Medicare program expenditures.
The Medicare program was enacted into law in 1965 as title XVIII of the Social Security Act. The new Federal health insurance program, effective July 1, 1966, provided basic health insurance coverage for persons 65 years of age or over. The primary goals of the Medicare program were to reduce the financial burden of the high cost of health care and to increase access to medical health services for the elderly, regardless of their income or health status. The 1972 Amendments to the Social Security Act (Public Law 92-603) expanded Medicare to cover two additional high-risk groups: permanently disabled workers and their dependents, and persons with end stage renal disease (ESRD).
Medicare is a federally administered program with uniform eligibility criteria and benefits. It has two coordinated health programs, each with its own trust fund: The hospital insurance (HI) program (Part A) pays for inpatient hospital services, post-hospital skilled nursing facility (SNF) services, home health agency (HHA) services, and hospice care; the supplementary medical insurance (SMI) program (Part B) covers physician, physician-related, and outpatient services.
The HI trust fund is financed primarily through employee and employer payroll taxes on earnings from employment covered under the Social Security Act; HI revenues are used to pay for HI services received by Medicare beneficiaries. The SMI trust fund is financed through premiums paid by or on behalf of persons enrolled in the program and by the Federal Government from general revenues; SMI revenues are used to pay for SMI services received by Medicare beneficiaries.
Beneficiary cost-sharing provisions were included to deter overutilization of benefits and to hold down program costs. With the implementation of Medicare, beneficiary out-of-pocket payments, as a proportion of personal health care expenditures (PHCE), were reduced. However, as a result of the escalation in Medicare costs since the program began, beneficiary out-of-pocket expenses for cost sharing and for non-covered services remain substantial.
From 1970 to 1990, Medicare benefit payments increased from $7.2 billion to $108.9 billion, an average annual rate of change (AARC) of 14.5 percent; as a proportion of total PHCE, Medicare benefit payments increased from 11.1 percent in 1970 to 18.6 percent in 1990. This rapid rate of increase has focused congressional attention on the need to constrain the future growth of program expenditures. Congressional passage of the Medicare prospective payment system (PPS) in 1982, the Deficit Reduction Act of 1984 (DEFRA), and the Medicare Physician Payment Reform Program of 1989 is generally believed to have contributed significantly to the slowing of Medicare spending growth. In this section, we focus on the changes in patterns of expenditures for Medicare-covered services and the distribution of payments between the program and beneficiary cost sharing.
Medicare program payments
Medicare is the largest source of public funds for health care services. In 1990, it accounted for $108.9 billion or 18.6 percent of all personal health care spending in the United States. When Medicare was implemented on July 1, 1966, it provided health care services to 19.1 million enrollees, who represented about 9.7 percent of the total resident population. By 1990, the estimated resident population was 248.7 million. Of this total, Medicare provided health insurance to about 34.2 million enrollees, or almost 13.8 percent of the total resident population. Medicare payment data provide administrative and statistical information on the use and cost of these health care services.
Trends in health expenditures: 1960-90
Trends in national health care spending for Medicare and for all PHCE are presented in Table 3.1 (Levit et al., 1991). Spending for national health care has steadily increased in dollar terms and as a proportion of the gross national product (GNP). In 1990, PHCE reached $585.3 billion; in 1960, the amount was $23.9 billion. As a share of the Nation's GNP, total PHCE accounted for 10.6 percent in 1990, compared with 4.6 percent in 1960. Based on preliminary estimates, PHCE rose to approximately $660.2 billion in 1991.
[TABULAR DATA 3.1 OMITTED]
The Federal health care legislation of 1965 that created Medicare and Medicaid shifted a large portion of the payments for the Nation's health care from the private to the public sector. In 1960, before Medicare and Medicaid, an estimated 21.4 percent ($5.1 billion) of all PHCE came from the public sector and 78.7 percent ($18.8 billion), including direct patient payments, came from the private sector (Figure 3.2). By 1990, 41.3 percent ($241.8 billion) of all PHCE were accounted for by the public sector and 58.7 percent ($343.5 billion) by the private sector. The proportion of payments that came directly out of the patient's pocket (such as drugs, dental and vision care, nursing home care, other preventive care services, and cost-sharing expenditures) decreased from 55.9 percent ($13.3 billion) of all PHCE in 1960 to 23.3 percent ($136.1 billion) in 1990,
Spending by Medicare, the largest source of public funds for health care services, increased at a greater rate than total spending for PHCE during the period 1970-90. In 1970, Medicare spending represented only 11.1 percent ($7.2 billion) of the Nation's health care bill ($64.9 billion). By 1990, Medicare accounted for 18.6 percent ($108.9 billion) of all PHCE ($585.3 billion). During the period 1970-90, Medicare expenditures increased at an AARC of 14.5 percent; PHCE increased at an AARC of 11.6 percent.
