Medicare balance billing restrictions: impacts on physicians and beneficiaries

Beginning in the late 1980s, states and the federal government restricted the ability of physicians to "balance bill" Medicare beneficiaries for charges in excess of the copayment and reimbursement amounts approved by Medicare. In this paper, I provide empirical evidence that this policy change resulted in a 9% reduction in out-of-pocket medical expenditures by elderly households. In spite of the change in marginal reimbursement to physicians, however, I find little evidence that the restrictions affected patterns of care. Thus, this restriction on the prices charged by physicians amounted to a transfer from affected physicians to affected patients.     

Supply and demand factors in the determination of Medicare expenditures.

This article presents multivariate estimates of the effects of supply-side factors (e.g., provider reimbursement) and demand-side factors (e.g., beneficiary ability to pay) on state-level expenditures per enrollee in Medicare Part A and Part B. The results indicate that a 1 percent increase in elderly income significantly increases the propensity to use Medicare Part B services, resulting in a 0.45 percent increase in Part B expenditures per enrollee. By contrast, patients' ability to pay has a much weaker effect on Part A expenditures. Changes in provider reimbursement also exert a substantial effect on expenditures. A 1 percent rise in the Medicare Prevailing Charge Index raises Medicare Part B expenditures by 0.43 percent. Collectively, the findings of this study suggest that both limits on Medicare reimbursement to providers and increased beneficiary liability have substantial effects on Medicare costs. Whatever the merits of arguments for or against such controls, the responsiveness of Medicare expenditures to equal percentage changes in supply and demand factors appears to be of a similar order of magnitude.     

Medicare Home Infusion Therapy Reimbursement Gap

This research seeks to address the home infusion therapy reimbursement gap found within Medicare Part D. In particular, the research explored the reimbursement gap's impact on home health utilization, its contribution to the national health expenditure growth, and the potential fix of the problem by restructuring Medicare Part B to include a home infusion therapy benefit under its coverage. Previous studies found that there is a great cost avoidance opportunity available through home health and home infusion treatment, because such treatment avoids the high costs associated with hospitalization and nursing home and other long-term care facilities. Future implications of this topic are unclear, as the Affordable Health Care for America Act is equipped to cut Medicare services and reimbursements, in spite of current bipartisan legislation in both houses to cover the home infusion reimbursement gap.     

Healthcare Providers’ Satisfaction with a State Children’s Health Insurance Program (SCHIP)

Purpose This study’s purpose was to understand how experiences with and perceptions of the health care plan characteristics influence provider satisfaction with a State Children’s Health Insurance Program (SCHIP). Methods Physicians and other health care providers participating in one program (ALL Kids) were mailed a survey (n = 500). Pediatricians were the most likely to return the survey. We used frequencies, chi-square and logistic regression analysis to explore relationships. Results The odds of being less satisfied with the program among providers who perceived that reimbursement in the ALL Kids program was less compared to private insurance were almost 7 times (OR = 6.81; 95% CI = (1.88–24.73)) greater than for those who perceived that reimbursement was more or the same in ALL Kids. Likewise, respondents who perceived that All Kids families were less likely than families with private insurance to return for follow-up visits were less satisfied with ALL Kids (OR = 17.42; 95% CI = (1.85–164.70)). Conclusions The stigma of SCHIP may be less than that often associated with Medicaid; however, this investigation should be considered with others that have identified barriers for provider’s participation. This study indicates that provider satisfaction is related to their perceptions of SCHIP policies and families, though it does not tell us what factors might contribute to this perception, such as, previous experience with public insurance (Medicaid) and publicly insured patients. Increasing reimbursement rates may not address perceptions that affect provider views of publicly-supported health plans and the participating families.     

