The Impact of Medicare Cost Shifting

Uncategorized

The Impact of Medicare Cost Shifting

David Ermer–Uncategorized–

It’s a pet theory of mine that employer sponsored health insurance problems can be traced back to Medicare’s adoption of the prospective pricing system back in 1983. I therefore find it interesting that a Milliman principal and consulting actuary Will Fox testified about Medicare and Medicaid price shifting to employer sponsored coverage at a September 16 hearing before the House Energy and Commerce Health Subcommittee. A copy of Mr. Fox’s presentation is here.

Among the findings, which are based on West Coast studies, are the following:
  • Hospitals make 15.9% from Private Insurers to make up losses on Medicare and Medicaid.
  • Cost shifting recently increased private health insurance premiums by 12.2% in California.
  • Cost shifting grows each year.
Medicare cost shifting impacts FEHB plans just like private insurance.

State of the stalled mental health parity bill

David Ermer–Uncategorized–
Here’s an interesting Minnesota Post article about Rep. Jim Ramstad who is sponsoring the House mental health parity bill. The article explains that

Even though the House and Senate both passed Ramstad’s so-called mental health parity bill last week, the two chambers are still squabbling over how to pay for the program. House members want to subsidize the $3.9 billion measure, which would require health insurers to cover treatment for mental health disorders just as they do physical ailments, by a change to the tax code.

The Senate, however, has passed the parity measure as part of a bill to extend tax revenue, some of which would cover the cost of the new requirements.

Ramstad says he’s still hoping the Senate will ultimately take up the language passed in his chamber, which would effectively end the battle over funding. But on the eve of a long Congressional recess, it’s unclear if the two chambers can come to a consensus or will chose to punt the measure to a post-election lame duck session.

Expectmore.gov

David Ermer–Uncategorized–

Here’s a link to the OMB’s latest assessment of the FEHB Program posted on the expectmore.gov website.

Here’s a link to the OMB’s latest assessment of the OPM Inspector General’s oversight of the FEHB Program from the same site.

The assessments were last updated on September 6 of this year.

Holy smokes, Batman!

David Ermer–Uncategorized–

From the federal Agency for Healthcare Research and Quality:

Patients’ Hospital Bills Jumped $70 Billion in Just One YearHospital charges—what patients are billed for their rooms, nursing care, diagnostic tests, and other services—jumped from $873 billion in 2005 to $943 billion in 2006, according to the latest News and Numbersfrom the Agency for Healthcare Research and Quality (AHRQ). The steep increase occurred even though hospital admissions increased only slightly, from 39.2 million to 39.5 million. Insured patients and their health plans pay less than the full charge, but uninsured patients are expected to pay the full amount. Between 2005 and 2006, hospital charges increased by:

  • $38 billion to $44 billion—15 percent for people with no insurance.
  • $124 billion to $135 billion—9 percent for Medicaid patients.
  • $411 billion to $444 billion—8 percent for Medicare patients.
  • $272 billion to $287 billion—6 percent for patients with private insurance.

    • This AHRQ News and Numbers is based on data from HCUP Statistical Brief #59: The National Bill: The Most Expensive Conditions by Payer, 2006. The report uses statistics from the 2006 Nationwide Inpatient Sample, a database of hospital inpatient stays that is nationally representative of inpatient stays in all short-term, non-Federal hospitals. The data are drawn from hospitals that comprise 90 percent of all discharges in the United States and include all patients, regardless of insurance type, as well as the uninsured.

    Monday Miscellany

    David Ermer–Uncategorized–

    [Rhetorical] Query: After yesterday’s Redskins victory over Dallas, who is the class of the NFL now?

    • OPM has posted online 2009 benefits and rates for the Federal Employees Dental and Vision Insurance Program.
    • FCW.com features an article on OPM’s efforts to expand the use of electronic personal health records and other e-health tools by FEHB plans and their federal employee and annuitant members.
    • CMS announced 2009 premiums for stand alone Medicare Part D prescription drug plans. According to the Kaiser Daily Health Care Policy Report,

      The average monthly premium for stand-alone Medicare prescription drug coverage will increase by 24% to $37 next year, according to an analysis of the plans by Avalere Health, the Wall Street Journal reports. The average monthly premium was $30 in 2008. Monthly premiums for the 10 most popular plans will increase by 31% next year, according to the analysis (Zhang/Fuhrmans, Wall Street Journal, 9/26). The 10 largest plans account for 61% of Medicare drug plan beneficiaries (Bloomberg/Arizona Daily Star, 9/16). CMS spokesperson Jeff Nelligan said premium increases are the result of rising drug prices and higher-than-expected usage of drug benefits (LaMendola, South Florida Sun-Sentinel, 9/26).

