WHAT’S THE PROBLEM WITH ADMITTED VS. OBSERVATIONAL?

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Fact: each year over one million Americans are denied access to the extended or skilled care services of Medicare if they are not classified as “admitted” when entering the hospital.

Seldom are we aware of this problem. The Center for Medicare and Medicaid (CMS) has come down hard on hospitals for “up coding” to “admitted” status in order to receive a higher payment for their services than they would if they were coded as “observational” status.

Follow this interview of a daughter’s first hand experience of denied Medicare skilled care for her mother because she was not aware of this Medicare issue and rule…

Daughter: In October, 2012, my mother fell and broke her pelvis in two places.

She was in the hospital for five days and received pain meds and intravenous hydration. My two sisters and I were told that she should go to a convalescent facility.

We had her placed in a convalescent facility and the first thing we were told was that Medicare would not cover the costs because she had not been “admitted” to the hospital. She was coded under “observational” only.

Interviewer: During your mother’s time in the hospital, did she receive treatment?

Daughter: Yes, pain meds and hydration. That was all.

Interviewer: She was treated, but never “admitted?”

Daughter: Yes, and she spent five days there; it wasn’t just an overnight.

Interviewer: So who ended up paying for her stay at the convalescent facility?

Daughter: Mother did; the bill was $6,900 for 30 days and we had to pay in advance.

Interviewer: That was well over $200 per day. Did she have a recovery?

Daughter: My sisters and I brought her home and took care of her; with a broken pelvis, she needed lots of bed rest. It took another two months to walk with a walker. She is still unsteady on her feet. There is now a family member with her 24 hours a day.

Interviewer: Then the lesson learned here is understanding the difference between a hospital “admittance” and an “observation.”

Daughter: Yes, that’s right. I asked the hospital after the fact that since she had a serious fall and was in extreme pain, shouldn’t they have “admitted” her? They said it would be falsifying the documents. I said, “but she was there for five days!”

Interviewer: What did they say?

Daughter: They said, “no.” It could not be changed.

Interviewer: Then there was no way of knowing that this would happen?

Daughter: We just assumed she was “admitted” to the hospital and never told anything about “observation” until we were ready to move her to the convalescent facility.

Interviewer: Were you surprised when you found out?

Daughter: We were stunned. When we brought her to the convalescent facility, we thought Medicare would cover the stay. But we paid up front instead.

Interviewer: How did you determine the cost of the stay in the convalescent facility?

Daughter: It went month by month.

Interviewer: I would suppose the facility has had situations where they did not get paid.

Daughter: Yes, I am sure that was the reason we paid up front.

Interviewer: So where does that leave you with the whole experience?

Daughter: I was disappointed with the way it was handled. Naturally, we would have rather been told right away that she was in the hospital on “observation”. At that time, we could have had a better chance of changing the status.

Interviewer: Anything else you can share about this experience?

Daughter: I want people to be sure to ask about the status – “admitted” or “observation.” It can make all the difference!

TRADE-OFFS IN RAISING MEDICARE ELIGIBILITY AGE

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Americans are living longer and there are those in our government who want to raise the eligibility age as part of any deal to reduce huge deficits.

But what sounds like a prudent sacrifice for an aging society that must watch its budget could have some surprising consequences, including higher premiums for people on Medicare…

the idea as a quick fix that would cause long-term problems.

Increasing the eligibility age to 67 would reduce Medicare spending by about 5 percent annually, compounding into hundreds of billions of dollars over time.

But things aren’t that simple.

This is a policy change that may appear to be straightforward, but has surprising ripple effects.

It’s a simple thing to describe, and the justification is that people are living longer, but there are indirect effects.

Among the effects identified:

Higher monthly premiums for seniors on Medicare. Their costs would increase because keeping younger, healthier 65 and 66 year olds out of Medicare’s insurance pool would raise costs for the rest. The increase would be about 3 percent when the higher eligibility age is fully phased in.

– Higher premiums for private coverage under Obama’s health overhaul. That’s because older adults would stick with private insurance for two extra years before moving into Medicare. Compared with younger adults, they are more expensive to insure.

– An increase in employer costs because older workers would try to stay on company insurance plans.

– Higher out-of-pocket health-care costs for two out of three older adults whose entry into Medicare would be delayed.

The Congressional Budget Office has also projected an increase in the number of insured.

That possibility becomes more real with populous states like Texas saying they won’t accept the Medicaid expansion in Obama’s health overhaul, which would provide coverage to low-income adults.

Then there’s the impact on people with physically demanding jobs, for whom extending their working years may be difficult.

Raising the eligibility age is not the only Medicare cut in play. Hospitals and other service providers could see reductions in payments, drug companies may owe new rebates to the government, and upper-income seniors would face higher monthly premiums.

The total package could reach around $400 billion over 10 years.