Trends in Medicare expenditures: 1967-90
The number and proportion of Medicare enrollees using covered services paid by the program has risen each year since the implementation of Medicare. (Note that persons for whom Medicare made payments for any service and who incurred cost-sharing liabilities are hereinafter referred to as "persons served." Overall, persons enrolled in the program are referred to as "enrollees." "Beneficiaries" and "persons served" are used interchangeably throughout this chapter). As shown in Table 3.3, in 1967, an estimated 7.2 million beneficiaries used covered Medicare services for which the program made payment, an annual rate of 366 persons served per 1,000 enrollees. By 1990, an estimated 27.1 million beneficiaries used covered Medicare services, an annual rate of 792 persons served per 1,000 enrollees, or more than 2.2 times higher than the rate in 1967.
[TABULAR DATA 3.3 OMITTED]
The increased use of Medicare services is directly reflected in the increase in program payments. Total Medicare payments grew from $4.2 billion in 1967, the first full year of the program, to $101.4 billion in 1990. The average payment per beneficiary increased from $593 in 1967 to $3,743 in 1990. During the period 1967-90, Medicare payments increased at an AARC of 14.8 percent, substantially higher than the 11.6 percent recorded for all health care spending.
The rapid rise of Medicare expenditures led to legislation to constrain the rate of growth. The following discussion of Medicare payments and related cost-containment activities differentiates the trend data into two time periods: the years prior to the Medicare PPS system (1967-83) and the years following the implementation of PPS (1983-90). From 1983 to 1990, Medicare payments increased from $53.4 billion to $101.4 billion, an AARC of 9.6 percent; the AARC for 1967-83 was 17.2 percent. The slower rate of growth in payments reflected, for the most part, the introduction (effective October 1, 1983) of the Medicare PPS for participating short-stay hospitals. During this period, inpatient hospital payments increased at an AARC of 7.4 percent. PPS was intended to provide economic incentives to maximize efficiency without adversely affecting access or quality of care.
DEFRA also contributed to slowing the growth in Medicare payments from 1983-90 by freezing Medicare SMI physician payment levels for a 15-month period beginning July 1, 1984. The freeze was extended by Congress through April 1986 for participating physicians and through December 1986 for non-participating physicians. The participating physician and supplier program instituted by DEFRA was designed to encourage physicians and suppliers to accept Medicare-allowed charges as payment in full.
The Medicare Physician Payment Reform Program (MPPRP) instituted by the Omnibus Budget Reconciliation Act (OBRA) of 1989 (Public Law 101-239) substantially changed the way physicians are paid under Medicare. OBRA established a Medicare fee schedule based on a relative value scale for physician procedures in association with various geographic adjustment indexes. The fee schedule will be implemented in phases beginning in 1992 and will be completed by 1996. The MPPRP included several major cost-containment provisions expected to constrain escalating SMI costs by providing a more equitable and uniform payment system (Health Care Financing Administration, 1991).
Payments by type of service
Medicare utilization and payment trends by type of service are presented in Table 3.3. Payments for inpatient hospital services and physician and physician-related services combined accounted for about 85.7 percent ($86.9 billion) of all program payments ($101.4 billion) in 1990. Outpatient services, HHA services, and SNF services accounted for the remaining 14.3 percent ($14.5 billion). In 1967, inpatient hospital and physician and physician-related services comprised 91.4 percent ($3.9 billion) of all program payments ($4.2 billion); outpatient, HHA, and SNF services accounted for 8.4 percent ($0.4 billion).
