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A CMS Health Economics Report

Staff Reporters 

The Centers for Medicare and Medicaid Services [CMS] recently reported that while the national health spending growth rate increased slightly in 2006, the percentage rise in expenditures on physician services slowed markedly, due largely to a small Medicare pay increase and its private-sector fallout. 

Overall national health spending reached $2.1 trillion, up 6.7 percent from $1.97 trillion in 2005, while the 2005 growth rate was 6.5 percent – a moderate increase that was possible because of a broad-based slowdown in spending growth in many categories, including physicians and clinical services. These expenditures increased by 5.9 percent in 2006, down from 7.4 percent in 2005.  

For the first time since 1999, physician spending increased more slowly than the gross domestic product, while the small size of Medicare’s physician payment update in 2006 played a role in the decelerating physician spending. 

Any thoughts-please opine?  

Related info: www.HealthDictionarySeries.com

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A New CMS Report

Staff Writers 

The Centers for Medicare and Medicaid Services recently reported that expenditures increased at the fastest rate in 25 years, fueled by its new Part D drug benefit. 

The CMS study found that health spending totaled $2.1 trillion in 2006 – or 16 percent of gross domestic product – up 6.7 percent from 2005, which experienced a growth rate of 6.5 percent. The rise came despite a slower pace of growth in public spending on most major health services, such as physicians and hospitals (Parts A and B), and only a slightly faster rate in spending growth for private payers. 

Spending on prescription drugs rose 8.5 percent after six consecutive years of slow growth, while spending on Medicare’s managed care plans increased 48 percent in 2006, almost 2½ times the 2005 pace, reflecting a 25 percent increase in enrollments and increased payments to insurers. 

Any comments on this WSJ first-read?

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Physicians Receive Temporary Reprieve

[By Staff Writers} 

Doctors will get a six-month reprieve from a 10.1 percent across-the-board cut in Medicare payments that was scheduled to go into effect January 1, 2008. 

In an effort to secure approval of the legislation, lawmakers decided to scale back its scope compared to earlier versions of the measure, but the bill still would provide for a number of Medicare policy changes, according to Reed Smith Health Industry Washington Watch.  

Other related policy changes and highlights of the bill include the following:

·  A 0.5 percent increase in Medicare physician fee schedule payments through June 30, 2008. Physicians would again face a steep payment cut in July 2008, however, requiring Congress to revisit Medicare policy in the New Year. The bill also would extend the five percent physician shortage area bonus payment and the work geographic index floor of 1.0 through June 30, 2008. 

·  An extension of the authorization and funding of the State Children’s Health Insurance Program (SCHIP) through March 31, 2009.

·  An extension of the Medicaid qualifying individual, Transitional Medical Assistance, and abstinence education programs through June 30, 2008.

·  A $1.5 billion reduction in the Medicare Advantage stabilization fund for regional preferred provider organizations in 2012, an extension of authority for specialized Medicare Advantage plans for special needs individuals, and a moratorium on new special needs plans and expanded service areas through December 31, 2009.

·  A provision to require CMS to adjust Part B drug average sales price (ASP) calculations to use volume-weighted ASPs based on actual sales volume, and to modify payment for the generic drug and sympatho-mimetic agent, albuterol [PROVENTIL HFA – albuterol sulfate].

·  Revisions to inpatient rehabilitation facility qualifications and payment policy, including a permanent freeze in the patient classification criteria compliance threshold at 60 percent (with co-morbid conditions counting toward this threshold) and a payment freeze from April 1, 2008 through September 30, 2009. 

Assessment

And so, although not an unexpected payment reprieve, how will these policy changes affect Medicare participating providers?

Conclusion

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• FINANCE: Financial Planning for Physicians and Advisors
• INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Healthcare Finance | Tagged: Health Economics | 2 Comments »

EEOC Health Benefit Reductions and Eliminations

Staff Writers 

The Equal Employment Opportunity Commission issued a new policy in December 2007 stating that employers can reduce or eliminate health benefits for retirees when they turn 65 years old and become eligible for Medicare.  

The new regulation allows employers to establish two classes of retirees, with more comprehensive benefits for those under 65 and more limited benefits – or none at all – for those older.  Currently, more than 10 million retirees rely on employer-sponsored health plans as a primary source of coverage or as a supplement to Medicare.

The EEOC rule helps employers continue to voluntarily provide and maintain important health benefits.  

