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Overview of Selected Medicare Provisions: A Side-by-Side Comparison of Medicare Current Law with Selected House and Senate Provisions to the Balanced – Report « » The Henry J. Kaiser Family Foundation

Overview of Selected Medicare Provisions: A Side-by-Side Comparison of Medicare Current Law with Selected House and Senate Provisions to the Balanced – Report

Understanding the Growth in Medicare's Home Health Expenditures

Overview Of Selected Medicare Provisions:

A Side-by-Side Comparison of Medicare Current Law with House and Senate Provisions to the Balanced Budget Act of 1997

Prepared by: Health Policy Alternatives, Inc.

Prepared for: The Henry J. Kaiser Family Foundation

July 1997

Preface

This report, prepared by Health Policy Alternatives, presents a side-by-side comparison of current Medicare law with selected Medicare provisions included in the Balanced Budget Act of 1997, as passed by the House of Representatives and the Senate.

The report includes a description of selected Medicare provisions in:

  • H.R. 2015, the Balanced Budget Act of 1997, as passed by the House of Representatives on June 25, 1997; and

  • S. 947/H.R. 2015, the Balanced Budget Act of 1997, as passed by the Senate on June 25, 1997.

In addition, the report includes Congressional Budget Office estimates of the described provisions.

Because this document is intended to highlight proposed changes that are likely to have a direct impact on beneficiaries, it does not include provisions pertaining to payments and other policies affecting health plans that contract with Medicare or providers under the traditional Medicare program.
Table Of Contents

Preface ii A. Medicare Plus/Medicare Choice Plans 1 1. Private plan options 1 2. General enrollment provisions 2 3. Special enrollment period 2 4. MSA enrollment 2 5. Disenrollment 3 6. Minimum enrollment 3 7. 50/50 rule 3 8. Premiums for basic benefits 4 9. Required additional benefits, etc. 4 10. Cost-sharing 5 11. Supplemental benefits (extra benefits not covered under the traditional Medicare program) 5 12. Balance billing by providers 6 13. Quality assurance 6 14. Access to emergency services 7 15. Minimum payments to out-of-plan providers 8 16. Provider-patient communications 8 17. Physician incentive plans 9 18. Marketing materials 9 19. Beneficiary counseling 9 20. Consumer information 10 21. Grievance and appeals 10 B. Establishment Of New Medicare Commission 11 1. Advisory commission on the future of Medicare 11 C. Medigap 12 1. Guarantee issue 12 2. Use of pre-existing condition exclusions 12 3. New Medigap policy 12 D. New Benefits 13 1. Preventive benefits 13 E. Co-Insurance And Other Out-Of-Pocket Costs 14 1. Home health copayments 14 2. Allowing beneficiaries to waive Medicare limits on provider charges 14 3. Hospital outpatient co-insurance 15 F. Part B Premium 16 1. Part B premium 16 2. Income-related Part B premium 16 G. Low-Income Protection 17 1. Low-income premium assistance 17 2. Low-income cost-sharing assistance 17 H. Eligibility 18 1. Delay Age of Entitlement 18

Balanced Budget Act Of 1997

Comparison Of Current Law With Selected House And Senate Medicare Provisions

A. MedicarePlus/Medicare Choice Plans Provision Current law House / h.r. 2015 Senate / s. 947 1. Private plan options Beneficiaries can choose coverage under a risk or cost contract HMO or remain in the traditional Medicare program. Beneficiaries can choose from an array of private plans including HMOs, PPOs, PSOs, plans offered by religious fraternal benefit societies, and MSAs (in combination with high-deductible plans) under a risk contract with Medicare. All options are required to meet revised quality and consumer protection standards.

CBO estimate1 98-02 98-07 Payment reforms:2 -$18.6 b -$75.1 b Selection effects: +$3.4 b n/a Similar provision except that beneficiaries may also choose coverage in an unrestricted fee-for- service (FFS) plan, or any other approved private plan with a Medicare contract. FFS plans would be exempt from most quality and consumer protection standards, including balanced billing limits.