For inpatient hospital services, Medicare payments increased from $2.7 billion in 1967 to $56.7 billion in 1990, an AARC of 14.2 percent. From 1967 to 1983, the AARC in inpatient hospital payments was 17.4 percent; but from 1983 to 1990, following the implementation of PPS, inpatient hospital payments increased at an AARC of only 7.4 percent. The latest available information regarding factors contributing to the growth in Medicare HI inpatient hospital payments for the period 1983-90 indicates that about 65 percent of the increase was the result of increases in payment per service (inflation) and 29 percent from increases in Medicare enrollment; the remaining 6 percent was the result of changes in intensity per admission, changes in number of admissions per capita, and hospital input prices in excess of general inflation (Health Care Financing Administration, 1992). In contrast, for the period 1973-83, about 51 percent of the growth in inpatient hospital payments was the result of increases in payment per service and only 7 percent resulted from increases in the enrollment population; the balance was the result of an increase in intensity per admission (23 percent), an increase in admissions per capita (4 percent), and hospital input prices in excess of the general inflation (15 percent) (Arnett et al., 1985).
For SMI physician and physician-related services, the second-largest component of Medicare spending payments rose from $1.2 billion in 1967 to $30.2 billion in 1990, an AARC of 15.0 percent. Efforts to constrain the growth in Medicare payments for physician services during the 1980s focused on the following actions:
* Incentives to encourage physician participation in
* A temporary freeze on physician fees for Medicare
* Reductions in payments for overpriced surgical
* Implementation of a national fee schedule for
diagnostic laboratory tests and durable medical
* Passage of the MPPRP 1989.
As a result of these legislative and administrative initiatives, the AARC for physician and other medical services slowed to 12.0 percent for the period 1983-90, from 16.3 percent for the period 1967-83. Based on an analysis of the components of the growth in Medicare physician spending during the period 1978-87, about 15 percent of the growth in physician spending was the result of an increase in the number of beneficiaries (about 2 percent a year); about 40 percent was the result of increases in payments per service (inflation); and about 45 percent of the growth resulted from factors such as an increase in the number of services (including new services and technology) and shifts to more expensive services (greater intensity) (Health Care Financing Administration, 1989).
During the study period (1967-90), the distribution of payments for SNF, HHA, and outpatient benefits shifted significantly as a percent of total Medicare payments. The greatest changes occurred for outpatient and HHA services. Payments for outpatient services increased from $38 million in 1967 to $8.8 billion in 1990, an AARC of 26.7 percent. Payments for HHA services (HI and SMI) increased from $43 million in 1967 to $3.7 billion in 1990, an AARC of 21.4 percent.
During the years 1967-90, payments for outpatient services increased from 0.9 percent of all program payments in 1967 to 8.7 percent in 1990. Similarly, payments for HHA services increased from 1.0 percent to 3.7 percent of program payments (Figure 3.4). In contrast, payments for inpatient hospital services decreased from 62.7 percent of all program payments in 1967 to 55.9 percent in 1990, and SNF payments decreased from 6.5 percent in 1967 to 1.9 percent in 1990. Payments for physician services, as a share of all Medicare payments, remained relatively constant from 1967 (28.7 percent) through 1990 (29.8 percent).
Payments by type of coverage
Medicare is primarily an HI coverage program. Since the program's inception in 1966, HI payments have represented a much larger (but decreasing) share of Medicare payments. In 1967, as shown in Table 3.5, HI payments comprised 70.0 percent ($3.0 billion) and SMI payments 30.0 percent ($1.3 billion) of all Medicare payments ($4.2 billion). In 1974, the first full year of the Medicare disability program, HI and SMI payments represented 72.2 percent ($8.1 billion) and 27.8 percent ($3.1 billion), respectively, of all Medicare payments. By 1990, however, the HI share of all Medicare payments had dropped to 61.5 percent ($62.3 billion), while SMI payments had increased to 38.5 percent ($39.1 billion). During the period 1967-90, the AARC for total Medicare payments was 14.8 percent; the AARC for SMI payments was 16.1 percent; compared with 14.2 percent for HI payments.
[TABULAR DATA 3.5 OMITTED]
The large relative increase in SMI payments over the history of Medicare reflects, to a large degree, a combination of the following factors:
* The expansion of Medicare coverage in 1973 and the
subsequent growth in the number of enrolled persons
with ESRD. The expensive services used by this group
of enrollees are concentrated in the SMI program.
* The growth in the use and scope of SMI outpatient
* The implementation of PPS, which provided
financial incentives for eliminating or reducing HI
inpatient hospital care and channeling appropriate
types of care to SMI ambulatory settings.
