Legisltative Impact on Medicare

Legislative and regulatory issues and pressure have had a tremendous impact on Medicare providers, beneficiaries, and taxpayers. Subsidized by the government and American taxpayers, the current and future financial state of Medicare availability and coverage is in the forefront in governing bodies and across the entire country. The government is in charge of regulating cost saving strategies to ensure a sustainable life for Medicare through constantly changing policies and procedures impacted through federal laws. The most notable examples of legislative and regulatory impact on fee for service programs, such as Medicare, are fraud, overpayments, fee schedules, and health care reform.
Medicare fraud is a felony crime that is punishable at a minimum sentence to five years in prison. Most payment errors are simple errors by providers, however some individuals, organizations, and providers try to abuse the system. Several statues exist through state and federal legislation to punish knowing and willingful fraudulent parties, including the most common acts: false claims act, false statements act, social security act, and federal mail and wire fraud.
“Overpayment to physicians and providers by Medicare is not uncommon, and generally, overpayments result when payment is made by Medicare for non-covered items or services that exceed the amount allowed by Medicare for an item or service, or when payment is made for items or services that should have been paid by another insurer” (Moran, 2007). Amendments to the Social Security Act, S. 452, section 202, enacted in 2003, allows providers that have received overpayments from Medicare to return the overpayment amounts within 1 year without accruing interest. Under S. 452, section 103, overpayments exceeding $5,000 can be paid back over a 3 year period. Any overpayments falling outside the regulations of the amendments are subject to 13.75 percent interest and knowingful non repayments are subject to fraudulent Medicare laws (Baucus, 2001).
Medicare’s fee for service payment model evaluates, publishes, and controls reimbursement amounts for all services according to procedure code. “To control spending the SGR system sets spending targets for the year and adjusts physician fee services to fall below lower than inflation in the cost of operating a medical practice. A wide enough gap between spending and the target results in fee reductions” (GAO, 2004). Physician groups having grown increasing dissatisfied with the governments right to update fees, resulting in decreasing reimbursement rates. “Since the introduction of the fee schedule in 1992 through 2001, physicians generally experienced real increases in their fee updates. Fee updates increased more than the increase in the cost of providing physician services, as measured by MEI. Fee updates increased by 39.7 percent, whereas MEI increased by 25.9 percent, resulting in a higher increase of providing medical services and considerably lower increase of Medicare reimbursement fee schedules” (GAO, 2004).

Current United States government administration is further impacting health care with health care reform. Proposed plans to subsidize all health insurance plans to all American citizens will increase legislative and regulatory involvement on the health care industry.





References:
Bennett, M.L. “Criminal Prosecutions for Medicare and Medicare Fraud.” Association of American Physicians and Surgeons, Inc. Topeka, KS. Retrieved January 23, 2010 from http://www.aapsonline.org/fraud/fraud.htm
Moran, M. (2007). Medicare overpayment rule needs clarification. Retrieved January 23, 2010 from http://pn.psychiatryonline.org/content/42/6/5.full.
United States Department of Health and Human Services. Medicare Fraud. Retrieved January 23, 2010 from http://www.medicare.gov/fraudabuse/Overview.asp.
United States. General Accounting Office, S. 452 and H.R. 868, The Medicare Education and Regulatory Fairness Act of 2001 [Introduced to the U.S. Department of Justice; 11 June 2001]. Regulatory Issues for Medical Providers, GPO Access. Web. 23 January 2010.

United States. Cong. Senate. 106th Congress, 1st Session. S. 608, A Bill to Amend the Nuclear Waste Policy Act of 1982 [introduced in the U.S. Senate; 15 March 1999]. 106th Cong., 1st sess. Congressional Bills, GPO Access. Web. 24 May 1999. .


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Uninsured the reason for rising healthcare costs?

The number one reason for rising health care costs is the financial obligation of supporting the uninsured. Did you know that the governement pays for half of total healthcare cost in the United States? This raises an important question, "Is cost control necessary in US health care?" We have been insulated from true healthcare costs as insured Americans, but in turn, paying taxes to support those who recieve governement support. It is no wonder that the we (the taxpayers and governement) are running out of money. The number of uninsured Americans on are the rise and it begs the question of how long the insured taxpayers are going to support those you do not pay taxes, but reap the benefits of governement support.