CBO estimate 98-02 98-07 Payment reforms: -$26.5 b -$150.7 b Selection effects: +$0.9 b n/a 2. General enrollment provisions Beneficiaries may enroll in a risk or cost contract HMO at any time during the year that the plan is open for enrollment. Risk or cost contract HMOs must be open for enrollment at least for 30 days during each year. From 1998-2000, all plans are required to have continuous open enrollment. Coordinated enrollment periods would be held during which changes among plans may be made for the following year beginning in October, 2000 (and in every succeeding year). Prior to coordinated open enrollment periods, comparative consumer data would be provided at “health fairs” sponsored by the HHS. Similar provision except individuals could enroll any time plans were open for enrollment including the coordinated enrollment period (beginning in November, 1998 and each year thereafter). 3. Special enrollment period No provision. In 2001 (and after), special enrollment periods would be held if a plan terminates operations in an area, an individual moves from plan service area, or a beneficiary disenrolls from a plan for cause. Similar provision except that special enrollment periods would begin in 1998 (and thereafter). 4. MSA Enrollment No provision. MSA enrollment permitted only at time of entitlement or annual open enrollment periods beginning for MSAs only in 1998. Enrollment in MSAs would be limited to 500,000 beneficiaries. Similar provision except that enrollment in MSAs would be limited to 100,000 beneficiaries. 5. Disenrollment Beneficiaries may disenroll at any time from an HMO. Disenrollments are effective within 30 days of notice. Beneficiaries permitted to disenroll at any time before 2001 as under current law (except disenrollment from MSA plans permitted onlyduring annual open enrollment periods.) In 2001, disenrollment is permitted only during the first 6 months of the year and during the annual open enrollment period. In 2002 and thereafter disenrollment permitted only during the first 3 months of year and during open enrollment period. Beneficiaries permitted to disenroll at any time as under current law, except for MSA plans, for which disenrollment is limited to annual open-enrollment periods. 6. Minimum enrollment Risk or cost contract HMOs must have at least 5000 enrollees (or 1500 in rural areas). Plans required to have at least 5000 (or 1500 for PSOs) enrollees or fewer under exceptions approved by HHS for rural areas (but not less than 500 for PSOs.) Requirements may be waived in first 3 years of Medicare contract. Plans required to have at least 1500 enrollees (500 in rural areas). PSOs permitted to count individuals served under risk arrangements with other plans to meet minimum enrollment standard. Requirement may be waived for first 2 years of Medicare contract. 7. 50/50 Rule Risk or cost contract HMOs are prohibited from having more than 50% of their enrollees eligible for Medicare or Medicaid. The 50/50 Rule would not apply to MedicarePlus plans. HHS provided authority to waive 50/50 rule after 1996 for current risk contract HMOs. The 50/50 rule sunsets after 1/1/99 and HHS provided authority to waive the rule prior to sunset. 8. Premiums for basic benefits Risk contract HMOs must provide at least the benefit package covered by traditional Medicare (“basic benefits”). They may not charge beneficiaries a premium for these benefits, except to cover cost-sharing equivalent to that in the traditional program. Similar to current law except that prohibition on additional premium for basic benefits would not apply to MSA plans. (For rules on minimum payments to out-of-plan providers, see below.) Similar provision except that prohibition on additional premium for basic benefits would not apply to either “unrestricted fee-for-service” plans3 or MSA plans. (For rules on minimum payments to out-of-plan providers, see below.) 9. Required additional benefits, etc. If the average of capitated payments a HMO receives from Medicare exceeds its adjusted community rate (ACR) for “basic benefits”, additional benefits equal to the excess paid by the program must be offered, the excess deposited in a benefit stabilization fund, or returned to Medicare.4 Cash rebates are not permitted. Current law is retained except that MSAs would not be required to compute an ACR or to provide additional benefits. Cash rebates would not be permitted as under current law. Identical provision. 10. Cost-sharing Average cost-sharing for “basic benefits” in an HMO cannot exceed the actuarial value of deductibles and coinsurance in the traditional, fee-for service program. Current law is retained except that MSA plans would not be subject to any limit on cost-sharing. Similar provision with an exception for “unrestricted fee-for-service” plans. MSA plans required to limit annual cost-sharing for Medicare covered services to $3000 for individuals, $5500 for couples. 11. Supplemental benefits (extra benefits not covered under the traditional Medicare program) HMOs may offer benefits in addition to those covered under the traditional Medicare program. HHS must review these benefits (for cost as barrier to enrollment) before plan can require beneficiary to pay for them as condition of enrollment. Supplemental benefits that are optional for beneficiaries are not subject to such review. Premium for supplemental benefits may not exceed ACR for services involved. Current law retained except that ACR limit on premiums would not apply to MSA plans. Similar provision with an exception to ACR limit on premiums for “unrestricted fee-for-service” plans as well as MSA plans. 12. Balance billing by providers HMOs must require participating providers not to balance bill Medicare enrollees. Out-of-plan hospitals, nursing homes may not charge more for Medicare covered inpatient services than the amount traditional Medicare would pay. Out-of-plan physicians may not charge beneficiary more than they could in the traditional program. Similar to current law, except that the Ways & Means bill would not apply balance billing limits to services furnished by physicians and other entities to enrollees in MSA plans. Similar to Ways & Means bill except that balance billing limits would not apply to services furnished by physicians and other entities to enrollees in either an “unrestricted fee-for-service” plan or an MSA plan. 13. Quality Assurance Plans are required to have ongoing internal quality assurance programs that stress health outcomes. External review by a peer review organization (PRO) of care is required. HHS has authority to designate an alternative entity to perform quality reviews. Ongoing internal quality assurance programs are required to measure outcomes, provide for utilization review, disclose data to facilitate choice, and conduct consumer satisfaction surveys. Plans must have contract with independent review agency that can be satisfied through approved private accrediting entities. Similar provision except that provisions do not apply to unrestricted FFS plans. Requires all plans to disclose loss ratios. 14. Access to emergency services HMOs are required to provide access to emergency services 24 hours a day, 7 days a week and to pay for out-of-plan emergency services without regard to prior authorization.