* The growth in the number of physicians participating
in the Medicare program.
* The increased scope, complexity, and cost of
There are substantial differences in the use and cost of Medicare benefits by type of enrollee. Medicare was designed so that nearly the entire aged population became eligible for HI when the program was implemented; on July 1, 1966, an estimated 19.5 million aged persons were enrolled in Medicare. By July 1, 1990, about 33.7 million aged persons, or about 98 percent of all persons age 65 years or over, were enrolled in Medicare. The SMI program, although voluntary and requiring a monthly premium, covers about 97 percent of aged Medicare enrollees.
Program payments for aged enrollees grew from $4.2 billion in 1967 to $89.6 billion in 1990, an AARC of 14.2 percent; HI payments increased at 13.6 percent, and SMI payments increased at 15.4 percent. Aged enrollees' share of Medicare payments decreased from 91.3 percent ($10.3 billion) in 1974 to 88.4 percent ($89.6 billion) in 1990.
Medicare benefits were extended on July 1, 1973, to disabled persons under age 65 who are unable to engage in any substantial gainful activity and who have received disability cash benefits for 24 months under the Social Security program. The number of disabled enrollees grew from 1.9 million in 1974 to 3.2 million in 1990, an AARC of 3.3 percent, compared with an AARC of 1.9 percent for aged enrollees during this period.
Medicare payments for the disabled also grew faster than for the aged; from $981 million in 1974 (the first full year that the disabled were covered under Medicare) to $11.8 billion in 1990. The AARC in payments for the disabled during this period was 16.8 percent, compared with 14.5 percent for the aged. As a share of Medicare payments, those for the disabled grew from 8.7 percent in 1974 to 11.6 percent in 1990.
As shown in Table 3.6, the average payment for disabled beneficiaries was $4,613 in 1990 or about 26 percent higher than that for the aged ($3,652). In 1974, the average payment for the disabled was $2,819 or approximately 21 percent higher than that for the aged ($2,321). This difference reflects the fact that the disabled covered by Medicare, which includes most of the population with ESRD, are a high-risk medical group; that is, the disabled use a greater volume of services and more expensive services than their aged counterparts.
[TABULAR DATA 3.6 OMITTED]
Distribution of payments by amount
As shown in Table 3.7, large variations exist in the distribution of payments per Medicare enrollee. As in other years, a large proportion of enrollees in 1990 incurred a small amount of payments or none at all (Figure 3.8). An estimated 20.8 percent (7.1 million) of all Medicare enrollees had no payments made on their behalf. An additional 35.9 percent (12.3 million) of all Medicare enrollees incurred payments of less than $500; the average payment for this group was $187. Thus, 56.7 percent (19.4 million) of all Medicare enrollees had payments of less than $500 and accounted for only 2.3 percent ($2.3 billion) of all payments; most beneficiaries incurring less than $500 in payments received SMI services only. In contrast, the majority of Medicare payments were used by a relatively small proportion of beneficiaries who incurred payments of $10,000 or more. That is, 8.4 percent (2.9 million) of all Medicare enrollees had payments of $10,000 or more and accounted for 64.4 percent ($65.3 billion) of all Medicare payments in 1990, with an average payment per enrollee of $22,831. An estimated 2.3 percent (803,900) of all Medicare enrollees had payments of $25,000 or more and accounted for 32.9 percent ($33.3 billion) of all payments in 1990 with an average payment of $41,453.
[TABULAR DATA 3.7 OMITTED]
As shown in Table 3.9, the average total Medicare payment per person served was $3,743 in 1990; by type of service, the average payment ranged from a low of $566 for outpatient services to a high of $8,668 for inpatient hospital services. The average payment per beneficiary for all HI services was $8,862, or more than six times higher than the average payment of $1,450 for beneficiaries with SMI services.
[TABULAR DATA 3.9 OMITTED]
Payments for inpatient hospital services accounted for 55.9 percent ($56.7 billion) of all Medicare payments in 1990. Only about 19.1 percent (6.5 million) of all Medicare enrollees used inpatient hospital services. The vast majority (96.7 percent) of Medicare beneficiaries who used inpatient hospital services incurred total payments of $2,000 or more. There were 794,940 beneficiaries using inpatient hospital services who incurred total payments of $25,000 or more during 1990. This cohort of high-cost users accounted for only 12.1 percent of all Medicare beneficiaries using inpatient hospital services, but comprised 41.6 percent ($23.6 billion) of all inpatient hospital payments; these persons incurred average payments of $29,696 for hospital inpatient services.