In general, it observed that employers are not required by federal law to provide health benefits to either active or retired workers. And unfortunately, the rising cost of health care and the increased life expectancy of workers have led some employers to not provide retiree health benefits or even negotiate the issue, according to some New York Times newspaper pundits. 

The Society for Human Resource Management, AFL-CIO, the American Federation of Teachers, the National Education Association, the American Benefits Council, and other groups support the decision, according to the EEOC.

And so, what do you think – are we heading toward a national healthcare system by default?

Filed under: Healthcare Finance | Tagged: Health Economics | 1 Comment »

Medicare and Medicaid Spending Growth

Staff Writers 

Like Michael Palmer’s song, “Irresistible”, it seems that Medicare and Medicaid spending would — if unaddressed — continue to grow faster than the economy over the next 75 years. According to the Congressional Budget Office; it’s also very unsustainable. 

The culprits are physician and hospitals reimbursement methods and new technology and treatments that drive costs.

“The main message of this study is that, without changes in federal law, federal spending on Medicare and Medicaid is on a path that cannot be sustained,” stated the CBO report of November 13th 2007. 

According to the CBO, by 2030, federal Medicare and Medicaid spending will consume about 8% of the gross domestic product, a measure of the total value of goods and services produced.

Of that, 0.8 percentage points would be from the effect of aging.

And, by 2082, federal Medicare and Medicaid spending would eat up 18.5% of the gross domestic product, with the effect of aging representing just 1.7 percentage points. 

What is the answer to this unsustainable [irresistible] dilemma?

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2008 Medicare Part A and B

[By Staff Writers]

CMS annually updates Medicare Beneficiary premiums, deductibles and co-payments, using formula driven adjustments set by statute.

As a reminder, Medicare Part A pays for inpatient hospital, skilled nursing facility and some home health care and Part B refers to outpatient expenses and pays doctors. About 99 percent of Medicare beneficiaries do not pay a premium for Part A services, since they have at least 40 quarters for Medicare-covered employment. 

The Part A deductible is the beneficiary’s only cost sharing for up to 60 days of Medicare-covered inpatient hospital care, but additional cost sharing applies after 60 days.

Medicare Part B covers physician services, outpatient hospital services, certain home health services, durable medical equipment and other items.  

2008 Premium and Deductible Levels* 

• Part A Monthly Premium: $423.00 Part B Monthly Premium: $96.40*
• Part A Annual Deductible: $1,024.00 Part B Annual Deductible: $135.00

And now for 2010

Due to the lack of a cost of living increase for 2010 in Social Security benefits, 75% of all Medicare beneficiaries were already exempt from any Part B premium increase in 2010. Currently, single earners above $85,000 and couples above $170,000 are not exempt and would likely be seeing a larger than normal increase to help off-set the lack of increases from the rest of the beneficiaries. This may change.

*Note: standard premium rate before income-related monthly adjustments

A Matter of Law 

Now, by statute, the standard Medicare Part B premium must be sufficient to cover 25 percent of the program’s costs, with Medicare bearing the remaining 75 percent. 

So, what do you think of similar statutory formulas that are used to determine the Medicare Part B deductible, the Part A deductible for hospital stays and other enrollee contributions?

Filed under: Healthcare Finance | Tagged: Health Economics | 6 Comments »

CMS to Docs … Payments to Drop!

[By Staff Writers]

According to Modern Physician, November 1, 2007, Medicare payments to physicians in 2008 will drop nearly 10 percent under a final rule issued by CMS, which estimates it will pay approximately $58.9 billion to 900,000 physicians and other health care professionals next year. The sustainable growth rate formula, which is tied to the health of the economy and is used to calculate physician payments under the Medicare program, is the force driving the projected cut.

Assessment

Since it has been estimated that payments will drop by more than 40 percent by 2015, unless the SGR is replaced, do you think Congress will adopted interim measures to stop payment reductions?

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

• DICTIONARIES: http://www.springerpub.com/Search/marcinko
• PHYSICIANS: www.MedicalBusinessAdvisors.com
• PRACTICES: www.BusinessofMedicalPractice.com
• HOSPITALS: http://www.crcpress.com/product/isbn/9781466558731
• CLINICS: http://www.crcpress.com/product/isbn/9781439879900
• ADVISORS: www.CertifiedMedicalPlanner.org
• BLOG: www.MedicalExecutivePost.com
• FINANCE: Financial Planning for Physicians and Advisors
• INSURANCE: Risk Management and Insurance Strategies for Physicians and Advisors

Filed under: Healthcare Finance | Tagged: Health Economics | 7 Comments »