Medicare Design Part A: Inpatient care, hospice, and some home health care Part B: Physician services + outpatient care Part C ( Medicare Advantage

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Medicare Design

Part A: Inpatient care, hospice, and

some home health care

Part B: Physician services + outpatient

care

Part C (“Medicare Advantage”): Private

plan alternative to Parts A and B

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Medicare Eligibility and Premiums – Parts A and B

Part A

:

– Entitled if:

• Age 65 + US citizen or permanent legal resident +

you/spouse makes payroll contributions at least 10 years • SSDI recipient for at least 24 months

• ESRD or Lou Gehrig’s disease – Eligible if:

• Not automatically entitled, but age 65 + US citizen or permanent legal resident

– Premium:

• No premium if entitled

• Premium if eligible but not entitled

Part B:

– Eligible if entitled or eligible for Part A – Means-based premium

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Medicare Part C

Defined: Private plans that contract with government

to offer Medicare Advantage Plans

Eligibility: Eligible for Part C if eligible for Parts A and B

Coverage:

Plans must cover all services covered under Parts A and B

May cover prescription drugs (Part D benefit)

May cover additional services not covered under Parts A

and B

Premium/cost-sharing:

Premium based on statutory formula; varies by plan

Cost-sharing may vary from Parts A and B cost-sharing

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Medicare Part D

Coverage: Covers outpatient prescription drugs. Covered

through private plans (Prescription Drug Plans or Medicare

Advantage (MA) Plans)

Eligibility and Enrollment:

Eligible for Part D if entitled to Part A, enrolled in Part B, or

enrolled in a MA Plan

Must affirmatively enroll

• Exception: “dual eligibles” automatically enrolled

• Those enrolled in a MA Plan must get their drug coverage through their

MA plan

May enroll at any time

Premiums:

Varies across plans

Means-tested

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PAYMENT RATE =

HOSPITAL SPECIFIC AMOUNT x DRG

(+ ANY ADD-ON PAYMENTS)

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STANDARDIZED AMOUNT

/

\

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EXAMPLE

National Standardized Amount = $5438

/ \

Labor Share = $3000 Non-Labor Share = $2438

Hospital ABC’s Wage Index = 1.5

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EXAMPLE

Joe Smith is admitted to Hospital ABC. Assigned

to a DRG with a weight of 2.0.

Payment Amount

= Hospital Specific Standardized Amount x DRG (+ any

add-on payments)

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PAYMENT RATE =

HOSPITAL SPECIFIC RATE x DRG

(+ ANY ADD-ON PAYMENTS

)

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PAYMENT RATE =

RVU x Conversion Factor

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RVU Physician Work (Geographically Adjusted) Practice Expense (Geographically Adjusted) Malpractice Expense (Geographically Adjusted)

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Medicare’s Hospital

Value-Based Purchasing Program

Quality Measures

– Clinical process of care – Patient experience of care – Patient outcomes

Efficiency Measure:

Medical Spending per Beneficiary (MSBP)

Scoring

– Composite quality score: based on higher of achievement and improvement score for each measure

– Combined score: 80% quality + 20% efficiency

Payment

– Specified percentage of standard payment rates withheld

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Payment Year HVBP* FY 2013 1% FY 2014 1.25% FY 2015 1.50% FY 2016 1.75% FY 2017 2.0%

Medicare Hospital

VBP Program: Payment

*% reduction in payment rates to fund VBP payments

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Pre-Value Based Purchasing

National Standardized Amount = $5438

/ \

Labor Share = $3000 Non-Labor Share = $2438 Hospital ABC’s Wage Index = 1.5

Hospital Specific Rate = (Labor Share x Wage Index) + Non-Labor Share = ($3000 x 1.5) + $2438, or $6938

______________________________________________________________________ Post-Value Based Purchasing: High Performing Hospital

Adjusted National Standardized Amount = $5500

/ \

Labor Share = $3055 Non-Labor Share = $2445 Hospital ABC’s Wage Index = 1.5

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PAYMENT RATE =

RVU x

Conversion Factor

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Medicare’s Hospital Readmission

Reduction Program

Penalty

% reduction in payments if excessive readmissions

Based on hospital-specific benchmark

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Medicare: Hospital

Acquired Conditions (HACs)

No increased payment for certain HACs

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Bundled Payments

Who: Organizations that voluntarily

participate.

Payment: Single payment to multiple

providers for an episode of care.

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Shared Savings Program

Who? Accountable Care Organizations (ACOs)

that voluntarily participate

Payment:

Shared savings model: ACOs providers paid fee

schedule rate (e.g., IPPS, physician fee schedule).

ACOs that meet target cost savings + quality metrics

awarded percentage of Medicare’s savings.

Shared savings + risk model: Same as shared savings

model, except ACOs that do not meet target cost

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Giving Providers Tools to Address

Quality & Cost Concerns

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Regulatory Initiatives: HIT/EHR

HIPAA

Office of the National Coordinator (ONC)

Establish standards

State health information exchanges (HIEs)

Technical assistance

Medicare and Medicaid EHR Incentive

Payments

Subsidies if “meaningful user” of EHRs

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$12,376 $14,913 $11,167 $12,478 $10,000 $11,000 $12,000 $13,000 $14,000 $15,000 2014 2019

Medicare is on track to spend $1,200 less per person in 2014

than was projected in 2010, and $2,400 less in 2019

FOR 2019

-$2,436

SOURCE: Kaiser Family Foundation analysis of mandatory Medicare outlays and Medicare enrollment data from CBO Medicare baseline projections, 2010-2014; 2014 estimates based on August 2014 baseline.

FOR 2014

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2.9%

3.1%

3.4%

3.9%

4.4%

4.8%

0% 1% 2% 3% 4% 5% 6% 2015 2020 2025 2030 2035 2040

Medicare spending is projected to grow as a

share of the economy

NOTE: Estimates are net Medicare spending as percentages of gross domestic product (GDP), based on the extended alternative fiscal scenario, under which Medicare’s physician payment rates would be maintained at current levels, rather than reduced.

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Medicaid Eligibility

Mandatory categories (“categorically needy”/”deserving poor”)

– Aged, blind, and disabled receiving SSI – Low income children and their caregivers – Pregnant women below 133% FPL

– Former foster care children under age 26

Optional categories

– Pregnant women, children and their caregivers with incomes exceeding limits for categorically needy

– Medically needy

– Other adults with incomes below 133% FPL (ACA)

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