Medicare Chapter 8 Flashcards

Medicare Overview

• Created under the Social Security Act.
• Established in 1965.
• Part 18 of the Act specifically created Medicare.
• Largest single payer for health care services in the U.S.

Medicare Parts

• Part A: Covers hospital insurance.
• Part B: Provides supplementary outpatient insurance.
• Part C: Known as Medicare Advantage, integrates Parts A and B managed care.
• Part D: Offers outpatient prescription drug insurance.

Administration and Eligibility

• Managed by the Centers for Medicare and Medicaid Services (CMS).
• Eligibility for Part A: Age 65, 10 years of payroll contributions, End-stage renal disease, ALS (Amyotrophic lateral sclerosis).
• If eligible for Part A, automatically eligible for Part B but must pay a monthly premium.

Benefits and Coverage

• Part A Benefits: Inpatient hospital care, skilled nursing facility (SNF) care, hospice, and home health care.
• Part B Coverage: Outpatient care, home health care, durable medical equipment (DME), prosthetics, and orthotics.

Costs and Reimbursement Methods

• Out-of-pocket costs for Part A include deductibles and co-insurance fees.
• Benefit period defined as the time from hospital admission to discharge plus 60 days.
• Cost-based reimbursement: Payment after services rendered; considered the older method.
• Prospective payment systems: Payment issued beforehand based on estimated needs; viewed as the newer method.
• Diagnosis-related group (DRG) payments are made per episode of care; resource utilization group (RUG) payments are made per day.

Financing and Payment Models

• Part B requires an annual deductible, co-insurance, and monthly premium.
• Governed by the Medicare Physician Fee Schedule, which operates on a fee-for-service model.
• Medigap: Private insurance supplement that covers costs not included in traditional Medicare plans.

Policy and Reform Considerations

• Potential reforms include raising the eligibility age and means-testing for benefits.
• The sustainable growth rate aims to contain Medicare Part B costs by adjusting a standardized conversion factor.
• Case mix adjustments classify patients for payment based on clinical characteristics and expected resource use.

Miscellaneous Concepts

• Certification: Physician approval of therapy plans for Medicare beneficiaries.
• Coverage determinations: Process by insurance companies to decide on claims payments.
• Entitlement: Guarantee of benefits to eligible individuals.
• Medically necessary: Determination required for reimbursement by a provider.
• Physician Quality Reporting System: Mechanism for quality reporting in Medicare services.

Financial Limitations

• Therapy cap: Annual limit on outpatient occupational therapy and physical therapy, combined with speech therapy (ST).
• Multiple procedure payment reduction: Cost containment strategy reducing payment for multiple procedure codes during a single visit.