• Raising the Age of Eligibility From 65 to 67
• Combining Part A and B Deductibles Into a Single Annual Deductible – Different proposals sought to create a deductible between $550 and $560, impose 20% cost-sharing on all Medicare services (including Part A services that currently require either no cost-sharing, or a set co-pay), coupled with a total annual out-of-pocket cap of between $5,250 and $7,500;
• Additional Means Testing of Medicare – Currently, higher income beneficiaries pay a larger share of their Part B and Part D premiums; one proposal sought to increase Part B premiums from 25% to 35% of program costs for those not already paying income-related premiums;
• Eliminating First-Dollar Medigap Coverage – This proposal prohibits Medigap plans covering the first $500 of cost-sharing and limits coverage to 50% of the next $5,000 (might include policies already held by individuals)
• Shifting Coverage of Persons Dually Eligible for Medicare and Medicaid (Dual eligibles) to Medicaid – This proposal gives Medicaid full responsibility for providing health coverage for persons dually eligible for Medicare and Medicaid, and requires Medicaid plans to place dual eligibles in Medicaid managed care plans.

Medicare and Social Security are exempt from large cuts.

If the Super Committee fails to agree on spending cuts to a long list of government programs, or Congress votes against the final proposal by the Super Committee, that will trigger automatic  spending reductions across the board, with Department of Defense taking the biggest hit. But Social Security and Medicare would be exempt from large cuts, and any cuts that are made would be directed at providers rather than patients. Of course, if doctors take the hit, they can decide to stop seeing Medicare patients.

Generics used to treat high cholesterol cost less than $10, while brand drugs cost $100 or more. Although most people on Medicare use generics, the chart below shows how the higher cost of brand drugs overwhelms the Part D budget.  If everyone used generics, the Medicare Part D budget could be cut by billions of dollars.

In 2008 Medicare spent $68.3 billion
on drugs purchased  through Part D.

Lipitor is going generic soon. Fosamax now has a generic replacement, so Part D plans are not covering this drug for treating osteoporosis.

Here is what they have to say about Medicare:

In fiscal year 2010, Medicare spending is expected to total $524 billion, accounting for 20 percent of national health expenditures, 15 percent of the federal budget, and 3.6 percent of the gross domestic product (GDP).

Medicare is responsible for 20 percent of the $2.6 trillion in total national health care expenditures in the U.S., but 40 percent of the nation’s total home health care spending, 30 percent of hospital spending, and 24 percent of prescription drug costs.

Inpatient hospital services account for the largest share of Medicare benefit payments (27 percent), followed by Medicare Advantage plans (23 percent) and payments to physicians (13 percent).

On an average per capita basis, annual Medicare spending has grown at a slightly smaller rate than annual private health insurance spending.  In 2006, Medicare payments averaged $8,344 for beneficiaries enrolled in the traditional fee-for-service program, but spending is highly skewed, with 10 percent of the population accounting for 58 percent of Medicare spending, averaging $48,210 among those in the top decile of spending.

Average annual growth in Medicare spending is projected to be 5.8 percent between 2012 and 2020, according to CBO, and 5.9 percent between 2010 and 2019, nearly one percentage point lower than projections for this period prior to the passage of the Affordable Care Act of 2010.

In 2008, Medicare spent $9,100, on average, for each Medicare beneficiary. Multiply that times the 46 million people enrolled in Medicare in 2008 for a total expenditure of $418 billion.   Kaiser Health News reported on a study of how much Medicare spends in locations around the country and efforts to determine how much waste there is in the health care program for seniors and disabled individuals.

Miami, Florida was the most expensive city for Medicare, with an average cost per Medicare beneficiary of $18,199 in 2008.  That is twice the national average cost! Medicare studied patients in Miami to see if doctors there were milking the system by ordering more tests and performing unnecessary operations and procedures.  It turns out that patients in Miami are very sick and require more care. When this is taken into account, the adjusted cost per Medicare beneficiary in Miami was $10,145 in 2008, which was 35% above the national average.  Miami is the epicenter for Medicare fraud and it looks like there is plenty of waste and/or fraud even when you consider the very bad health of patients there.

Medicare spending in Arizona is below the national average, though it depends on how you look at it.  The Kaiser Health News article reports that in Mesa, Arizona, Medicare spending was 5 percent below the national average in 2008. But the average Mesa Medicare patient was slightly younger than the national average, and fewer patients had diagnoses that were expensive to treat such as heart failure and diabetes. So, when looked at this way, average Medicare spending in Mesa became $8,370, which put it 12% above the national average ($7,500).

Sun City, Arizona came in 4% below the national average in 2008, at $8,764 per Medicare beneficiary. But when Medicare looked at the details of patients in Sun City, it turned out they were not that sickly and their care was a bit out of line for their health conditions.   Using a complicated formula, Medicare adjusted the average cost for Sun City to $7,999 per person, and this was 7% above the adjusted national average.

Honolulu is one of the least expensive cities for Medicare, as the average cost per beneficiary was just $6,732 in 2008.  This was 32% below the national average. When adjusted for the health conditions of patients there, Honolulu’s average cost was even lower, at 34% the national adjusted average.