The physician quality reporting initiative--a gateway to pay for performance: what every health care professional should know

The Physician Quality Reporting Initiative (PQRI) is a pay-for-reporting (P4R) program sponsored by the Centers for Medicare & Medicaid Services open to all health care providers that treat Medicare patients. This P4R initiative provides financial incentives for participation and unlike most pay-for-performance (P4P) programs, there are no penalties for poor performance. PQRI therefore offers Medicare providers nationwide a low-risk opportunity to gain experience with reporting procedures likely to be incorporated into P4P reimbursement schemes. The 74 measures used during the first reporting period are applicable to both generalist and specialist providers and open participation in PQRI to a much broader audience compared with previous federal initiatives. Also in contrast to programs that measure hospital or group quality and reimburse for services at the health system level, measurement and reimbursement in PQRI directly affects individual Medicare providers. The combination of provider-level measurement and reimbursement and efforts to assess care delivered by both generalist and specialist Medicare providers highlights how this P4R initiative is truly a gateway to a P4P reimbursement system. Participation in the PQRI program provides useful experience to Medicare providers and their staff in preparing for future initiatives that try to tie quality to reimbursement.     

Impact of Medicare's prospective payment system on hospitals, skilled nursing facilities, and home health agencies: how the Balanced Budget Act of 1997 may have altered service patterns for Medicare providers

The prospective payment system is one of many changes in reimbursement that has affected the delivery of health care. Originally developed for the payment of inpatient hospital services, it has become a major factor in how all health insurance is reimbursed. The policy implications extend beyond the Medicare program and affect the entire health care delivery system. Initially implemented in 1982 for payments to hospitals, prospective payment system was extended to payments for skilled nursing facility and home health agency services by the Balanced Budget Act of 1997. The intent of the Balanced Budget Act was to bring into balance the federal budget through reductions in spending. The decisions that providers have made to mitigate the impact are a function of ownership type, organizational mission, and current level of Medicare participation. This article summarizes the findings of several initial studies on the Balanced Budget Act's impact and discusses how changes in Medicare reimbursement policy have influenced the delivery of health care for the general public and for Medicare beneficiaries.     

The rise and fall of New Jersey's uncompensated care fund

Since 1982, acute care hospitals in New Jersey have been reimbursed on a diagnosis-related group (DRG) basis along with a provision for 100 percent reimbursement of uncompensated care (bad debts and charity care). Initially, that system was based on a hospital-specific surcharge. Eventually, that was replaced with a uniform charge for all hospitals, including reimbursement by Medicare. But the growth in the number of uninsured, an inequitable financing system, increases in bad debts, and the elimination of Medicare payments led to the program's demise. An extended legislative stalemate has resulted in a pair of temporary extensions--aided by an infusion of federal Medicaid dollars--but the state still must find a permanent solution.     

CPT fee differentials and visit upcoding under Medicare Part B

Medicare Part B pays outpatient physicians according to the billed Current Procedural Terminology (CPT) codes, which differ in procedure and intensity. Since many performed services merely differ by intensity, physicians have an incentive to upcode services to increase profitability of a visit. Using nationally representative data from the 2001 to 2003 Medicare Current Beneficiary Survey, this paper explores the effect of Medicare Part B fee differentials on the upcoding of general office visits (i.e. for established patient visits with CPT codes of 99212‐99215). It finds strong evidence that these fee differentials influence physician's coding choice for billing purposes across a variety of specialties. For general office visits, Medicare outlays attributable to upcoding may sum to as much as 15% of total expenditures for such visits. Medicare has much to gain financially by clarifying its classification rules. Until the distinctions between types of Medicare visits are redefined in a way that eliminates ambiguity, upcoding under Medicare Part B is likely to continue. Copyright © 2010 John Wiley & Sons, Ltd.     

Medicare cost controls and program compliance: the rationale of physician claims edits

This article attempts to demystify and create a context for the enactment of several Medicare cost control and compliance systems for physician reimbursement. The focus is on claims "edits" and Medicare compliance. Portions of Medicare, including health care provider reimbursement, remain fee-for-service programs that can be easily defrauded. To protect the Trust, the Centers for Medicare and Medicaid Services (CMS) has taken a multi-pronged approach, using program administration, enforcement, and rules-based claims editing systems. The Evaluation and Management codes, the Correct Coding Initiative (CCI), and medical necessity rules are claims edits that affect procedure codes. The Medicare program has a complicated system of billing procedures and an apparatus to enforce them. A solid compliance plan must incorporate proper claims editing, because consistent incorrect Medicare billing can be considered abuse. Many resources are available to aid physicians, including computerized tools, new CMS initiatives, and Internet materials.     

