Medicare and Health Reform

Medicare Changes Based on Documented Excess Payments; Will Benefit Seniors

The Congressional Research Service (CRS) explains proposed Medicare changes.

The CRS report describes changes to Medicare in the House health reform bill.  It notes that the reductions in Home Health target providers that have imposed excessive charges.  These and other reforms are essential to stablize Medicare.  They would not reduce any services to any beneficiaries, and would not affect most providers:

“In its March 2009 Report, MedPAC explains that payments to HHAs have exceeded costs by a wide margin since the PPS [prospective payment system] was implemented in 2000. As a result, MedPAC recommends that the

MB increase for 2010 be eliminated and that the payment coding changes scheduled by the Secretary be accelerated. Further, MedPAC recommends that HHA rates be rebased to better reflect the average costs of care.”

MedPAC has documented justifications to these changes.  For example, a September report notes excess payments to certain outlier home health agencies, and examples of fraud:

The rule proposes two changes to the outlier policy to address program integrity issues that have been identified in a number of areas. First, the rule would reduce the size of the outlier pool from 5 percent of total payments to 2.5 percent. Because statute requires that the outlier adjustment be budget neutral, the base rate would be raised by 2.5 percent to compensate for this reduction.

Second, the rule would institute a cap on agency outlier payments that would limit outlier payments to no more than 10 percent of an agency’s Medicare home health payments; currently there is no provider limit on these payments.

The anomalous outlier trends in recent years are compelling evidence that abusive and likely fraudulent practices are widespread in many areas, and increased safeguards are necessary to curb inappropriate outlier payments.


From Center on Budget and Policy Priorities:

House-Passed and Senate Health Bills Reduce Deficit, Slow Health Care Costs, and Include Realistic Medicare Savings
Congress Has Good Record of Implementing Medicare Savings; Medicare Savings in These Bills Are Similar to Those Implemented in the Past

By James R. Horney and Paul N. Van de Water [1]

December 4, 2009


Medicare Cost Plan vs. Medicare Advantage – Where’s the Advantage?

Congress is debating changing excess payments to Medicare Advantage (MA) plans, which offer supplemental benefits but charge about 14% more than comparable plans.  At the same time, health reform bills would enhance Medicare for all beneficiaries (no co-pays for prevention, lower drug prices, overall sustainability).  Opponents of reform have sent misleading messagese to MA enrollees. This table compares two Medicare supplemental plans offered by Kaiser Permanente.  In Virginia, they offer a regular Medicare supplemental plan (Medicare Cost Plan).  In San Francisco, they offer a Medicare Advantage plan.  The comparison shows that in this case MA beneficiaries would be equally well off, and for some services better off, in a traditional Medicare Cost Plan.  While MA plans vary, health reform promises better benefits to all Medicare beneficiaries.

Kaiser Permanente Virginia Medicare Supplemental Plan

Kaiser Permanente San Francisco Medicare Advantage Plan

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