Medicare payments for physician and physician-related services comprised about 29.8 percent ($30.2 billion) of all Medicare payments during 1990. An estimated 77.0 percent (26.4 million) of all Medicare enrollees used such services during the year. In contrast to beneficiaries who utilized inpatient hospital services, more than two-thirds (17.9 million) of the beneficiaries using physician and physician-related services incurred total payments of less than $2,000, with an average payment for such services of $363 per beneficiary.
High-cost users of Medicare
A small proportion of Medicare beneficiaries accounted for a high proportion of payments. This is compatible with the primary purpose of any type of health insurance; that is, to provide protection against the risk of large and unexpected health care bills by spreading the risk among a large number of enrollees. In 1990, about 8.4 percent (2.9 million) of all Medicare enrollees accounted for 64.4 percent ($65.3 billion) of all Medicare payments. This distribution of payments has remained stable during the past two decades (Riley et al., 1986).
The high-cost populations shown in Table 3.10 represent groups of beneficiaries who accounted for a disproportionately large share of Medicare payments. The data provide insight as to some classifications of beneficiaries that have high average Medicare payments per beneficiary. The groups identified are beneficiaries with ESRD, beneficiaries who died during the reporting year, beneficiaries who used inpatient hospital services, and beneficiaries who underwent inpatient hospital surgery.
[TABULAR DATA 3.10 OMITTED]
The 1972 Amendments to the Social Security Act extended Medicare coverage to persons with ESRD. ESRD is that stage of kidney impairment that is irreversible, cannot be controlled by conservative management alone, and requires dialysis or kidney transplantation to maintain life. In 1990, there were approximately 158,580 ESRD beneficiaries who received covered Medicare services amounting to $4.5 billion; thus, 0.6 percent of all Medicare beneficiaries accounted for about 4.4 percent of all Medicare payments. The average payment for ESRD beneficiaries in 1990 was $28, 101 per person, or nearly eight times higher than the average payment for beneficiaries without ESRD ($3,600) (Figure 3.11).
The second group of high-cost users of Medicare services are beneficiaries who died during the reporting year; the use of Medicare services generally becomes much more intense as death approaches. In 1990, such beneficiaries comprised about 6.6 percent (1.8 million) of the total Medicare beneficiary population but accounted for 21.5 percent ($21.8 billion) of all Medicare payments. The average payment for Medicare beneficiaries who died during 1990 was $12,199, or nearly four times higher than that for beneficiaries who survived the year ($3,146).
Another group of high-cost users are those beneficiaries who incurred an inpatient hospital episode of care during the year. In 1990, an estimated 6.5 million beneficiaries (about 24.1 percent of all beneficiaries) used covered Medicare inpatient hospital services; this group accounted for $83.4 billion in total payments, with an average payment of $12,753. In contrast, there were 20.6 million beneficiaries in 1990 who used Medicare-covered services but did not require an inpatient hospital stay; their average payment was only $874.
Finally, the last group of high-cost users identified in Table 3.10 are beneficiaries who had an inpatient hospital surgical procedure. An estimated 4.2 million beneficiaries underwent inpatient hospital surgery during 1990, incurring Medicare payments of $59.3 billion. The average total payment for this cohort was $14,201, or nearly eight times higher than that for Medicare beneficiaries who did not have an inpatient hospital surgical procedure during the year ($1,836).
Payments by area of residence
Despite the fact that Medicare enrollees meet uniform eligibility criteria for HI benefits and pay equal premiums to receive SMI benefits, the geographical distribution of Medicare benefits is not equal. Although this distribution reflects local differences in resources, prices, and medical practice patterns, some have raised the question of equity in the geographic distribution of benefit payments. Table 3.12 summarizes 1990 Medicare payment data by State of residence of the beneficiary and urban or rural residence. The data presented on urban-rural residence is a measure of the distribution of Medicare payments by residence rather than a measure of differences in the use of and payments to providers in urban and rural areas.