Impact of municipal health services Medicare waiver program.

A major goal of the municipal health services program (MHSP) was improvement of health services for the elderly while containing Medicare reimbursement. A Health Care Financing Administration financed Medicare waiver program provided some additional benefits to Medicare Part B enrollees who used the MHSP clinics. Disadvantaged and sicker elderly groups were underrepresented in MHSP facilities. However, even after taking these differences between MHSP and other patients into account, analyses of Medicare records showed that participants in this program had lower reimbursement for hospital inpatient, outpatient, and emergency room services. Also, participants had higher reimbursements for physicians' ambulatory and ancillary care. The net result was total Medicare reimbursements were decreased for program participants.     

Trends in Medicare Part B mental health utilization and expenditures: 1987-92

This article examines the impact of expanding Medicare Part B coverage of mental health services, based on analysis of 6 years of Medicare Part B claims data (1987-92). Inflation-adjusted per capita spending more than doubled (from $9.91 to $21.63) following the elimination of the annual outpatient treatment limit and extension of direct reimbursement to clinical psychologists and social workers. There was a 73-percent increase in the user rate (from 23.25 to 40.20 per 1,000 Medicare beneficiaries), and a 27-percent increase in the average number of services per user (from 8.9 to 11.3). Mental health spending increased from 1 percent to 2 percent of expenditures for Part B professional services. Ongoing monitoring of mental health utilization is desirable to ensure that recent access gains are not eroded with the increasing shift to managed care and implementation of gatekeeper mechanisms.     

Decoding incident-to and provider-based billing: ensuring payment and avoiding liability

In this increasingly complex world of Medicare reimbursement, physicians must constantly review their billing practices to ensure compliance with all Medicare requirements. "Incident-to" billing and provider-based billing are two areas that present unique challenges for providers, especially those practicing in hospital-owned practices such as hospital outpatient departments. Both incident-to and provider-based billing limit providers' abilities to bill for and receive reimbursement in those practice settings. The Office of Inspector General's 2012 Work Plan Report identified both incident-to billing and place-of-service errors as two of the many areas for investigation and compliance efforts in 2012. This article focuses on identifying the unique point-of-service challenges presented by physicians practicing in hospital outpatient departments or hospital-owned clinics.     

From Cottages to Condos

The home health care industry has under one a dramatic period of growth since the passage of Medicare (Title XVIII of the Social Security Act) in 1965. This growth has occurred in both the expansion of the total number of Medicare-certified agencies providing care, as well as the number of clients served and hours of care provided. It has been suggested that the single most important factor in this market expansion was the inclusion of a home care benefit in the original Medicare legislation, thus making it possible for nonprofit home care agencies to rely on a predictable source of government reimbursement. This paper explores the influence that amendments to the Medicare legislation slnce 1980 have had on market expansion, as well as other federal, state and private policy initiatives that have also influenced this growth. The authors sugest that overall growth does not equate with improved access or availability of needed services in the home for the frail and functionally-impaired elderly. Research findings from the first year of a three year study designed to document the impact of cost containment policies on community-based care for the elderly are reported in summary form to illustrate the authors position.     

From cottages to condos: the expansion of the home health care industry under Medicare.

The home health care industry has undergone a dramatic period of growth since the passage of Medicare (Title XVIII of the Social Security Act) in 1965. This growth has occurred in both the expansion of the total number of Medicare-certified agencies providing care, as well as the number of clients served and hours of care provided. It has been suggested that the single most important factor in this market expansion was the inclusion of a home care benefit in the original Medicare legislation, thus making it possible for nonprofit home care agencies to rely on a predictable source of government reimbursement. This paper explores the influence that amendments to the Medicare legislation since 1980 have had on market expansion, as well as other federal, state and private policy initiatives that have also influenced this growth. The authors suggest that overall growth does not equate with improved access or availability of needed services in the home for the frail and functionally-impaired elderly. Research findings from the first year of a three year study designed to document the impact of cost containment policies on community-based care for the elderly are reported in summary form to illustrate the authors position.     