Albuquerque, New Mexico is another low cost city for Medicare, coming in at 26% below the national average, or 18% below average when adjusted.

The key for Medicare is to determine if these lower cost locations simply have healthier seniors, or if hospitals and doctors are operating in more efficient ways, resulting in lower costs to the Medicare program.  This is very important because of growing Medicare enrollment (2.8 million baby boomers turning 65 in 2011) and political pressure to reduce the Medicare budget.

This entry was posted on Tuesday, March 15th, 2011 at 9:29 am and is filed under Health. Tags for this post: Arizona Medicare, medicare arizona, medicare budget, medicare cost, medicare mesa, medicare sun city, medicare tucson, tucson medicare. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

In 2010, Part D made up 13.4% of the Medicare budget, or 68 billion dollars.  So even with seniors paying premiums for their Part D plans that range from $15 to $90 per month, Medicare still paid out $68 billion in 2010 to subsidize their drug costs!

Then I came across an opinion piece From Forbes magazine (Nov. 20, 2009). The title is “Republican Deficit Hypocricy”.  The entire piece can be read by clicking on this link, but here are some parts I found particularly interesting:

Bruce Barlett wrote in Forbes:

The human capacity for self-delusion never ceases to amaze me, so it shouldn’t surprise me that so many Republicans seem to genuinely believe that they are the party of fiscal responsibility. Perhaps at one time they were, but those days are long gone.

This fact became blindingly obvious to me six years ago this month when a Republican president and a Republican Congress enacted the Medicare drug benefit, which former U.S. Comptroller General David Walker has called “the most fiscally irresponsible piece of legislation since the 1960s.”

Recall the situation in 2003. The Bush administration was already projecting the largest deficit in American history–$475 billion in fiscal year 2004, according to the July 2003 mid-session budget review. But a big election was coming up that Bush and his party were desperately fearful of losing. So they decided to win it by buying the votes of America’s seniors by giving them an expensive new program to pay for their prescription drugs.

Recall, too, that Medicare was already broke in every meaningful sense of the term. According to the 2003 Medicare trustees report, spending for Medicare was projected to rise much more rapidly than the payroll tax as the baby boomers retired. Consequently, the rational thing for Congress to do would have been to find ways of cutting its costs. Instead, Republicans voted to vastly increase them–and the federal deficit–by $395 billion between 2004 and 2013.

…. Just to be clear, the Medicare drug benefit was a pure giveaway with a gross cost greater than either the House or Senate health reform bills how being considered. Together the new bills would cost roughly $900 billion over the next 10 years, while Medicare Part D will cost $1 trillion.

Moreover, there is a critical distinction–the drug benefit had no dedicated financing, no offsets and no revenue-raisers; 100% of the cost simply added to the federal budget deficit, whereas the health reform measures now being debated will be paid for with a combination of spending cuts and tax increases, adding nothing to the deficit over the next 10 years, according to the Congressional Budget Office. (See here for the Senate bill estimate and here for the House bill.)

….It astonishes me that a party enacting anything like the drug benefit would have the chutzpah to view itself as fiscally responsible in any sense of the term. As far as I am concerned, any Republican who voted for the Medicare drug benefit has no right to criticize anything the Democrats have done in terms of adding to the national debt. Space prohibits listing all their names, but the final Senate vote can be found here and the House vote here.

Bruce Bartlett is a former Treasury Department economist

UnitedHealth Group remains the biggest Part D provider nationwide with over 4 million seven-hundred thousand people enrolled in their plans. Enrollment grew by 4% during the annual enrollment period (AEP) at the end of 2010.  Most of United’s plans are marketed as “AARP Medicare Rx”.

Humana’s Part D enrollment grew by 32% nationwide. This growth is probably due to the heavy advertising of the Humana Walmart plan which costs only $14.80 per month. Humana now has 2 million three hundred thousand members in its PDP plans throughout the country.

CVS Caremark’s Part D enrollment grew 30%, for fourth place in nationwide PDP membership.  Not sure why their enrollment surged as I don’t recall any big advertising campaign. CVS Caremark enrollment totaled just over 1.5 million at the start of 2011.

Coventry Health Care lost 26% of its PDP enrollment, but it is still the fifth largest player in the Part D market nationwide.

Health Net was sanctioned by CMS (Centers for Medicare and Medicaid) and was not allowed to enroll new members after November 19^th, 2010. The company lost 11% of its PDP members and now has an enrollment of just over four hundred thousand .

Republicans on the committee said new rules and funding changes for Medicare Advantage are hurting seniors. Representative Dave Camp (R-Mich) said seniors are going to lose benefits because of the Affordable Care Act.

He said, “Sadly, that is already happening—from those who depend on local hospitals to folks who depend on Medicare Advantage plans to retirees receiving retiree drug coverage to seniors who will pay higher prices”.

Mr. Camp did not offer specifics to back up his view that seniors are being hurt by changes to Medicare Advantage. Dr. Berwick, the Administrator of Medicare, did offer facts and figures to support his case that nothing bad has happened to Medicare Advantage plans as a result of the Affordable Care Act.

