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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1 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 Part D: Prescription drugs

2 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 Penalty if enroll later unless had employer-based coverage

3 Medicare -- Supplemental Insurance Types of supplemental insurance Employer Medicaid Other government programs Medigap Coordination of Benefits General rule: Medicare pays first, supplemental insurance pays second, beneficiary pays rest Exception: If beneficiary is working, employersponsored plan pays first, Medicare pays second, beneficiary pays rest

4 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; vary by plan Cost-sharing may vary from Parts A and B cost-sharing rules, but overall benefit package must be actuarially equivalent to Parts A and B

5 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 Higher premium if enroll later (unless creditable coverage) Premium subsidies for low-income individuals

6 IPPS Payment Rate PAYMENT RATE = STANDARDIZED AMOUNT x DRG (+ ANY ADD-ON PAYMENTS)

7 STANDARDIZED AMOUNT / \ Labor Share Non-Labor Share

8 EXAMPLE Standardized Amount = $5209 / \ Labor Share = $3000 Non-Labor Share = $2209 Hospital ABC s Wage Index = 1.5 Hospital Specific Rate = (Labor Share x Wage Index) + Non-Labor Share = ($3000 x 1.5) + $2209, or $6709

9 Primary Diagnosis Secondary Diagnosis Procedures Assigned to DRG Complications/ Co-morbidities

10 EXAMPLE Joe Smith is admitted to Hospital ABC. Assigned to a DRG with a weight of 2.0. Payment Amount = Hospital Specific Rate x DRG (+ any add-on payments) = $6709 x 2.0 (+ any add-on payments) = $13,418 (+ any add-on payments)

11 IPPS Payment Rate PAYMENT RATE = STANDARDIZED AMOUNT x DRG (+ ANY ADD-ON PAYMENTS)

12 Payment For Physician Services PAYMENT RATE = RVU x Conversion Factor

13 RVU Physician Work (Geographically Adjusted) Practice Expense (Geographically Adjusted) Malpractice Expense (Geographically Adjusted) Procedure Code RVU

14 Shared Savings Program If ACO meets or exceeds its minimum savings rate (MSR): Track 1: One-sided risk Receive percentage of savings Percentage = 50% x performance score Capped at 10% of benchmark Track 2: Two-sided risk Receive percentage of savings Percentage = 60% x performance score Capped at 15% of benchmark Share percentage of losses MSR = a percentage of the ACO s expenditures benchmark (e.g., 2% of benchmark). Benchmark = CMS s estimate of what of Medicare s expenditures would have been for the ACO s Medicare beneficiaries if they had received care from non-aco providers. Performance score = percentage score on 33 quality measures

15 Medicaid Eligibility Mandatory categories ( categorically needy ) 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 Medically needy Pregnant women, children and their caregivers with incomes exceeding limits for categorically needy Other adults with incomes below 133% FPL

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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