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Federal Health Care Issues
Related to Older Persons
Lynda Burton
Lecture Outline
• Share of Nation’s health dollars for older
persons (c. 33%)
• Where expenditures go
• Medicare reimbursement: PPS
• Managed care vs. Fee for Service
• MMA, 2003
–
–
–
–
Prescription drugs
Chronic care improvement
Pay for performance
Information technology
Medicare, Medicaid, and SCHIP account for onethird of national health spending.
Medicaid and
SCHIP
15%
Other Public
12%
1
All CMS
Programs
33%
Other Private
6%
CY 2000
2
Private Insurance
34%
Medicare
17%
Out-of-pocket
15%
Total National Health Spending = $1.3 Trillion
1 Other public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of
Veterans Affairs, Indian Health Service, and State and local hospital subsidies and school health.
2 Other private includes industrial in-plant, privately funded construction, and non-patient revenues, including philanthropy.
Note: Numbers shown may not sum due to rounding.
Source: CMS, Office of the Actuary, National Health Statistics Group.
Where the Medicare Dollar Went: 1980 and 2005
Medicare spending has moved from inpatient hospital services to all other settings. Managed
care has grown while the physician share declined.
1980
HHA
2%
Physician
2005
Administrative
2% Expenses
Outpatient Hospital
5% and Other
Outpatient Facility1
14%
Other
24%
Inpatient
Hospital
43%
14%
Managed Care
SNF
1%
Inpatient Hospital
68%
17%
Physician
Total = $37 Billion
1 Other services include other professional services and ambulance services.
Note: Data do not sum due to rounding. Spending includes benefit dollars only.
Source: CMS, Office of the Actuary, Trustees Report 2006
Home4%
Health
Care
6%
SNF
Total = $336 Billion
Issue: Federal Funds Provided to States for Medicaid
Over twenty-two percent of state total spending and over forty-four percent of federal
funds provided to states were spent on Medicaid.
Total State Spending
Elementary &
Secondary
Education
21.4%
Federal Funds Provided to States
Elementary &
Secondary
Education
11.4%
Higher
Education
10.9%
Public
Assistance
2.1%
Higher
Public
Education
Assistance
5.6%
3.6%
Transportation
8.0%
Corrections
0.6%
Transportation
8.0%
Medicaid
22.3%
Corrections
3.5%
All Other
26.3%
Medicaid
44.5%
All Other
31.7%
Source: National Association of State Budget Officers, 2004 State Expenditure Report.
Definition of Prospective Payment Systems
• A Prospective Payment System (PPS) is a method of
reimbursement in which Medicare payment is made
based on a predetermined, fixed amount.
• The payment amount for a particular service is derived
based on the classification system of that service (for
example, DRGs for inpatient hospital services).
• CMS uses separate PPSs for reimbursement to acute
inpatient hospitals, home health agencies, hospice,
hospital outpatient, inpatient psychiatric facilities,
inpatient rehabilitation facilities, long-term care hospitals,
and skilled nursing facilities.
From CMS website
Issue: Medicare reimbursement policies
– Physician payments
• RBRVS
– Hospital
• PPS (DRGs) 1983
– Skilled nursing home
• PPS 1999
– Home health
• PPS 2000
– Hospice
• FFS , per visit or service
Issue: Hospital payments
• DRGs
– Effect on length of stay
– Rise in sub-acute care, skilled nursing care
• Maryland’s unique all-payer system
• Pay for Performance (P4P) based on
quality indicators
Issue: Physician payment
• Physician payment: 17% of Medicare
costs in 2005
• Physician fee schedule
– Relative value units
– Has it worked? MEDPAC
• Revenue from Medicare c. 20%
RBRVS (Relative value units)
• Attempt to control rise in cost of
procedures and stagnation in payments for
non-procedural events
– amount of work required to provide a service
– expenses related to maintaining a practice
– liability insurance costs
Issue: Managed care vs. fee for service
• 20% of Medicare beneficiaries in MA plans
• Advantages and disadvantages
– Integrated care
– Risk as incentive to HMO to prevent disease
– Payment for HMOs
• CMS adjustments (claims-based risk adj)
• Overpayment for MAs?
– Medicare private fee-for-service plans
Issue: Out-of-Pocket Expenses for Medicare Beneficiaries
Beneficiaries without supplemental insurance and those with Medigap coverage have higher outof-pocket spending than other groups.
$5,000
$4,673
$4,324
$4,500
$3,950
P er C apita D ollars
$4,000
$3,957
$3,500
$2,776
$3,000
$2,977
$2,500
$2,000
$1,500
$1,000
$500
$0
Medicare FFS
Only
Medigap
Other
Employer
Sponsored
Plan
Medicaid
Medicare Risk
HMO
. by Type of Insurance Coverage, 2003 Note: Premium payments are included
Source: CMS, Office of Research, Development, and Information: Data from the Medicare Current Beneficiary Survey (MCBS), 1993
and 2003 Cost and Use Files.
Other issues: MMA 2003
•
•
•
•
Prescription drugs
Chronic care improvement
Linking quality with performance
Information technology
Pay for Performance (P4P)
• Payment linked to whether quality
indicators were achieved
• Who defines quality?
• CMS demonstrations in hospital care,
physician providers
– HaH Health Care Quality Demonstration
Waiver