Medicare

The Medicare agency is encouraging beneficiaries to take advantage of the annual Open Enrollment period, which started Monday. This is the one time every year when people with Medicare can review and, if necessary, change their current health care coverage.

Open enrollment this year began Nov. 15 and runs through Dec. 31. 

The Centers for Medicare and Medicaid Services on Friday announced the Medicare premiums, deductibles and co-insurance amounts to be paid by Medicare beneficiaries in 2011.

The standard Part B rate is $115.40 a month, a 4.4 percent increase over last year; but most seniors will pay the same Part B premium as they have since 2008: $96.40 per month. Richer seniors — the top 5 percent of earners — will pay between $161.50 and $369.10 because of a surcharge adopted in Republicans' 2003 prescription drug benefit.

Medicare says the premium is going up because of "growth in the use of services like outpatient hospital care, home health and physician-administered drugs." The premium also incorporates potential congressional action to avert a 23 percent physician pay cut scheduled for Dec. 1.

The deductible for Part A Medicare (hospital and nursing home care) goes up $32 next year, to $1,132.

For prescription drug plans, the average premium for all plans will rise by 9.49 percent, according to estimates by the policy group Avalere. Under the new healthcare reform law, according to Forbes, the richest seniors will pay an extra $12 to $69.10 a month for their coverage.

President Obama's fiscal commission proposes to get the government's healthcare spending under control with a laundry list of oft-debated solutions that neither party has been able to enact because of entrenched ideological and industry opposition.

The co-chairmen's mark, unveiled Wednesday, suggests "asking doctors and other health providers, lawyers and individuals to take responsibility for slowing healthcare cost growth." The proposals include tort reform, drug rebates and Medicare payment cuts, all of which have been lobbied to a halt in the past.

The proposal also recommends mandatory premium increases and payment cuts after 2020 if federal healthcare costs continue to grow faster than the rate of growth of GDP plus 1 percent. And it rekindles the debate over taxing health benefits and instituting a public option.

The commission's proposal starts with preventing a scheduled 30 percent cut called for by the physician payment formula, known as the Sustainable Growth Rate (SGR). The "doc fix" pay freeze would cost $276 billion over 10 years, which would be paid for "not through deficit spending but through savings from payment reforms, cost-sharing and malpractice reform, and long-term measures to control healthcare cost growth."

The proposed offsets include: 

• Paying doctors and other providers less, improving efficiency and rewarding quality by speeding up payment reforms and increasing drug rebates. The proposal would replace the SGR with "modest reductions" through 2015 and then establish a new payment system (saves $24 billion); the proposal would also require manufacturers to offer rebates on brand-name drugs as a condition for participating in the Medicare prescription drug program (saves $59 billion);

• Reducing the cost of defensive medicine by adopting comprehensive tort reform (capping non-economic and punitive damages and making other changes in tort law would save $64 billion);

• Expanding cost-sharing in Medicare to promote informed consumer health choices and spending (eliminating first-dollar coverage in Medigap plans would save $50 billion; replacing existing cost-sharing rules with universal deductible, single coinsurance rate and a catastrophic cap for Medicare Part A and Part B would save another $85 billion);

• Expanding successful cost-containment demonstrations;

• Strengthening the healthcare reform law's Independent Payment Advisory Board (IPAB); and

• Recommending additional health savings.

During the healthcare reform debate, early calls for tort reform and drug rebates were quickly squashed after heavy lobbying by lawyers and drugmakers. As for the IPAB, rather than strengthening it, a number of Republicans have called for its repeal.

But the fiscal commission thinks the appointed board has promise if it can get some teeth after being watered down considerably during the reform debate. The 15-member board would make recommendations for cuts in Medicare payments to providers if federal health expenditures grow faster than a specified target.

The commission proposal would strengthen the IPAB by: 

• Eliminating special carve-outs for hospitals and certain other providers;

• Increasing the spending rate reduction target to 1.5 percent starting in 2015 instead of 2018;

• Eliminating the trigger that would turn off the IPAB in 2019 if other cuts called for in the healthcare reform bill are achieved;

• Allowing cost-saving recommendations even if spending doesn't surpass target growth rate;

• Allowing proposals that apply reforms to health plans in the exchange; and

• Creating a "back-up sequester" that would automatically increase premiums and reduce provider payments if IPAB recommendations (or equivalent savings) are not adopted.

The proposal would set a global target for all federal health spending after 2020 of GDP plus 1 percent, and review costs every two years. If costs grow too fast, the president would be required to submit — and Congress would have to consider — reforms that could include a public option.

In addition, the proposal tackles healthcare costs on the tax side.

It lays out one option, named after Sens. Judd Gregg (R-N.H.) and Ron Wyden (D-Ore.), that would cap the income-tax exclusion for employer-provided healthcare at the amount of the actuarial value of the standard option under the Federal Employees Health Benefits Plan. Taxing health benefits would likely lead employers to drop more expensive plans and almost doomed healthcare reform after unions revolted against the tax on so-called "Cadillac" plans, which ended up being significantly delayed and watered-down.

