Fig. 51.1
By 2019, national health spending is expected to reach $4.5 trillion and comprise 19.3 % of gross domestic product (GDP)
With the advent of the resource-based relative value scale (RBRVS), physicians have shifted from price setters to price takers.
Technology costs, while providing an improvement in patient care, have skyrocketed.
The current professional liability crisis has resulted in increased malpractice rates and driving specialists from specific locations.
The Reimbursement Process
Medicare
Although private payers vary in their reimbursement rates and policies, most are tied in some form to the Medicare system.
Medicare was created in 1965 by the Federal government as a social insurance program designed to provide all adults over the age of 65 with comprehensive health-care coverage at an affordable cost.
Medicare is administrated by the Centers for Medicare and Medicaid Services (CMS).
In 2004, Medicare had over 41 million enrollees and is forecasted to include almost 80 million people by 2030 (Fig. 51.2).
Fig. 51.2
In 2004, Medicare had over 41 million enrollees and is forecasted to include almost 80 million people by 2030
Medicare is divided into two parts:
Medicare Part A, also known as Hospital Insurance, helps pay for inpatient hospitalizations, skilled nursing facility (SNF) care, and home health and hospice care.
Part A is financed primarily through federal payroll taxes (FICA) paid by both employees and employers.
Individuals who receive Social Security benefits or Railroad Retirement benefits are automatically enrolled in Part A.
Individuals under 65 who receive Social Security disability or those with end-stage renal disease for over 24 months are also eligible for Part A.
Medicare enrollees are responsible for copayments associated with the services provided.
Medicare Part B, also known as Medical Insurance, provides coverage for payments to physicians for services provided.
Part B is funded by a combination of the federal government’s general revenues (75 %) and individual monthly premiums (25 %).
Part B covers screening for breast cancer, cervical cancer, prostate cancer, and colorectal cancer.
Unlike Part A, Medicare Part B has monthly premiums.
Patients can opt out of Part B.
Similar to Part A, Part B enrollees are responsible for copayments and deductibles.
Medicare Part C or Medicare Advantage is the government’s plan to shift the cost and risks of Medicare patients to the private sector.
In Medicare Advantage, private payers receive a monthly payment per covered individual (capitated amount) to provide all of Part A and B services.
Since these plans are privately administered, individual choice is often severely limited with regard to physicians and hospitals.
Medicare Part D, Prescription Drug Coverage, was signed into law in December 2003 that provides for prescription drugs with an initial deductible of $250 and a monthly premium of $35.
Individuals with incomes $160,000 and above will be subjected to higher Part B and Part D premiums.
Medicare Resources
The Medicare budget is determined by legislation and is formula based, involving the Medicare Economic Index (MEI), a weighted index, and the sustainable growth rate (SGR).
The SGR compares the cumulative actual spending for physicians’ services since 1997 to a cumulative target amount of spending over the same time period.
The SGR says essentially that the amount Medicare pays doctors for an average Medicare patient cannot grow faster than the economy as a whole.
Related posts:
Stay updated, free articles. Join our Telegram channel
Full access? Get Clinical Tree