[TABULAR DATA 3.12 OMITTED]
Medicare payments varied considerably by State of residence of the beneficiary. In 1990, payments were highest for residents of California ($10.1 billion), New York ($8.8 billion), Florida ($7.2 billion), Pennsylvania ($6.8 billion), Texas ($5.6 billion), and Ohio ($5.0 billion). These six States accounted for 43.2 percent ($43.6 billion) of all Medicare payments in the United States ($100.9 billion). The average Medicare payment per enrollee was $3,012 in 1990. By division, the average payment per enrollee ranged from a low of $2,560 in the West North Central Division to a high of $3,413 in the Middle Atlantic Division, a difference of 33 percent. By State, there was a considerable difference in the average payment per enrollee (Figure 3.13). Enrollees in the District of Columbia had the highest average payment ($4,024), followed by Louisiana ($3,722), Maryland ($3,665), New York ($3,525), and Pennsylvania ($3,496). In contrast, the five States with the lowest average payments per enrollee were Hawaii ($2,044), Oregon ($2,047), Minnesota ($2,186), Idaho ($2,216), and South Dakota ($2,264).
An estimated 77 percent ($77.7 billion) of all Medicare payments were for beneficiaries residing in urban areas. In the Northeast Region, about 91 percent ($22.5 billion) of all payments ($24.8 billion) were for Medicare beneficiaries residing in urban areas. Similarly, in the West Region, approximately 82 percent ($14.2 billion) of all payments ($17.2 billion) were for urban beneficiaries. There were three geographic census areas (the District of Columbia, New Jersey, and Rhode Island) that were designated entirely as metropolitan (urban) statistical areas. In contrast, for beneficiaries residing in the West North Central Division, approximately 48 percent ($3.3 billion) of Medicare payments were for rural beneficiaries. The average payment per urban enrollee was $3,166, or approximately 22 percent greater than that for rural beneficiaries ($2,590). By division, the difference in the average payment per enrollee between urban and rural areas ranged from a low of 12 percent in the Pacific Division to a high of 27 percent in the East North Central Division. The largest percent differences in payments by urban-rural residence were noted in New York and Alaska (42 percent) and in Illinois, Hawaii, and Vermont (almost 30 percent). Average payments per enrollee were higher for rural residents than for urban residents only in Connecticut, Minnesota, North Dakota, Idaho, Wyoming, Oregon, and Washington.
Medicare beneficiary cost sharing
Medicare contains a variety of cost-sharing provisions to hold down costs through deterring overutilization of health care services by making the beneficiary more sensitive to the cost of health care. In 1990, through Medicare payments and beneficiary cost sharing, an estimated $121.4 billion was spent for Medicare-covered health care services. The program paid about 83.5 percent ($101.4 billion) of the total. For HI, Medicare paid 91.2 percent ($62.3 billion) of the expenditures ($68.3 billion), and for SMI, 73.6 percent ($39.1 billion) of the expenditures ($53.1 billion). Medicare beneficiaries were responsible for cost-sharing expenses (deductible, coinsurance, and balance billing) amounting to an estimated 16.5 percent ($20.0 billion) of all program expenditures. HI cost-sharing expenses amounted to 8.8 percent ($6.0 billion) of HI expenditures. For SMI services, cost-sharing liability accounted for about 26.4 percent ($14.0 billion) of SMI expenditures. These cost-sharing expenditures do not reflect beneficiary out-of-pocket expenses for non-covered services, non-covered days, or Medicare HI or SMI premiums.
Approximately 11 percent (3.6 million) of all Medicare enrollees (34.2 million) are eligible for Medicare and Medicaid benefits (Petrie, 1992). These dually eligible persons have their Medicare deductibles and most of their coinsurance liability paid by their respective State Medicaid programs. A large proportion (about 72 percent) of Medicare enrollees purchase private health insurance policies (often called "medigap" policies) to supplement their Medicare coverage and have some or all of their deductible and coinsurance liability paid by private health insurance. Medigap policies generally do not cover balance-billing liability (i.e., the portion of an unassigned bill exceeding the Medicare-determined reasonable charge). Approximately 17 percent of all Medicare enrollees remain at full risk for cost-sharing liability (Lewin/ICF, 1989). The Medicare Catastrophic Coverage Act (MCCA) of 1988 (Public Law 100-360) would have reduced some of the cost-sharing risk and closed some of the coverage gaps in Medicare coverage; however, that legislation was repealed effective January 1, 1990. Hence, the beneficiary cost-sharing provisions reverted to those prevailing prior to the act.