Another solution consists of a "tax reform trigger" that calls for an across-the-board "haircut" for itemized deductions, employer health exclusion and general business credits that would take effect in 2013 if reform is not yet enacted.

Donald Berwick is scheduled for his first hearing before the Senate Finance Committee next Wednesday, Nov. 17.

The chief medical officer at the Centers for Medicare and Medicaid Services (CMS) responded Tuesday to a scathing article on dialysis care in the U.S. by acknowledging that his agency is failing to adequately oversee the taxpayer-funded procedure.

"We have been not able to perform the oversight functions as frequently or as thoroughly as we might like to," Barry Straube told NPR. 

"We are hindered by funding that comes from Congress in order to perform regulatory oversight visits for all of the 17 different provider sites that CMS is charged with regulating. And the funding that is provided to the agency is insufficient in order to be able to meet the statutory requirements in terms of frequency and thoroughness of those sites."

Straube's comments come as The Atlantic magazine and the investigative outfit ProPublica published a year-long investigation into kidney-failure care, which is covered by Medicare. The article found that the U.S. mortality rate is worse than in most other developed countries that spend far less per patient, in large part because of a dearth of state and federal regulations regarding staffing ratios and training.

Straube told NPR that part of the problem was that Congress hampered the agency's oversight powers when it told the agency several years ago to focus on annual visits to nursing homes at the expense of other facilities, including dialysis centers.

He also said the article fairly described conditions at some facilities but overstates the problem overall.

"My main quibble with the article is that it sounds like one would not want to have dialysis in the United States," he said. "This is a lifesaving treatment that the vast majority of people are being treated very well in very clean facilities that hopefully make very few mistakes."

But ProPublica's year-long review of more than 1,500 clinics in California, New York, North Carolina, Ohio, Pennsylvania and Texas from 2002 to 2009 found that surveyors came across filthy or unsafe conditions in almost half the units they checked. 

"Hundreds of clinics were cited for infection-control breaches that exposed patients to hepatitis, staph, tuberculosis and HIV," the article says. "Prescription errors were common: 60 clinics had at least five citations for them."

Blaming congressional inaction, the nation's largest doctors' lobby is urging lawmakers this month to block a steep cut scheduled to hit Medicare doctors at the start of December.

The American Medical Association (AMA) is warning that a failure to prevent the cut would be "a catastrophe for seniors" because many doctors would stop seeing Medicare patients altogether. Physicians are facing a 23 percent cut on Dec. 1, and an additional 1.9 percent cut is scheduled for Jan. 1. 

"This is not about doctors," AMA President Cecil Wilson told reporters on a press call Monday. "It's about access to care for senior citizens."

Wilson minced no words about where the blame for the cuts should rest. "It's not AMA that's not fixing the problem. This is a congressional problem."

Lawmakers, he added, "are putting the lives and health of seniors at risk."

AMA is endorsing a temporary pay patch, delaying the cuts for 13 months and providing a 1 percent pay increase for doctors instead. The time cushion will allow Congress next year to consider ways to scrap the 13-year-old formula — the Sustainable Growth Rate (SGR) — that dictates Medicare physician payments, replacing it with a system that better reflects the true cost of delivering care, AMA says.

It's hardly a new argument. 

The SGR was designed to prevent Medicare doctor payments from bankrupting the program by indexing reimbursements to the growth of the economy. Because healthcare inflation has risen much faster than GDP in recent years, the SGR has called for physician cuts every year since 2002. Congress, however, has usually stepped in with temporary patches to prevent those cuts.

Years of kicking the can down the road, though, has caused the cuts to compound, leading to next month's scheduled 23 percent reduction.

Fixing the problem — even patching it — doesn't come cheap. The cost to delay the cut by 13 months is estimated at $15 billion. A permanent fix would run well above $200 billion — so expensive that Democrats never even tried to include it as part of the new healthcare reform law.

Lawmakers on both sides of the aisle agree the SGR is flawed and needs reforming, but cost concerns have always prevented a permanent fix — a hurdle that only got higher after Tuesday's elections, which were largely a referendum on deficit spending.

To prod lawmakers to action, AMA is taking out a full-page ad in USA Today this week, with others to follow next week in various Capitol Hill papers. 

The Department of Health and Human Services on Friday unveiled a new tool to help medical school students learn to spot and fight Medicare fraud.

The booklet, entitled "Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud Abuse," will go out to medical schools across the country. It explains the laws that apply to physicians so they can comply with federal law, avoid liability and spot signs of potential fraud. 

The release coincides with the third regional healthcare fraud prevention summit, held Friday in Brooklyn and featuring HHS Secretary Kathleen Sebelius and Attorney General Eric Holder. The Obama administration has been touting the health reform law's $350 million investment in efforts to root out healthcare fraud.

The new "roadmap" follows a survey of medical school deans by HHS's inspector general that found 92 percent of them requested HHS to provide them with educational materials to inform students about Medicare and Medicaid fraud, waste and abuse.

Enrollees in traditional Medicare will save more than $3,500 on average over the next 10 years, according to a new report released Thursday by the Department of Health and Human Services.