Defines emergency services as services that are needed immediately because of an injury or sudden illness and cannot be delayed for the time needed to reach plan providers without risk of permanent damage to health. Plans would be required to coverout-of-plan emergency services without regard to prior authorization or the provider's contractual relationship with the plan.

Emergency services are services needed to evaluate or stabilize an emergency medical condition. An emergency medical condition is a medical condition manifesting itself by acute symptoms of sufficient severity such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in specified serious adverse health effects. Similar provision except the definition of emergency medical condition would be expanded to include severe pain. 15. Minimum payments to out-of-plan providers No provision. To satisfy requirement that MedicarePlus plans provide at least the “basic benefits” under Medicare, out-of-plan providers must be paid at least amounts equal to traditional Medicare(plus allowable balance billing). MSAs must also make minimum payments (excluding balance billing) and count toward the deductible at least the amount traditional Medicare would pay. “Unrestricted fee-for-service” plans would not be required to meet standards for minimum payments to providers. 16. Provider-patient communications No provision. MedicarePlus plans could not prohibit or otherwise restrict communications between a health professional and a patient about the patient's health status or treatment options if the health professional is acting within their scope of practice. No provision. 17. Physician incentive plans HMOs may not operate a physician incentive plan that links incentive payments (compensation) to specific patients. A physician incentive plan that places physicians at substantial financial risk must include stop-loss protection and periodic surveys on access. Similar to current law except Commerce bill would expand prohibition to cover incentive plans involving other health professionals. Would retain current law. 18. Marketing materials Risk contract HMOs must submit marketing materials to HHS for review and approval prior to use. MedicarePlus plans required to submit marketing materials to HHS 45 days prior to use. Unless disapproved, materials may be used. No MedicarePlus plan or agent is permitted to complete any election form for a beneficiary. Similar provision except MedicarePlus plans or agents are not prohibited from completing a beneficiary election form. 19. Beneficiary counseling HHS is authorized to make grants to states to support beneficiary insurance information and counseling services. HHS is authorized to require MedicarePlus plans to pay their pro rata share of the costs of information dissemination and to support the grant program established under current law for counseling services. Similar provision except that MedicarePlus plans are not required to share in the costs of the grant program for state counseling services authorized under current law. 20. Consumer information HHS is authorized to prescribe the requirements for risk contracting HMOs regarding information about qualified plans for beneficiaries. Brochures, enrollment forms and other promotional information must be approved by HHS prior to use. MedicarePlus plans are required to disclose at time of enrollment and annually the following information in a standardized format: plan service area; benefits and exclusions; provider network members; out-of-area coverage policy; premiums; prior authorization rules; grievance and appeal rights; and quality assurance programs. Similar provisions except that on request from a beneficiary, Medicare Choice plans must furnish data on their plan compared to the traditional Medicare program. 21. Grievance and appeals Risk or cost contract HMOs must have meaningful grievance and appeals procedures. In cases of denied services or disputes over charges, beneficiaries have the right to a hearing by HHS if the amount is over $100 (or judicial review if the amount is over $1000. Beneficiaries must be informed of their rights at the time of enrollment and annually thereafter. Similar to current law, MedicarePlus plans would be required to allow external review by HHS of service denials if amount of service exceeds $100, and to judicial review if amount exceeds $1,000.

