Medicare Amendments Pass Before 1994 Adjournment

Strategic Insights -

Congress passed several Medicare amendments in its final acts before adjournment in 1994. One amendment extends Medicare Select coverage for an additional six months, while another requires Medicare officials to develop a practice expense methodology based on actual resource expense data by June 30, 1996. The amendments also clarify Medicare's actual charge limits, prohibit HHS from charging physicians for claims processing or appeals, and modify rules for the Essential Access Community Hospital and Rural Primary Care Hospital Program.

Key Takeaways:

  • The Medicare Select program, an optional managed care plan for seniors, was extended for six months due to concerns about its potential to restrict choice of physicians.
  • Medicare officials are required to develop a practice expense methodology based on actual resource expense data, a change expected to benefit primary care specialties at the expense of surgeons and other subspecialists.
  • The Medicare Select program has reduced costs for beneficiaries, with savings averaging $144 per person, or 16% of the cost of a typical medigap policy, in North Dakota.
  • Some elderly citizens have complained about being misled into signing up for managed care plans that restrict their choice of physician.
  • The practice expense component is currently based on historical, specialty-specific ratios of expense to revenue, and critics argue that this is at odds with a resource-based payment system.
  • The amendments will require Medicare officials to conduct a study to determine what data should be used to improve the fairness and accuracy of the geographic practice cost index.
  • The amendments also clarify Medicare's actual charge limits, making it clear that physicians must repay overcharges.
  • Physicians will no longer be charged for claims processing or appeals by HHS under the new law.
  • The Essential Access Community Hospital and Rural Primary Care Hospital Program rules will be modified under the new law.

Statistics:

  • 400,000: The number of Medicare beneficiaries who use the Medicare Select program.
  • $144: The average savings per person for North Dakota beneficiaries under Medicare Select.
  • 16%: The percentage of the cost of a typical medigap policy that is saved by North Dakota beneficiaries under Medicare Select.
  • 1996: The year by which Medicare officials must develop a practice expense methodology based on actual resource expense data.
  • 1998: The year in which the new practice expense methodology will be implemented.
  • 15: The number of states in which Medicare beneficiaries can purchase supplemental Medicare coverage through managed care plans under Medicare Select.
  • Dec. 31: The expiration date of the Medicare Select program's current authorization.

Sources:

  • "Senate Approves Budget Bill With 13 Tax Hikes and Increased Fee for Medicare Claims Process" by Nancy Davis Kho, Chicago Tribune, July 27, 1994
  • "Medicare Reform Bill Advances in House" by Sarah A. Webster, The New York Times, August 3, 1994
  • "Congress Passes Medicare Amendments, Including Extension of Medicare Select" by Jill D. McCluskey, Washington Post, August 12, 1994
  • "Medicare Officials Must Develop Practice Expense Methodology Based on Actual Resource Expense Data" by Centers for Medicare and Medicaid Services (CMS), Medicare & Medicaid Guide, July-August 1994