Cost differences between hospice and nonhospice care. A comparison of insurer payments and provider charges.

Although it has been postulated that hospice care savings are "biased" when costs are measured in terms of insurer payments instead of provider charges, this claim has not been documented by research. This article examines cost differences between hospice and nonhospice care, first, by analyzing Medicare Part A payments and, second, by studying provider charges for services rendered to a population of 24 cancer patients during their last 24 weeks of life. The exploratory results of the study showed that although the cost savings derived from analyzing provider charges were about double those based on Medicare Part A payments, both approaches to the measurement of cost strongly indicated that hospice home care was less costly than nonhospice care. Further analysis showed that variations in the rates of Medicare reimbursement accounted for 22 to 42% of the differences in the derived cost savings between the two approaches to measuring cost, and that payments to hospitals played a major role in determining this outcome.     

Explaining state Medicaid nursing home reimbursement

Medicaid nursing home reimbursement methods and per diem rates affect costs, quality, equity, and access. State rate-setting is a laboratory of policymaking, which can inform state and federal Medicaid reform initiatives. This paper explains state Medicaid nursing facility rates in 1979-1994. Findings suggest that prospective facility-specific methods constrained rates in some but not all periods, particularly when older cost-reports were employed in rate-setting. Analysis failed to show that prospective class rate-setting methods constrained rate increases. Findings suggest that the efficacy of reimbursement methodology to control rates depends upon wider health care policy trends and that future facility-level analyses should consider policy contexts as between states.     

Effects of state Medicaid home care Medicare maximization programs on Medicare expenditures

Some state Medicaid programs have attempted to shift home health care costs to Medicare by using retrospective Medicare maximization billing practices. We used a two-part model with random effects to analyze whether retrospective billing practices increase Medicare expenditures for dual eligibles by analyzing primary data collected from 47 state Medicaid offices supplemented with Medicare Current Beneficiary Survey (MCBS) data from 1992-1997. Retrospective billing practices were projected to increase Medicare home health care expenditures by 73.8 million dollars over six years, although this was not statistically significant. We also found significantly higher Medicare spending in states with lower Medicaid spending levels, suggesting that states with high Medicaid utilization have potential to shift some of these expenditures to Medicare.     

The impact of the 340B Drug Pricing Program on Critical Access Hospitals: Evidence from Medicare Part B

I study the impact of expanding the 340B Drug Pricing Program to include Critical Access Hospitals (CAH) on Medicare Part B drug utilization and spending. The 340B program entitles certain hospitals and clinics to discounts on most outpatient drugs. In 2010, the Affordable Care Act expanded 340B eligibility to CAHs — small rural hospitals that receive cost-based reimbursement from Medicare. Exploiting variation in the predicted exposure to the 340B expansion in a difference-in-differences method, I find that the 340B expansion reduced Part B drug spending but did not affect Part B drug utilization. This finding contrasts with existing evidence about 340B’s impact on hospitals but is consistent with the prediction that cost-based reimbursement dampens the incentives created by the 340B discounts. I also find suggestive evidence that CAHs passed the cost savings from 340B on to patients. These results add new perspectives to the ongoing debate over 340B.     

Physician attitudes and behavior in response to changes in Medicare reimbursement policies

BACKGROUND. Rapidly changing Medicare reimbursement policies since 1983 have affected every primary care physician. This study has attempted to quantify the attitudes and behaviors of Ohio primary care physicians toward these changes. METHODS. In Ohio, 1758 primary care physicians were surveyed by a mailed questionnaire about their attitudes toward recent changes in Medicare reimbursement policies and the resulting changes in their practices. RESULTS. More than 80% of respondents termed most Medicare policies as "objectionable" or "very objectionable." Fifty percent were limiting the number of Medicare patients in their practices. Family physicians and physicians who perceived their income to have decreased and their staff workload to have increased were also more likely to limit the number of Medicare patients in their practices. CONCLUSIONS. Ohio primary care physicians have a negative opinion of Medicare reimbursement policies and have limited their practices significantly as a result.