OBAMACARE MANDATE MAY BECOME ‘MANDATE PLUS’

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Can’t get enough of Obamacare’s individual mandate? Get ready for “mandate plus.” What’s the catch?

The Obama administration always said there was a practical reason it needed the mandate, which starts next year. It wasn’t to be mean to people – it was supposed to pull in enough healthy customers to help pay for all the sick people who will get coverage.

Here’s the catch: the individual mandate penalties will be pretty weak as they are phased in over two years – only $95.00 when they start in 2014, much less than it costs to buy insurance. And yet, everyone with pre-existing conditions will have to be accepted for coverage right away.

That’s why insurance companies are telling the administration the mandate won’t be enough for the first two years. They want more incentives – such as a late enrollment fee – to get healthy people to sign up quickly. Without getting the healthy folks in, the fear is that everyone’s health insurance premiums could shoot through the roof when all those sick people get their coverage.

The idea is being called “mandate plus.”

The mandate is the “stick” that’s supposed to prevent that, by making people pay a penalty (or as Supreme Court called it, a tax) if they don’t get health coverage when they’re eligible. When the mandate is at full strength in 2016, people will pay $695.00 or 2.5 percent of their income, whichever is greater.

“There’s broad agreement that in order for the exchanges and the insurance market reforms to work, the coverage needs to be affordable, and there needs to be as many healthy people in the risk pool as possible.

A CONSUMER’S GUIDE TO THE HEALTH LAW

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Now that President Barack Obama has won a second term, the Affordable Care Act is back on a fast track.

Some analysts argue that there could be modifications to reduce federal spending as part of a broader deficit deal; for now, this is just speculation. What is clear is that the law will have sweeping ramifications for consumers, state officials, employers and health care providers, including hospitals and doctors.

While some of the key features don’t kick in until 2014, the law has already altered the health care industry and established a number of consumer benefits.

Here’s a primer on parts of the law already up and running, what’s to come and ways that provisions could still be altered.

Under the law, for someone who does not have health insurance, they will have to buy it or suffer the ramifications.

Beginning in 2014, most people will have to have health insurance, or pay a fine.

For individuals, the penalty would start at $95 per year, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income by 2016.

For families, the penalty would be $2,085 or 2.5 percent of household income, whichever is greater. The requirement to have coverage can be waived for several reasons, including financial hardship or religious beliefs.

Millions of additional people will qualify for Medicaid or federal subsidies to buy insurance under the law.

While some states have passed laws to block the requirement to carry health insurance, those provisions do not override federal law.

Anyone with health coverage through an employer who wants to keep their current plan will be able to do so.

But, just as before the law was passed, an employer is not obligated to keep the current plan and may change premiums, deductibles, co-pays and network coverage.

For example, most plans now ban lifetime coverage limits and include a guarantee that an adult child up to age 26 who cannot get health insurance at a job can stay on their parents’ health plan.

What other parts of the law are now in place?

A person is likely to be eligible for preventive services with no out-of-pocket costs, such as screenings and cholesterol tests.

Health plans cannot cancel anyone’s coverage once they get sick – a practice known as “rescission” – unless they committed fraud when applying for coverage.

Children with pre-existing conditions cannot be denied coverage. This will apply to adults in 2014.

Insurers will need to provide rebates to consumers if they spend less than 80 to 85 percent of premium dollars on medical care.

Some existing plans, if they haven’t changed significantly since passage of the law, do not have to abide by certain parts of the law.

For example, these “grandfathered” plans can still charge beneficiaries part of the cost of preventive services.

If a person is currently on one of these plans, and their employer makes significant changes, such as raising your out-of-pocket costs, the plan would then have to abide by all aspects of the health law.

So, what happens if a person wants health insurance but feels they can’t afford the premiums?

Depending upon a person’s income, they might be eligible for Medicaid. Currently, in most states nonelderly adults without minor children do not qualify for Medicaid. But beginning in 2014, the federal government is offering to pay the cost of an expansion in the programs so that anyone with an income at or lower than 133 percent of the federal poverty level, (based on current guidelines – $14,856 for an individual or $30,656 for a family of four) will be eligible for Medicaid.

What if someone makes too much money for Medicaid but still feels they can’t afford the insurance?

They miight be eligible for government subsidies to help pay for private insurance sold in the state-based insurance marketplaces, called exchanges, slated to begin operation in 2014. Exchanges will sell insurance plans to individuals and small businesses.

These premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,856 to $44,680 for individuals and $30,656 to $92,200 for a family of four (based on current guidelines).

If a person has health problems, it will be easier for them to get coverage because insurers will be barred from rejecting applicants based on health status once the exchanges are operating in 2014.

Small business owners are not required to buy health insurance for their employees.