For seniors and people with disabilities who have high prescription-drug costs, savings should be even higher — as much as $12,300. Savings will be greatest for beneficiaries who reach Medicare's infamous prescription-drug "doughnut hole." 

Total savings per beneficiary enrolled in traditional Medicare are estimated to be $86 in 2011, rising to $649 in 2020. For those in the doughnut hole, estimated savings increase from $553 in 2011 to $2,217 in 2020.

The report does not cover the 11 million seniors who have private Medicare Advantage plans, however. Those beneficiaries, according to an analysis released last month by the program's chief actuary, can expect to see their out-of-pocket costs steadily increase until 2017, to a high of $923 that year, before falling to $873 in 2019.

"The Affordable Care Act makes Medicare stronger and reduces the burden of healthcare costs on some of our most vulnerable citizens," HHS Secretary Kathleen Sebelius said in a statement. "The law improves benefits for seniors and people with beneficiaries who rely on Medicare and ensures that Medicare will be there for current and future generations by extending the life of the Medicare Trust Fund. These benefits and savings are only possible with the continued implementation of the Affordable Care Act."

The health reform law's new discounts and rebates for prescription drugs in Medicare and Medicaid will have varying but limited effects on beneficiaries' pocketbooks, Congress's budget scorekeeper said Thursday. Older Americans who reach the infamous Medicare "doughnut hole," however, should benefit substantially.

The new law "requires manufacturers of brand-name drugs to provide new discounts and rebates for drugs purchased through Medicare and Medicaid, with the amount of those discounts and rebates based on the prices of the drugs," the Congressional Budget Office explains in a letter to House Budget Ranking Member Paul Ryan (R-Wis.), who requested the information. "Manufacturers thus have an incentive to raise those prices to offset the costs of providing the new discounts and rebates, although other forces will limit their ability to do so."

CBO estimates Medicare provisions will raise drug prices by about 1 percent, making "federal costs for Medicare’s drug benefit and the costs faced by some beneficiaries slightly higher." The 50 percent rebate in the Medicare "doughnut hole," meanwhile, should be so substantial that most seniors who reach that level should pay less overall for their drugs, even after factoring in the higher prices they'll pay for the portion of drugs consumed before reaching the doughnut hole. 

Medicaid, meanwhile, should pay less for drugs because of new rebates in that program.

The Centers for Medicare and Medicaid Services on Wednesday released the list of 356 suppliers who have won contracts to provide durable medical equipment for nine communities across the country.

The competitive bidding program, created by the 2003 Medicare reform law, aims to save patients and the government money by replacing standard fees with market competition among providers. The program, which slashes prices by 32 percent, begins Jan. 1 in the following areas: 

• Charlotte – Gastonia – Concord (North Carolina and South Carolina)

• Cincinnati – Middletown (Ohio, Kentucky and Indiana)

• Cleveland – Elyria – Mentor (Ohio)

• Dallas – Fort Worth – Arlington (Texas)

• Kansas City (Missouri and Kansas)

• Miami – Fort Lauderdale – Pompano Beach (Florida)

• Orlando – Kissimmee (Florida)

• Pittsburgh (Pennsylvania)

• Riverside – San Bernardino – Ontario (California)

Industry groups have objected to the program, saying its cuts are too steep for many small companies to survive. And several experts have criticized the way the bidding program is structured.

A House bill to repeal the competitive bidding program has attracted more than 250 sponsors.

With all eyes on the politics of Tuesday's elections, the nation's largest doctors lobby is reminding Congress of an imminent policy battle: how to prevent a looming Medicare cut for the country's physicians.

The American Medical Association (AMA) is warning of "a catastrophe" if lawmakers don't step in to block the 23 percent cut, which is scheduled to take effect Dec. 1, and another 6.5 percent cut that's due a month later.

"If physicians cannot keep their doors open because Medicare now only pays about half the direct cost of running a practice, then we're going to lose access to care," AMA President Cecil B. Wilson said in an interview with Kaiser Health News. "It will be gut-wrenching for physicians to say, 'I can no longer continue to see new Medicare patients.' … But that's where we are, and if you're talking about a 30 percent cut if Congress does nothing by Jan. 1, this will be a catastrophe."

But fixing the so-called Sustainable Growth Formula (SGR) won't be easy. Delaying the cut until the start of 2012 would cost about $15 billion, Kaiser reports, citing an April estimate from the Congressional Budget Office, while a 10-year fix would require lawmakers to come up with $276 billion. 

The AMA, under pressure from anxious members, is urging Congress to provide a 13-month fix in the lame-duck session.

"Our strategy is to say to Congress, 'What we want from you is to stabilize Medicare payments to physicians for the next 13 months to get us through 2011,'" Wilson told Kaiser. "That will give us an opportunity working with the new Congress to develop a means of getting rid of the formula, putting in a formula or a payment mechanism that recognizes increased costs of care."

House lawmakers last year passed a bill that scrapped the SGR and erased the cuts dictated under the formula, but the measure wasn't offset by budget cuts or revenue increases elsewhere in the budget. Fiscal conservatives in the Senate killed a similar bill a few days later, leaving lawmakers to return to the perennial game of passing short-term updates instead.