicare providers who are already subject to Medicare payment update reductions that are required by the law until 2019. The board can make no recommendations that affect hospitals or hospice care until 2020.i think you can make the argument that if you lower provider rates enough you effectively solve the fee-for-service utilization problem.
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So they can't say: Medicare will not reimburse you if you use this protocol for this disease?
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I note that NoVa never said the IPAB is prohibited from killing off seniors! Very interesting.
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"Medicare will not reimburse you if you use this protocol for this disease?"no, that's getting into comparative effectiveness research. Medicare can't do that now, by law. there's talk of "bonus" payments for following the "approved" protocol. As you can imagine, the docs don't want anything that usurps their authority on clinical matters. http://healthaffairs.org/blog/2011/02/02/comparative-effectiveness-research-and-medicare-sean-tunis-view/
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ashot, I do worry about that, for obvious reasons. 🙂
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That's in the health care law too . I think it's Sec. 2022: Soylent Green and Sec. 2116: Logan's Run.
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lmsinca- The good news is that whatever loopholes exist within the Soylent Green and Logan's Run sections, NoVa will know them backwards and forwards and be able to help you exploit them.
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loophole is such an ugly word. i prefer "strategically legislated advantage"
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shhhhhhh ashot, why do you think I lured him over here? You know what one of the most interesting things I've discovered working with Hospice? Most people, especially older ones, jump at the chance to go out gracefully rather than prolong the process. It's sort of like a light goes on as soon as a doctor even brings the subject up as a possibility. You have no idea how many people make up their minds right on the spot, "let's do it".
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"Strategically legislated advantage" I really like that. lmsinca- In the last month or so I have had some interesting discussions with the ethicist who works for one of my clients regarding some of these issues. It seems that when the individual gets to make the decision him or herself, they choose not to prolong the process. However, if the individual becomes incapacitated the family often wants to do everything they can to prolong the life of their loved one. The laws in Michigan and poor understanding of the law often make doctors and hospitals very hesitant to pull the plug. NoVa has repeatedly talked about how end of life is where a huge chunk of our health care dollars are spent. We could probably take a big chunk out of our deficit if we made inroads there even if we left the rest of health care alone. I don't think politicians see a lot of upside in touching this sensitive issue even though it is something that touches us all so nothing gets done.
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ashotI remember sitting in the doctor's office with my dad and his doctor giving us options and, even knowing what I know, wishing he would try one more round of chemo. He chose Hospice and my mind said yeah, it's time, but my heart was hoping for one more Christmas.
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And my kids have already told me if I ever get cancer I better effing try to beat it, only they didn't use the "e" word.
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BTW, NoVA, you get an A on your homework. :>) Seriously, thanks for keeping us informed. I'll never understand why a few people at PL tried to chase you off.
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"I'll never understand why a few people at PL tried to chase you off. "It's easier to justify your opinions in a fact free environment.
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