In case of urgently needed care, reviews must be completed within 72 hours, or 24 hours for reconsiderations. HHS must contract with private entity for appeals of urgent or emergency care. Similar provision. B. Establishment of New Medicare Commission Provision Current law House / h.r. 2015 Senate / s. 947 1. Advisory commission on future of Medicare No provision. A 15-member bipartisan commission is established composed of members of Congress and Executive Branch officials who are directed to report, by 5/1/99, on the impact of baby boom retirees on Medicare, and to provide recommendations for comprehensive reforms, and on the feasibility of an ongoing independent commission to make annual recommendations on Medicare expenditure targets. Commission sunsets 30 days after submission of its report. Similar provision with specific direction to report on restoring financial solvency to Medicare through 2030, on an appropriate balance of benefits and individual contributions, on financing medical education, on the feasibility of a buy-in to Medicare at age 62, and on the impact of chronic disease and disability trends on the future of Medicare. C. Medigap Provision Current law House / h.r. 2015 Senate / s. 947 1. Guarantee Issue At age 65, beneficiaries have a one time 6-month open enrollment period for all 10 Medigap plans. Provision does not apply to beneficiaries under age 65 who are entitled to Medicare on the basis of disability. Beneficiaries would have an initial 6-month open enrollment period, and additional open enrollment for Medigap plans A,B,C, or F if: there is no break in prior coverage greater than >63 days; employer coverage is lost; there is a change in residence, or within 6 months of a one-time voluntary disenrollment from a MedicarePlus plan.

CBO estimate 98-02 98-07 +$0.2 b +$0.6 b Similar provision except the one-time voluntary disenrollment option permits open enrollment for 1 year to any Medigap policy with comparable or lesser benefits.

Also, extends initial 6 month open enrollment period to disabled beneficiaries.

CBO estimate 98-02 98-07 +$0.5 b +$1.5 b 2. Use of pre-existing condition exclusions Medigap issuers may impose pre-existing condition exclusion limits up to 12 months during the initial open enrollment period. For beneficiaries with at least 6 months of prior continuous coverage at age 65, during the initial open enrollment period, no preexisting condition exclusion may be imposed. Identical provision. 3. Standardization of Medigap policies Current law permits no more than 10 standardized packages of Medigap coverage to be sold. No provision. Expands list of standardized packages to include a combination of one of the existing 10 policies with an annual deductible of $1500. D. New Benefits Provision Current law House / h.r. 2015 Senate / s. 947 1. Preventive Benefits Medicare program provides limited coverage for preventive and screening services. Coverage is generally limited to diagnosis & treatment of an illness or injury. Coverage extended to annual mammograms for women >40, screening pelvic exams, annual prostate exams for men >50, colorectal screening including sigmoidoscopies, diabetes self-management training and certain supplies, & bone mass measurement.

Current outreach efforts on flu and pneumococcal vaccines extended through 2002.

Waives deductible for screening mammography and pap smears.

CBO estimate 98-02 98-07 +$4.6 b +$9.2 b Similar provisions except that screening pelvic exams, prostate exams, and the extension of outreach efforts are not included.

Waives coinsurance for screening mammograms provided in hospital outpatient departments.

CBO estimate 98-02 98-07 +$3.7 b +$7.3 b E. Co-insurance and Other Out-of-Pocket Costs Provision Current law House / h.r. 2015 Senate / s. 947 1. Home health copayments Home health benefits are not subject to deductibles or co-insurance under Part A or Part B. No provision. A $5 per visit copayment would be imposed on each visit covered under Part B (visits in excess of 100 for post- hospital patients and all visits not preceded by a 3-day hospital stay). Total annual amount of co-pays capped at Part A deductible.

CBO estimate 98-02 98-07 +$4.7 b +$10.5 b 2. Private contracting for Medicare-covered services. Providers and practitioners who furnish Medicare- covered services are required to file claims for their Medicare patients and to abide by limits on how much they can charge these patients above the amount Medicare pays. A provider is not required to file a claim for a covered service only if the beneficiary refuses to supply necessary information for privacy reasons. There are no exceptions to the limits on the amount a provider may charge beneficiaries. No provision. Physicians and other practitioners would be permitted to enter into private contracts for the provision of Medicare covered services with a beneficiary if no claim is submitted and if the practitioner otherwise submits no claims to Medicare for any other beneficiary. Such contracts would not be subject to Medicare balance billing limits. 3. Hospital outpatient co-insurance Co-insurance amounts for outpatient services are equal to 20% of the hospital charge without regard to Medicare payment amount.Co-insurance amounts would be limitedd to 20% of national median o charges for the service in 1996 updated yearly & hospitals allowed to reduce co-insurance to 20% of total payment amount.5 Similar provision except base year for setting co-insurance rates is 1997. F. Part B Premium Provision Current law House / h.r. 2015 Senate / s. 947 1. Part B premium Authority to set Part B premium equal to 25% of part B program costs expires after 1998. Sets Part B premium at 25% of part B program costs permanently.

