Health Reform Impacts on Medicare

1. Health Reform Impacts on Medicare What the new law means for Medicare recipients

2. Medicare Part D • 2010: $250 rebate if reach doughnut hole • 2011: 50% Discount on brand name drugs in doughnut hole • Also begin phasing in reduction in cost of generic drugs in doughnut hole • 2013: Begin phasing in reduction in cost of brand name drugs from 100% co-pay to 25% by 2020 • Government will not be able to negotiate drug prices

3. Prevention and Wellness Exams • Annual comprehensive health risk assessment beginning in 2011 • Reimburses physician 100% with no adjustment for deductible or coinsurance (must be outpatient setting) • No cost sharing for prevention benefits rated A or B by U.S. Preventive Services Task Force

4. Medicare Advantage Changes • Reduce insurance company reimbursements – • Drained $11 billon from Medicare in 2009 • Increase Part B premiums for all • Savings of $136 billion over 10 years • 2011: Restructure payments so closer to average reimbursements for traditional Medicare beneficiaries • 2011: Enrollment period Oct. 15 to Dec. 7 • Can disenroll within 46 days after Jan. 1

5. Bonuses for Practitioners • 10% bonus payment for primary care services • Physicians • Clinical nurse specialists • Physician Assistants • Effective 2011-2015 • 10% bonus to general surgeons in health professional shortage areas

6. Hospital Reimbursement Changes • Focus on quality and effectiveness • Improve care coordination and delivery of care • Slow cost growth • Goal: improve productivity and sustain fiscal solvency of the Medicare Hospital Trust Fund (Medicare Part A) • Expand solvency of trust fund by 5 years to 2022 • Savings of $24 billion over ten years • Reward reduction in hospital-acquired infection rates • Avoid hospital readmissions (today 20% readmitted within 30 days due to poor care or after-care) • Savings of $7 billion over ten years

7. Center for Medicare and Medicaid Innovation • Develop new approaches to paying for health care • Encourage greater quality and efficiency • Savings of $151 billion over 10 years

8. Higher Medicare Taxes • Incomes of more than $200,000 for an individual and $250,000 for couple will pay 2.35% on income toward Medicare • Currently pay 1.45% • Increase of 0.9%

9. Reductions in Cost Growth not Cuts to Benefits • Medicare basic benefits will remain the same and in some cases (drug coverage and preventive care) improve • Changes ways hospitals are reimbursed • Fraud prevention • Provider screening and compliance programs • Increased anti-fraud activities • More supervision of home-health referrals • Documentation • Patient appointments • Higher penalties • Documentation • Patient appointments

10. Project Savings and Spending Over 10 years • $533 billion in savings • $105 billion in new spending • Payroll tax generate $87 billion in revenue • Tax on drug companies $27 billion in revenue through 2019 • Reduction in retiree drug subsidy payments for employers $5 billion savings • Productivity improvement: $151 billion savings • Medicare Advantage: $136 billion savings • Hospital Adjustment: $24 billion savings • Home Health: $39 billion

11. Links for More Information • Kaiser Family Foundation • Summary of Key Changes to Medicare in 2010 Health Reform Law • www.kff.org/healthreform/7948.cfm • Commonwealth Fund • http://www.commonwealthfund.org/