• Medicare and the Affordable Care Act (ACA)


    Medicare provides health care for over 48 million Americans. So it’s not surprising that strengthening and improving that program is a major goal of healthcare reform in the Affordable Care Act (ACA) passed in March 2010. According to Kathleen Sebelius, then-Secretary of Health & Human Services, rather than change or diminish your current Medicare benefits, the ACA is designed to improve Medicare by introducing new benefits and savings with an emphasis on delivering quality care.

    What Is Medicare?

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    Dr. Peter L. Duffy, Director of the Cardiovascular Service Line at Reid Heart Cent/FirstHealth of the Carolinas in Pinehurst, North Carolina, outlines some of the benefits for Medicare patients under the Affordable Care Act.

    Many people confuse Medicare and Medicaid. Although some people receive benefits from both (it’s called dual eligibility), Medicare and Medicaid are two different programs. Click here to learn more about Medicare and what it covers, or go to www.Medicare.gov here if you would like to learn more about eligibility, applying and receiving benefits.

    How Will the ACA Reform Medicare?

    In keeping with the goal of improving quality of care and eliminating waste without reducing benefits, the ACA has many provisions designed to improve and strengthen Medicare. Even if you do not currently receive Medicare benefits, you are still affected by changes to Medicare because they are funded by your tax dollars. And, since most of us will one day become Medicare beneficiaries, you may also be interested in how your future coverage will be affected under the ACA. Read on to learn more.

    Extending Solvency of Medicare Trust Fund Until 2029

    According to the Centers for Medicare & Medicaid Services, Medicare is the second largest social insurance program in the United States. It had $554.3 billion total expenditures in 2011. As you can imagine, maintaining such a program is a challenging and costly task, and many are concerned that the country is running out of time and money to do it. Read on to learn how the ACA intends to save Medicare for years to come.

    • Eliminating Waste, Fraud, and Inefficiency. The ACA extends the solvency of the underlying trusts that fund Medicare until 2029 by slowing the rate of spending and reducing payment errors, waste, fraud, and inefficiency. A few examples follow:
      • The ACA provides incentives to transition to Electronic Health Records (EHRs). EHRs have been shown to reduce errors, such as ordering duplicate tests and help healthcare providers and patients make better decisions because their records are readily available for review.
      • Bundling payments for services is another way the ACA is attempting to addresses inefficiencies in the system. For example, if you’ve ever had coronary bypass surgery, you probably received separate bills from each provider involved in your care and for each test and service provided. As a way to cut costs and improve care, the ACA calls for a five-year, voluntary pilot program that will attempt to streamline the billing process by billing for each “episode of care” (for example, coronary bypass surgery) instead of each service (for example, administering anesthesia). If the pilot program is successful, it will be expanded to include all healthcare providers,
      • The ACA also set aside $350 million to prevent, detect and fight fraud in Medicare and other government health insurance programs. It is anticipated that the cost for this part of the program will more than pay for itself. You can help by visiting Stop Medicare Fraud to learn more and click here if you’re a senior interested in getting involved.
    • Reducing annual payment increases to insurance companies, hospitals and nursing homes. Another way that the ACA is intended to extend the life of Medicare is by reducing annual payment increases to insurance companies, hospitals, and nursing homes from Medicare.

    Improving Coverage

    The cost of health care takes a particularly heavy toll on Americans who have fixed and in many cases limited income, as is often the case for retirees and anyone suffering from a debilitating disease that makes it difficult to work. The ACA provides some relief by:

    Eliminating the “doughnut hole” in prescription coverage.
    One of the most significant expenses faced by seniors in the U.S. is the cost of prescription drugs. As we get older, we typically need more medications to stay healthy, which is certainly the case when it comes to our cardiovascular health. One way that the ACA addresses this problem is by having Medicare Part D pay more of the cost of prescription drugs by providing discounts on name-brand prescription drugs and working toward closing the gap in prescription drug coverage (the “doughnut hole”) by 2020.

    The doughnut hole is the gap in coverage that occurs after your plan stops paying for your drugs and before you reach the benchmark required for catastrophic coverage ($4,550 in 2014). While you are in the doughnut hole you are responsible for paying 100 percent of the cost of your medication.

    The ACA called for the creation of a Medicare Coverage Gap Discount Program to help people pay for their medication while they’re in the doughnut hole. To qualify for the Medicare Coverage Gap Discount Program, you must:

    • be enrolled in the Medicare Prescription Drug Plan or a Medicare Advantage plan that includes prescription drug coverage,
    • NOT receive Extra Help, a Medicare and Social Security program that helps   Medicare beneficiaries with limited incomes and resources pay for their prescription drugs, and
    • have reached the gap in coverage (“doughnut hole”) that qualifies you for the discount.

    If you qualified in 2010, you may have already received a one-time, tax-free rebate of $250 from Medicare when you entered the doughnut hole. And beginning in 2011, the ACA provided for a 50 percent discount on brand-name prescription drugs and 7 percent discount on generics for relief of your out-of-pocket expenses while in the doughnut hole. 

    The percentage discount you receive will continue to increase each year (as shown in the table below) until 2020, when you will be responsible for paying 25 percent for covered brand-name and generic drugs while you are in doughnut hole and until you reach the out-of-pocket spending limit ($4,550 in 2011).

       Adapted from Medicare.gov

    Check your Explanation of Benefits (EOB) statement on a regular basis to see how much you’ve spent on covered prescription drugs and to help you determine when you entered the doughnut hole and can expect to receive discounts on your covered medications. 