Medicare/Medicaid-Prospective Payment Systems

Rationale of Reimbursement Systems
Health care reimbursement systems in the United States (US) fall into three major categories: cost based, prospective payment, and managed care. The following paper will focus on types of prospective payment, specifically Medicare, and an analysis of the system’s effectiveness based on strengths and weaknesses in the United States health care system.
Enacted in 1965, Medicare is the first form of socialized heath insurance programs in the United States. The emergence of federal government regulated health insurance was in response to a perceived upward and uncontrolled spiral of rising healthcare costs, which accounted for a disproportionate amount of gross national product in the US as compared to other industrialized nations (York, LePore, Opelka, Steinberg, & Money, 2002). To ensure support by the American Medical Association, as well provide a socialized program, Medicare contains two main parts, funded separately. Medicare part A is true social insurance covering hospital and skilled nursing services supported mostly by payroll taxes. Medicare Part B is voluntary coverage for durable medical equipment, and physician, as well outpatient services, funded mostly by federal reserves, but also includes an elective 25% social security deduction. In 2006, Part D was added to subsidize the cost of prescription drugs.
Prospective payment is the system Medicare uses to pay hospitals and for inpatient hospital services and Part B and D services; based on the diagnosis related group (DRG) classification system. Prospective per-case payment rates are set at a level intended to cover operating costs in an efficient hospital for treating a typical inpatient in a given diagnosis-related group. Payments for each hospital are adjusted for differences in area wages, teaching activity, care to the poor, and other factors. Hospitals may also receive additional payments to cover extra costs associated with atypical patients (outliers) in each DRG (ProPAC, 1995).
Medicare, which has provided a healthcare solution for historically lower income individuals including the elderly and permanently disabled, has evolved over the past 40 years and its effectiveness is debated still today. Much of the debate of Medicare and prospective payment base health insurance falls among three main groups: healthcare professionals and medical providers, Medicare recipients, and the government.
Healthcare and medical providers have experienced severe reimbursement cuts from all insurance companies, typically initiated by Medicare allowing private pay insurances to adopt similar cost cutting benefits. DRG allows providers to have a clear understanding of covered and non-covered services, listed by procedure and diagnosis codes eliminated time associated with preauthorization and financial burden for denials after services are rendered, and are published each year by the Center for Medicare and Medicaid Services (CMS). The challenge over the past decade has been that reimbursable codes are declining yearly to control government health spending. Medicare Part A, responsible for inpatient and hospital-based services has become restrictive, limiting reimbursement to a flat global fee and denying reimbursement for preventative care. For example, if a Medicare recipient is admitted to the hospital for a total knee replacement, the inpatient hospital reimbursement is currently around $12,000. Medicare sets this payment rate to include routine medical devices, drugs administered, and addition services. In addition, Medicare may not reimbursement for preventative medical conditions such as bed sores.
Medicare Part B has become a new focus over the past decade with medical advancements shifting medical procedures from hospitals to outpatient facilities and physician offices. Increased outpatient-based procedures have created an increased interest in cost saving strategies beyond hospitals. In the early 1990s several reforms were made to Medicare to control spending, including physician services. Several studies have found that Medicare and other purchasers could realize substantial savings if a portion of patients switched from less efficient to more efficient physicians. In April 2005, CMS initiated a demonstration mandated by Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 to test the theory. One researcher concluded, based on his simulations that if five to ten percent of Medicare enrollees switched to the most efficient physicians, savings would be one to three percent of program costs (Steinwald, 2007). Most health care professions and policy makers would agree that efficiency equates into increased productivity and decreased cost. Practices included in the study included general practicing physicians and provided a financial incentive for meeting budget goals, which raised the concern of patients not receiving the best care and skipping medical testing steps to reduce Medicare spending. Specialists would argue transitioning to office-based procedures decreases spending and creates efficiencies, yet Medicare has consistently cut physician reimbursements, making office- based procedures a less than profitable service.
Medicare recipients are being affected by Medicare cuts by non-covered services and discrimination by providers. Non-covered services under Part B has led increased out of pocket of expenses on an already financially stressed population leading to refused treatment options and increased financial burden on family members to treat Medicare recipients. Sequential conservative treatments must fail before surgical intervention will be reimbursed, can prolong treatment and increase what many health care providers would argue as unnecessary spending, often leading to surgical intervention.
The future of Medicare holds more challenges with an increase in life expectancy keeping Americans eligible for government funded health insurance longer with higher risk of medical related complications. According to a new study completed in 2009 from the McArthur Research Network on an Aging Society, the current forecasts of the U.S. Social Security Administration and U.S. Census Bureau may underestimate the rise in life expectancy at birth for men and women combined, by 2050, from 3.1 to 7.9 years. The cumulative outlays for Medicare and Social Security could be higher by $3.2 to $8.3 trillion relative to current government forecasts. Current healthcare reform proposals raise the concern of whom and at what age will continue to receive the appropriate medical care, in addition who will dictate what is “appropriate medical care”? The projections indicate Medicare and other government funded health programs declining with an increase demand in the healthcare industry that is outperforming most industries in the US economy, leading to business, clinical, and ethical decisions in treating patients.
Rising healthcare costs have led to government to one main objective: control costs and eliminate unnecessary spending. Government intervention in the healthcare industry is an even more controversial topic with the recently passed health care reform bill. A prospective payment system allows the government to evaluate annually evaluate medically necessary procedure codes and provide a clear and concise coverage policy to providers. Eliminating “non medically necessary” codes allows the government t control the taxpayers spending, reserving funds for necessary medical procedures. Controlling spending prolongs funds for future Medicare recipients, but again questions the government for deciding what medical care should be provided
Procedure based systems provide an efficient and clear guide to reimbursement in the US health care industry. Current focus on a government run healthcare system has created an increased focus on the advantages and disadvantages of the reimbursement system. The above rationale discusses the effective of the current system on healthcare providers, government, and current and future Medicare/Medicaid recipients.














References

Prospective Payment Assessment Commission (ProPAC). Medicare and the American health care system. Report to the Congress, Washington, DC: Prospective Payment Assessment Commission, June 1995.
Medicare: Providing Systematic Feedback to Physicians on their Practice Patterns Is a Promising Step Toward Encouraging Program Efficiency. Testimony
Before the Subcommittee on Health, Committee on Ways and Means, House of
Representatives, May, 2007.
Olshansky, J.A., Goldman, D.P., Zehng, Y., &Rowe, J.W. Aging America in the twenty-first century: demographic research from the McArthur foundation research on an aging society. The Milbank Quarterly, 8, 842-862. Retrieved January 11, 2009 from http://www.politico.com/static/PPM41_agingsociety_pdf.html
York, J.W., LePore, M.R., Opelka, F.G., Steinberg, W.C. (2002). A decade of decline: an analysis of Medicare reimbursement for vascular procedures. International Journal of Vascular Surgery, 16: 115-120. doi: 10.1007/s10016-0010138-0