But, starting in 2014, businesses with 50 or more employees that do not provide health care coverage and have at least one-full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a $2,000 fee per full-time employee. The firm’s first 30 workers would be excluded from the fee.

However, firms with 50 or fewer people won’t face any penalties.

In addition, if a person owns a small business, the health law offers a tax credit to help cover the cost. Employers with 25 or fewer full-time workers who earn an average yearly salary of $50,000 or less today can get tax credits of up to 35 percent of the cost of premiums. The credit increases to 50 percent in 2014.

What about the how the legislation will affect seniors over age 65?

The law is narrowing the gap in the Medicare Part D prescription drug plan know as the “doughnut hole.” This is when seniors who have paid a certain initial amount in prescription drug costs have to pay for all of their drug costs until they spend a total of $4,700 for the year. Then the plan begins again.

This coverage gap will be closed entirely by 2020. Seniors will still be responsible for 25 percent of their prescription drug costs. So far, 5.6 million seniors have saved $4.8 billion on prescription drugs, according to the Department of Health and Human Services.

The law also expanded Medicare’s coverage of preventive services, such as screenings, which are now free to beneficiaries. Medicare will also pay for an annual wellness visit to the doctor. HHS reports that during the first nine months of 2012, more than 20.7 million Medicare beneficiaries have received preventive services at no cost.

The health law reduced the federal government’s payments to Medicare Advantage plans, run by private insurers as an alternative to the traditional Medicare. Medicare Advantage costs more per beneficiary than traditional Medicare. Critics of those payment cuts say that could mean the private plans may not offer many extra benefits, such as free eyeglasses, hearing aids and gym membershps, that they now provide.

Because of the law, a person may have to pay more for their health care.

But, no one knows for sure. Even supporters of the law acknowledge its steps to control health costs, such as incentives to coordinate care better, may take a while to show significant savings. Opponents say the law’s additional coverage requirements will make health insurance more expensive for individuals and for the government.

That said, there are some new taxes and fees. For example, starting in 2013, individuals with earnings above $200,000 and married couples making more than $250,000 will pay a Medicare payroll tax of 2.35 percent, up from the current 1.45 percent, on income over these thresholds. In addition, higher-income people will face a 3.8 percent tax on unearned income, such as dividends and interest.

Starting in 2018, the law also will impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year and $27,500 for families. The tax has been dubbed a “Cadillac” tax because it hits the most generous plans.

In addition, the law also imposes taxes and fees on several major health industries. Beginning in 2013, medical device manufacturers and importers must pay a 2.3 percent tax on the sale of any taxable medical device to raise $29 billion over 10 years. An annual fee for health insurers is expected to raise more than $100 billion over 10 years, while a fee for brand name drugs will bring in another $34 billion.

These fees will likely be passed onto consumers in the form of higher premiums.

This law has hit some real bumps in the road.

For example, the law created high-risk insurance pools to help people purchase health insurance. But enrollment in the pools has been less than expected. As of August 31, 2012, 86,072 people have signed up for the high-risk pools, but the program, which began in June 2010, was initially expected to enroll between 200,000 and 400,000 people. The cost and the requirements have been difficult for some to meet.

Applicants must be uninsured for six months because of a pre-existing medical condition before they can join a pool. And because participants are sicker than the general population, the premiums are higher.

Enrollment has increased since the summer, after the premiums were lowered as much as 40 percent and some states stepped up advertising.

A long-term care provision of the law is dead for now. The Community Living Assistance Services and Supports program (CLASS Act) was designed for people to buy federally guaranteed insurance that would have helped consumers eventually cover some long-term care costs. But last fall, federal officials effectively suspended the program even before it was to begin, saying they could not find a way to make it work financially.

Are there more changes ahead for the law?

Some observers think there could be pressure in Congress to make some changes to the law as a larger package to reduce the deficit. Among those options is scaling back the subsidies that help low-income Americans buy health insurance coverage. The amount of the subsidies, and possibly Medicaid expansion as well, could be reduced.

It’s also possible that some of the taxes on the health care industry, which help pay for the new benefits in the health law, could be rolled back. For example, legislation to repeal the tax on medical device manufacturers passed the House with support from 37 Democrats (it is not expected to receive Senate consideration this year). Nine House Democrats are co-sponsoring legislation to repeal the law’s annual fee on health insurers.

Meanwhile, the Independent Payment Advisory Board (IPAB), one of the most contentious provisions of the health law, is also under continued attack by lawmakers. IPAB is a 15-member panel charged with making recommendations to reduce Medicare spending if the amount the government spends grows beyond a target rate. If Congress chooses not to accept the recommendations, lawmakers must pass alternative cuts of the same size.

Some Republicans argue that the board amounts to health care rationing and some Democrats have said that they think the panel would transfer power that belongs on Capitol Hill to the executive branch. In March, 2012 the House voted to repeal IPAB.

Your comments are always welcome!