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    Understand the “doughnut hole”once and for all. Dr. Peter L. Duffy, Director of the Cardiovascular Service Line at Reid Heart Cent/FirstHealth of the Carolinas in Pinehurst , North Carolina, explains what it is and how the Affordable Care Act addresses this gap in coverage.

    Also, be aware that prescription drug coverage under Medicare can be affected by other factors, such as other insurance coverage or assistance, including but not limited to state aid or other discount drug programs, and whether the company that makes your drug has agreed to participate in the ACA’s discount drug program. Download “Closing the Coverage Gap— Medicare Prescription Drugs Are Becoming More Affordable” for helpful examples that may apply to your specific situation and for a chart of the exact discounts that apply each year until the gap closes in 2020.

    Ask for Help
    Still confused? If you have any questions, ask. Mistakes are common and it’s up to you and your family to make sure that you receive all your entitled benefits, according to your plan and personal situation. Contact your plan administrator when you need more information. And, if you cannot reach an agreement with your drug plan about a benefit you should have received, you can always appeal. Call your State Health Insurance Assistance Program (SHIP) or 1-800-MEDICARE (1-800-633-4227) for assistance. 

    Eliminating Coinsurance for Preventive Services
    The intent of these provisions of ACA was to encourage prevention by making staying healthy less expensive by eliminating coinsurance for preventive services, such as colorectal cancer screening, mammograms, and cardiovascular screening, such as cholesterol checks and screening for diabetes. You are eligible for this benefit if you have Medicare or Medicare Advantage (check with your plan to be sure) and your doctor or other healthcare provider agrees to participate. 

    Other qualifying services include:

    • Tobacco use cessation counseling. (A coinsurance and deductible will apply if you have already been diagnosed with a tobacco-related illness).
    • Screenings, such as the following, if certain coverage criteria apply:
      • Bone mass measurement
      • Cervical cancer screening, including Pap smear tests and pelvic exams 
      • Cholesterol and other cardiovascular screenings 
      • Colorectal cancer screening (except for barium enemas) 
      • Diabetes screening 
      • Flu, pneumonia, and hepatitis B shots 
      • HIV screening for people at increased risk or who ask for the test 
      • Mammograms 
      • Medical nutrition therapy to help people manage diabetes or kidney disease 
      • Prostate cancer screening (except digital rectal examinations)

    Providing a Free Physical Exam
    ACA’s changes to Medicare allow seniors to have an annual physical exam at no cost to them. If you are new to Medicare, this benefit includes your “Welcome to Medicare” physical during your first year of coverage under Medicare Part B. The purpose of this exam is to review your current state of health and discuss other preventive services you should consider. After this first visit you can then take advantage of the free annual “Wellness Exam” to reassess and continue with your plan to live a healthy lifestyle. 

    Changes in Medicare Advantage

    Nearly 25 percent of all seniors receive Medicare benefits through Medicare Advantage Plans (Medicare Part C), which are health plans similar to HMOs or PPOs that are run by Medicare-approved private insurance companies. Medicare Advantage plans provide the same services covered by Medicare Parts A and B, just like original Medicare, but they typically offer additional coverage for services such as vision, dental, hearing, health and wellness, and many include prescription drug coverage (Medicare Part D). 

    The ACA has made the following changes to these plans with the goal of lowering costs and providing better benefits and higher quality care:

    • Phasing out extra payments to Medicare Advantage plans. Medicare pays over $1,000 more on average, per person to Medicare Advantage plans than it spends per person for Medicare, which in turns hikes up the cost of everyone’s premiums, including the 77 percent of seniors enrolled in original Medicare. Beginning in 2011 ACA provided for payments from Medicare to Medicare Advantage to be phased out over the next several years until 2018. ACA does not eliminate Medicare Advantage plans but they will have to operate without these payments from Medicare. It is a plan that is projected to save Medicare more than $150 billion over 10 years. Advantage plans that provide high-quality care and services will receive bonus payments.
    • Plans may eliminate optional services. To reduce costs, Medicare Advantage plans may choose to reduce optional services, for example benefits toward purchasing glasses or joining a gym, but they may not eliminate any items or services covered by traditional Medicare. 
    • Medicare Advantage Plans must still cover all items and services offered by traditional Medicare. Medicare Advantage plans will continue to offer the same benefits of Parts A and B of Medicare and offer other benefits. By 2014 the plans will be required to lower their costs and spend at least 85 percent of every dollar on health care rather than administrative costs or profits.

    Other Resources

    Visit the following sites for other useful information about Medicare, its programs, and how they will change under the ACA:

    •  www.medicare.gov or call 1-800-MEDICARE (general information about   Medicare)
    •  http://go.usa.gov/3GG  (view or download “Your Guide to Medicare Prescription Drug Coverage” for general information about Medicare prescription drug coverage)
    •  http://go.usa.gov/loF  (view or download “Bridging the Coverage Gap” for information on how to lower your prescription drug costs) 
    •  www.socialsecurity.gov or call 1-800-772-1213 (for information on qualifying for the Extra Help program from Medicare to help pay your prescription drug costs)
    •  Visit www.stopmedicarefraud.gov to learn how to prevent, detect, and report Medicare fraud and abuse.

    Note: This website and the information contained, expressed or implied  herein are made available solely for general informational purposes and are not intended to be legal, tax, health, medical or professional advice or the sole source of information about health insurance coverage or specific health plans. While every effort is made to ensure that this information is accurate and current, SCAI makes no guarantees and disclaims any expressed or implied warranty or representation about its accuracy, relevance, timeliness, completeness or appropriateness for a particular purpose.