Dr. Berwick said that Medicare Advantage (MA) enrollment rose 6% in 2010 and premiums for MA plans actually decreased overall. He said there are now over 12 million people enrolled in Medicare Advantage plans. Berwick said, “On average, beneficiaries have seen a 6% reduction in their premiums, and there is a 5% increase in the number of beneficiaries who are now in 4- and 5-star Medicare Advantage contracts this year versus last year.”

So who is right?

Well……Berwick offered statistics which are very straightforward. More people enrolled in Medicare Advantage plans last year, and that was because these plans are still attractive alternatives to Original Medicare and Medicare supplements.

But……The real cuts to Medicare Advantage funding are in the works for next year’s plans, and we won’t know until September if 2012 MA premiums will go way up or if co-pays will see big increases.

• Establish or update the individual’s medical and family history;
• Create a list of current providers and suppliers involved in providing medical care, including a list of prescriptions;
• Take measurements of height, weight, body mass index, blood pressure and other routine measurements; and
• Detect cognitive impairments.

During the wellness visit, the health professional will establish or update a screening schedule for the next 5-10 years, based on recommendations of the United States Preventive Services Task Force (USPSTF).  The recommendations of USPSTF are based on an individual’s age and health status.  The visit may include health education or preventive counseling services designed to reduce risk factors that have been identified during the visit.  Examples of such education and counseling services include those designed to promote self-management and wellness, including weight loss, physical activity, smoking cessation, fall prevention and nutrition.

The wellness visit may be conducted by a physician or another practitioner whose services are recognized by Medicare.  Such practitioners include physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, clinical social workers, and clinical psychologists. Practitioners may also include health educators, registered dietitians, or nutrition professionals working under the supervision of a physician.

The services for which no cost-sharing (deductible and/or co-payment) will be charged are:

• Mammograms every 12 months for eligible beneficiaries age 40 and older;
• Colorectal cancer screening, including flexible sigmoidoscopy or colonoscopy (see below);
• Cervical cancer screening, including a Pap smear test and pelvic exam;
• Cholesterol and other cardiovascular screenings;
• Diabetes screening;
• Medical nutrition therapy to help people manage diabetes or kidney disease;
• Prostate cancer screening (for most codes);
• Annual flu shot, pneumonia vaccine, and the hepatitis B vaccine;
• Bone mass measurement;
• Abdominal aortic aneurysm screening to check for a bulging blood vessel;
• HIV screening for people who are at increased risk or who ask for the test.[6]

Cost-sharing is also eliminated for the wellness visit and personal prevention plan.

CMS indicates that the following preventive services covered by Medicare will continue to be subject to cost-sharing:

• Digital rectal examination furnished as a prostate cancer screening service;
• Glaucoma screening;
• Diabetes self-management training services;
• Barium enema furnished as a colorectal cancer screening.

Note that, for all services, current coverage policies continue to apply.  For example, Medicare only covers bone mass measurements once every two years for qualified high-risk individuals. Testing within that time frame for people who meet the eligibility criteria will not be subject to a deductible or co-payment.  Bone mass measurement will not be covered for someone who is not a high risk individual, however, regardless of the change in cost-sharing requirements.

Clarification Concerning Smoking Cessation Counseling

Coverage for smoking cessation counseling services became effective for services provided on or after August 25, 2010, the date of the recent CMS memorandum. Services may be provided on both an outpatient and an inpatient basis, but they are reimbursed under Medicare Part B. Smoking cessation counseling services provided before January 1, 2011, are subject to cost-sharing.  Cost-sharing is eliminated for services provided after that date.

An article in the University of Pennsylvania’s MedPage Today says that more for-profit hospice agencies are being created and they tend to serve patients who may require less intensive care – resulting in more profit for the agency.

About 84% of all hospice patients are paid for by Medicare, and some hospice advocates are calling  for hospice organizations to be reimbursed based on the intensity of care they provide to patients.

Under current rules,  only beneficiaries admitted to hospitals as inpatients are required to receive information about contacting their state QIO regarding quality of care issues. Today’s proposed rule would require that in order to participate in the Medicare program, providers and suppliers would need to inform beneficiaries of their right to complain to a QIO about quality of care, as well as how to contact their local QIO. In all, the following care settings are impacted by this proposal:

• Clinics, rehabilitation agencies, and public health agencies that provide outpatient physical therapy and speech-language-pathology services
• Comprehensive outpatient rehabilitation facilities
• Critical access hospitals
• Home health agencies
• Hospices
• Hospitals
• Long-term care facilities
• Ambulatory Surgical Centers
• Portable x-ray services
• Rural health clinics and Federally Qualified Health Centers

I notice that skilled nursing homes are not in this list. I wonder why?

Beneficiaries with questions or concerns about the quality of care they receive under Medicare can learn more about their rights by calling 1-800-MEDICARE or by reading Medicare’s fact sheet, “Quality of Care Concerns,” online at http://www.medicare.gov/Publications/Pubs/pdf/11362.pdf.