Each fall, Medicare uses data from the states to decide whether a person will continue to automatically qualify for Extra Help for the coming year. Using the example from the previous page, let’s say Medicare determines that Julie no longer automatically qualifies for Extra Help. Medicare reviews data from her state for a month where she doesn’t qualify for Medicaid (Month 2). Medicare sends her a gray letter saying she doesn’t automatically qualify and encourages her to apply for Extra Help through Social Security to see if she qualifies based on her income and resources. Even though she no longer automatically qualifies, Julie may still qualify for Extra Help if she applies. After not qualifying (month 2), Julie can meet spend down again in a later month (month 3). Her state tells Medicare, and she gets a letter from Medicare saying she automatically qualifies for Extra Help beginning from the month she qualified for Medicaid at least until December 31 of the same year.
Medicare Spending By Year
From the mid 1990s Medicare Part A Hospital Insurance spending (net of Part C spending) declined, from 1.5 percent GDP in 1995 to 1 percent GDP in 2000, and since then it has flatlined a little above 1 percent of GDP. Medicare Part B Supplementary Medical Insurance (net of Part C) also declined, from 0.6 percent GDP to 0.45 percent GDP before recovering to 0.7 percent GDP in 2003. Since then Part B Medicare spending has held fairly steady at 0.6 to 0.7 percent GDP.
Medicare Hospital Spending by Claim
The table below divides each hospital’s average episode spending levels into three time periods: 1) during the 3 days prior to the index admission, 2) during the index admission, and 3) during the 30 days after hospital discharge. Within these three time periods, the average episode spending levels are further broken down into seven provider types (e.g., inpatient, outpatient).
Cracking Down On $70 Billion Worth Of Medicare Fraud
What may at first seem like an accounting disagreement at a big government agency actually has profound implications for U.S. policy and society. Congress is presently mired in an endless debate about when—and how much—to cut entitlement programs in an effort to reduce the federal deficit. The Obama administration proposes trimming $248 billion over 10 years from Medicare alone. Yet if fraudulent losses could be reduced by just a few percentage points, the issue becomes moot—and the medical support that tens of millions of Americans rely upon could continue uninterrupted. “The annual combined cost of Medicare and Medicaid is between $800 and $900 billion annually,” Sparrow says. If only 10% is lost to fraud, he notes, that’s $80 billion a year—pointing to a figure even higher than the $70 billion cited by the GAO. “But if it’s 20% or 30%?” he asks. “We’d easily find $200 billion over 10 years. That means you wouldn’t need to cut reimbursement rates for providers. You wouldn’t need to restrict insurance coverage. You wouldn’t have to increase deductibles. Getting hold of this problem is a much healthier way of dealing with the cost- control imperative than through indiscriminate cutbacks.” The question thus becomes whether the politicians in Washington who are now trying to cut spending on medical care are actually wrestling with the wrong problem. Which means they might settle on the wrong solution.
The Mystery of the Missing $1,200 Per Person: Can Medicare’s Spending Slowdown Continue?
Health care observers are still scratching their heads trying to explain why Medicare spending is growing so slowly. A CBO analysis shows the Great Recession did not have the same effect on Medicare that it had on the slowdown in health care spending generally, which has been documented by our Kaiser colleagues. It is clear that the Medicare savings provisions in the ACA, such as reductions in provider payment updates and Medicare Advantage payments, have played a major role, and the changes included in the law may be having a bigger effect than was expected soon after the law passed. In addition, the Budget Control Act of 2011 also exerted downward pressure on Medicare spending through sequestration that reduced payments to providers and plans by 2 percent beginning in 2013. And yet even after incorporating these scheduled payment reductions in the baseline, CBO has continued to lower its projections of Medicare spending.