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6 Cards in this Set
- Front
- Back
THERE ARE 2 WAYS SENIORS CAN BE COVERED UNDER MEDICARE:
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The Traditional Medicare Fee-for-Service Program
- or - Medicare + Choice (renamed to “Medicare Advantage” in 2004) Comprehensive care delivered by an HMO, PPO, POS, or PSO*. The contract between the MCO and the government is called a Medicare Risk contract. * A PSO (provider-sponsored organization) is a group of doctors and hospitals that provides a health insurance-like product directly to employers or senior citizens. |
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THIS CHAPTER (pp. 1060 - 1072) COVERS:
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Eligibility: What kinds of MCOs and insurers may enter into a Medicare Risk contract
How the contractor is paid by the government (“contractor” means the MCO) How the BBA (Balanced Budget Act of 1997) changed the eligibility rules and levels of payment. This section is only about the Medicare + Choice program, not about the regular Medicare fee-for-service program. Also note that this chapter was written before the Medicare Modernization Act of 2003. |
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THE GOVERNMENT’S REIMBURSEMENT OF M+C CONTRACTORS
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The government pays the MCO a fixed monthly capitation based on demographics and member health statuses. (Adjusted Community Rating)
The MCO has two options: Provide a plan equal to Medicare’s and return any payments not needed; or Use the extra government payments to provide enrollees with additional benefits or reduced cost-sharing (most participating MCOs chose this option) |
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THE BALANCED BUDGET ACT OF 1997 (BBA)
Goals of the Balanced Budget Act of 1997: |
To cut down health spending to balance the budget
To encourage more MCOs to join the Medicare Risk program. Especially in rural areas To provide more choices of types of health plans for seniors: HMO’s PPO’s PSO’s Private FFS plans POS plans High-deductible plans with separate MSA Accounts Increases patients’ prudence in spending. |
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Requirements by an Organization in order to become an M+C Plan:
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Federal Requirements to become an M+C Plan
Finances. Sufficient capital; license as a risk-bearing entity. Medicare Regulations. Mandated benefit package; mandated limit on additional premiums and copays chargeable to beneficiaries. Health Care Delivery. Access, Quality, and Credentials. The BBA’s eases to previous requirements: Repeal of 50/50 requirement. Waiver of 5000-member minimum requirement PSO’s given easier financial requirements Medicare area of coverage no longer must equal non-Medicare area Other Terms of the BBA: The MCO can offer “supplemental benefits” The premium for these extras is restricted They must be non-discriminatory. |
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Payment Methodology: How Participating MCO’s are Paid
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Before the BBA of 1997
Each MCO was paid a monthly capitation equal to 95% of the expected cost that the enrollees would have incurred under the traditional fee-for-service Medicare. Payments were adjusted for age, sex, and location. After the BBA of 1997 The BBA of 1997 changed (mostly lowered!) the way Medicare Risk MCO’s were paid. An HMO’s payment would now be the maximum of the following: A) A blended local and national rate PMPM B) Flat dollar amount ($367 PMPM in 1998), or C) 2% higher than the prior year’s rate (for renewing MCO’s) Risk adjustment (for specified medical diagnoses) would be phased in. MCOs would get more money for their sickest beneficiaries. Medical education costs were now paid to contractors as incurred, not in advance. New entrant bonus given to plans entering previously empty areas. Next year’s rates and demographic factors are announced a year in advance. Done. |