    • The AMA News reports that “Medicare’s flagship Physician Quality Reporting Initiative has left in its wake a sea of annoyed physicians who say the pay-for-reporting program is being poorly managed by an unresponsive administration.”

    Interesting observation from Business Insurance

    David Ermer–Uncategorized–
    Jerry Geisel reports that “The 7% increase for the Federal Employee Health Benefits Program, which covers about 8 million people, is roughly in line with rate increases industry experts expect private-sector employers to be hit with next year. For example, Hewitt Associates Inc. is projecting that 2009 premium increases will average 6.4%.”

    OPM announces 2009 FEHBP premiums and benefits

    David Ermer–Uncategorized–
    The U.S. Office of Personnel Management held a news conference today at which it announced 2009 FEHBP premiums and benefits. According to OPM’s press release,

    Enrollees with self-only coverage will pay, on average, $4.83 more each pay period (about $125 per year) next year. Family coverage will cost an average $11.12 more per pay period. FEHB enrollees pay – on average – 30 percent of the total cost of a plan’s premium, while the government pays 70 percent. This year’s Open Season begins November 10 and runs through December 8, 2008, giving employees the opportunity to change or add to their portfolio of health- and family-care insurance products.

    The Washington Post, Govexec.com, and the Federal Times promptly published articles on the news conference.The Blue Cross and Blue Shield Association and United Healthcare issued their own press releases about 2009 premiums and benefits. More details to follow over the week.On related note, the Kaiser Health Care Policy Report featured a long post on rising premiums nationwide.

    NHIN Development

    David Ermer–Uncategorized–
    The nascent National Health Information Network was demonstrated yesterday at one of the final meetings of the American Health Information Community. Healthcare IT News reports that

    The demonstrator, a cooperative of 19 groups that includes communities, federal agencies and healthcare providers from across the country, showed how the first approved use cases could work to help save lives and give doctors more information to make better medical decisions. The data used in Tuesday’s demonstration was based on fictitious patients; ONC officials said they plan to launch a live public demonstration with real patient data in December.

    Also at this meeting, the Board of Directors of AHIC’s public-private replacement, aptly named AHIC Successor, Inc. was announced. According to an HHS press release, HHS Secretary Mike Leavitt remarked that

    “This is a key milestone for the health IT movement. It will ensure that the critical work of the AHIC can be effectively leveraged so that interoperable health IT becomes a reality and that the benefits of health IT reach all Americans. I enthusiastically support the new board and look forward to working in partnership with AHIC Successor to move the nation toward an effective, nationwide health information system.”
    To demonstrate the commitment of the federal government to the new organization, Secretary Leavitt and Veterans Affairs Secretary James Peake will serve as federal liaisons to the board. The National Coordinator for Health Information Technology, Dr. Rob Kolodner, will continue to coordinate federal input into the public-private process.

    Domestic partners benefits

    David Ermer–Uncategorized–
    In 1996, Congress passed the Defense of Marriage Act which requires that spousal coverage under the FEHB Act be limited to married men and women. Sen. Joe Lieberman (I Conn.) has introduced a bill, S. 2521, that would modify this law to permit FEHB Program coverage of same sex domestic partners. Yesterday, the Senate Homeland Security and Governmental Affairs Committee held a hearing on the bill. OPM testified against the bill for a variety of reasons, including cost. OPM estimated that “the FEHB Program (government) costs would be $41 million for 2010 and approximately $670 million for 2010 through 2019.” OPM also raised specific concerns about the difficulties of administering this coverage. “The bill under consideration would provide benefits to those in domestic partnerships or relationships which are certified by affidavit. OPM believes this process could lead to fraud and abuse in the programs we administer.” According to a Govexec.com article on the hearing, “[m]embers of the committee were skeptical that fraud would be widespread, pointing to the large number of private sector companies — including more than half of Fortune 500 companies — that have domestic partnership benefits.”