3 weeks of solid good news for Medicare-aged people and producers
As President of the National Association of Medicare Supplement Advisors, Inc. (NAMSA), one of my obligations is to report weekly via our NAMSA newsletter to our members items of interest relative to Medicare matters, and of course, items of interest to their clients.
Everyone in America is aware that we are living in turbulent times, and those of us in the insurance industry have not been immune to bad news.But, for three weeks in a row recently I have been able to deliver quite a number of entries of good news. Good news for Medicare Supplement and Medicare Advantage companies, for producers, and for the 65+ Medicare-aged public.
The good news
Well, there were no less than 19 “good news” items that came out in the month of July. We can’t cover them all, but selecting and reporting some of them can be of value to any producer in the Senior or retired market.
First, and probably the most important to our profession was the report distributed by the Congressional Budget Office on July 8, which indicated Medicare spending (on a per capita basis) is slowing down.Nobody seems to be exactly sure where the per capita savings are coming from, but with the large influx of boomers who started into the system in 2011, and will continue for another 15 years, a reduction of per capita spending means a lot—to Medicare’s budget, to taxpayers, to beneficiaries, and to the Medicare producer.
How and why? Medicare needs all the savings it can get, so with the swell of boomers into the system, a lower (and younger) demographic means that the system is spread out over more enrollees, at a lower per capita cost, which saves Medicare money, and manifests itself in overall Medicare savings—for everybody.
Then, in late July, the mid-year Medicare Trustees Report stated that the Hospital Insurance (HI) Trust Fund would be solvent until 2030, four years longer than predicted last year, and 13 years longer than predicted before the passage of PPACA—Obamacare. The document warns of adifferent story for the Social Security Disability Fund, which is predicted to be insolvent in two years. Remember, that qualifying for the SSDI program also allows people early access to Medicare.
The report states that, “In 2013, Medicare covered 52.3 million people; 43.5 million people aged 65 and older and 8.8 million with disabilities, total expenditures for Medicare were $582.9 billion, and total income (FICA contributions, and Part B premiums) was $575.8 billion.”
In addition, the report insinuates that because expenditures have leveled off (0.8% annually for the past four years), there should not be a need for an increase in the Part B premiums for enrollees. This premium is currently at $104.90 per month (for most enrollees—higher income earners pay more), and the stabilization created over the past three years in Part B premiums, which led to the current rate, and presumably would follow into the 2015 rate, would be great news for Part B enrollees.
“Admitted” vs. “Under Observation” problem
Then, three weeks ago, a nearly two-hour hearing was held in a Senate committee aptly named the “Improving Access to Medicare Coverage Act of 2013.” Though the title is somewhat dated (it was introduced in March 2013), the bills, identical in the Senate and the House, if passed, will have a HUGE impact on Medicare enrollees.
The background of the problem—and one which NAMSA has fought for nearly three years—is that many people are not allowed access to the Extended Care benefits of skilled care in a nursing home because they were not “admitted” to the hospital. Currently, access to Extended Care requires that a patient be admitted to a hospital for three days (not counting the day of dismissal) to qualify for their skilled care needs,and find out too late that they were in the hospital under “observation.”
The “admitted” vs. “observational” status of a patient has been a particularly sore spot for Medicare enrollees (and their children) for the past three years, and is growing more frequent. When a patient goes to the hospital, in pain, or sickness, or from an accident, they are given a wristband, moved to the fifth floor, and hope to have their malady cured. The last thing on their mind is to ask if they have been admitted. They assume they have been. But then upon dismissal, they get the bad news that they need to be transferred to skilled care, and that Medicare will not be paying for it.
Doesn’t sound like a big deal? Well, it is. This unfortunate predicament happened to 1.4 million enrollees in 2011, and grew to 1.9 million in 2012. And…it is still growing. There are myriad reasons why this happens but it really boils down to one problem. Medicare pays more to hospitals for “admitting” patients (as an inpatient, which then becomes a Part A claim), than it does for coding them as “under observation” (as an outpatient, which then becomes a Part B claim).
This causes hospitals to be paranoid in their coding procedures because if they are accused of “upcoding” to admission, the Recovery Audit Contractors (RACs) of Medicare come along behind them and expect the hospitals to refund the money Medicare paid. Thus, the problem of coding as “observational” also winds up on the backs of the Medicare patient—through the loss of the Extended Care benefits.
So, that’s what the two bills and the hearing were all about—putting a stop to this problem, doing away with the “observational” problem, and perhaps, even doing away with the three-day rule. While most congressional hearings are somewhat boring, this one was lively. Five very skilled people testified in favor of passing the bills, and their arguments were well received. Nobody on the committee or providing testimony said a word in opposition to moving this forward. In fact, I can’t imagine a Senator or Representative voting against these bills and going back and facing their Medicare constituency as to why they did not support this legislation.
That’s the good news. But, now, when Congress actually passes the bills becomes the question. One thing is certain—enough legitimate concern has been raised that the problem needs to be settled, and quickly, before another two or three million people get the bad news.
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