CBO estimate 98-02 98-07 +$12.9 b +$94.1 b Similar provision.

CBO estimate 98-02 98-07 +$12.4 b +$78.1 b 2. Income-related Part B premium All beneficiaries pay the same Part B premium, which covers 25% of part B program costs (remaining 75% of costs are funded by general revenues). An exception applies to low income Medicare beneficiaries (QMBs and SLMBs) who are entitled to receive Medicaid assistance in paying part B premiums. No provision. Individual beneficiaries with annual incomes over $50,000 & couples over $75,000 would pay higher Part B premiums, which phase up to 100% of Part B costs for individuals with over $100,000 annual income ($125,000 for couples). Administered by HHS based on income from most recently available tax records. Future premiums adjusted to reflect over or under payments in prior years, based on data provided by IRS. Revenues from higher part B premiums credited to Part A.

CBO estimate 98-02 98-07 +$3.9 b +$19.6 b G. Low Income Protection Provision Current law House / h.r. 2015 Senate / s. 947 1. Low-income premium assistance Individuals with income below 100% of poverty (QMBs) & those eligible for Medicaid are entitled to have Medicare premiums, deductibles and co-insurance amounts paid by Medicaid. Those with incomes between 100% & 120% of poverty (SLMBs) are eligible to have Medicaid pay their premiums only. Individuals with incomes between 120% & 135% of poverty would be entitled to Medicaid payment of premiums. Those with incomes between 135% & 175% of poverty would be entitled to Medicaid payment of only the portion of the premium related to the transfer of home health benefits to Part B. Premiums for individuals with incomes above 120% of poverty would be fully financed with Federal funds (i.e., no State match).

CBO estimate 98-02 98-07 +$1.1 b +$8.5 b States entitled to a block grant to support premium assistance to those with incomes between 120% & 150% of poverty. States have flexibility to design assistance within income limits and are not required to apply for grants. Grants sunset after 2002. Grant funds transferred from Part B trust fund total $1.5 billion over 5 years.

CBO estimate 98-02 98-07 +$1.5 b +$1.5 b 2. Low-income cost-sharing assistance Individuals eligible for Medicaid or with annual incomes below 100% of poverty are entitled to have Medicaid pay their Medicare premiums, deductibles, and co-insurance. States are required to pay the full amounts for which individuals would otherwise be liable. No provision. Medicaid would not be required to pay co-insurance amounts for dual eligibles or QMBs to the extent that the Medicare payment exceeds what Medicaid would pay for the same service. Providers would not be permitted to bill for amounts not recovered from Medicaid and beneficiaries would not be financially liable for any payment.

CBO estimate 98-02 98-07 Medicare +$2.9 b +$7.3 b Medicaid -$5.0 b -$12.6 b H. Eligibility Provision Current law House / h.r. 2015 Senate / s. 947 1. Delay Age of Entitlement Individuals generally become entitled to Medicare at age 65. Individuals under age 65 who qualify for Social Security disability benefits become entitled to Medicare after a 24-month waiting period. No provision. Age of entitlement to Medicare would be increased gradually two months/year) to age 67 by 2027.

CBO estimate 98-02 98-07 $0.0 b -$10.2 b

1. CBO estimates of the federal budgetary effects of H.R. 2015 as passed by the House of Representatives on June 25, 1997 and S.947 as passed by the Senate on June 26, 1997. House estimates are based on provisions as reported by the Ways and Means Committee.

2. Savings estimates include impact of payment reforms which are not described in this document.

3. The bill defines an “unrestricted fee-for-service plan” as one that “provides for coverage without restrictions relating to utilization and without regard to whether the provider has a contract or other arrangement” with the plan.

4. The ACR is essentially a proxy for what a plan would charge beneficiaries for the Medicare benefit package if they were enrolled in a community-rated commercial product.

5. Scoring of coinsurance protections are incorporated in the CBO savings estimate of implementing a prospective payment system for hospital outpatient department services.