Medicare cost-sharing provisions
Both the HI and SMI programs require the beneficiary to share the costs of covered health care services. Many of the HI cost-sharing provisions are based on the concept of a "benefit period." A benefit period begins with the first day of hospitalization and ends when the individual has not been an inpatient in a hospital or SNF for 60 consecutive days. There is no limit to the number of benefit periods a beneficiary may use.
Under HI, the beneficiary is required to pay an inpatient hospital deductible for each benefit period. The Secretary of Health and Human Services set the annual deductible at $592 for 1990 based on a formula specified by law; the deductible approximates the cost of 1 day of inpatient hospital care. When inpatient hospital services are received for more than 60 days during a benefit period, the beneficiary must pay a coinsurance amount for each day from the 61st through the 90th and a larger coinsurance amount for each day from the 90th through the 150th. Days in this last period are chargeable against the individual's non-renewable lifetime reserve of 60 days for inpatient hospital services. The inpatient hospital coinsurance amounts associated with these periods are equal to one-fourth and one-half, respectively, of the inpatient hospital deductible. The coinsurance amounts are annually adjusted. For covered SNF services, the beneficiary must pay a coinsurance amount for each day from the 21st through the 100th of a benefit period. The SNF coinsurance amount is defined by law as equal to one-eighth of the HI annual inpatient deductible. The cost-sharing amounts since the beginning of the program are shown in Table 3.14. The beneficiary-paid HI coinsurance amounts in 1990 were equal to:
[TABULAR DATA 3.14 OMITTED]
* One-fourth ($148) of the annual hospital deductible
for each of the 30 coinsurance days of inpatient
* One-half ($296) of the annual hospital deductible for
each of the 60 non-renewable lifetime reserve days for
inpatient hospital care.
* One-eighth ($74) of the annual deductible for each of
the 80 coinsurance days of SNF care.
Under HI, the patient is also liable for the cost or replacement of the first three pints of blood in a benefit period.
Under SMI, enrollees must pay a monthly premium ($28.60 in 1990) to be eligible for covered services. In addition, as described later, beneficiaries are liable for an annual SMI deductible, 20-percent coinsurance for covered charges for physician and physician-related services, and balance-billing amounts for unassigned physician or supplier claims.
* The SMI deductible was increased from $50 to $60 as
of January 1973 and from $60 to $75, effective
January 1, 1982. The MPPRP 1989 raised the SMI
annual deductible, effective January 1, 1991, to $100.
Until the annual deductible is met, beneficiaries are
responsible for 100 percent of allowed charges for
physician and physician-related services.
* Medicare pays 80 percent of the allowed charge (after the deductible has been met), and beneficiaries are responsible for the remaining 20-percent coinsurance amount required by law.
* Beneficiaries are also liable for physician charges resulting from balance billing on unassigned claims; that is, beneficiaries are responsible for paying the physician the difference between the physician's submitted charge and the Medicare-allowed charge on unassigned claims. (Note: Effective January 1, 1991, the MPPRP 1989 placed a limit on the amount that a physician may charge on unassigned claims.)
DEFRA established the Medicare participating physicians and suppliers program (MPP). Under MPP, physicians and suppliers are encouraged to sign a participation agreement with Medicare binding them to accept assignment for all services provided to Medicare patients for the following year. Physicians who accept assignment agree to accept the Medicare-allowed charge as payment in full. A physician or supplier who chooses not to participate in the program (non-participating physicians or suppliers) may still continue to accept assignment on a case-by-case basis. It should be noted that the Medicare-allowed charges are usually lower than the physician's submitted charges. Thus, Medicare beneficiaries may avoid a substantial balance-billing liability by choosing a participating physician or one who takes Medicare assignment.
Trends in beneficiary cost-sharing
As shown in Table 3.15, total Medicare beneficiary cost-sharing liability rose from $4.5 billion in 1977 to $20.0 billion in 1990, an AARC of 12.2 percent. HI beneficiary cost-sharing liability rose from $ 1.1 billion in 1977 to $6.0 billion in 1990, an AARC of 14.0 percent. During the same period, SMI cost-sharing liability climbed from $3.4 billion to $14.0 billion, an AARC of 11.5 percent. Beneficiary cost-sharing liability as a share of Medicare expenditures (program payments plus beneficiary cost sharing) decreased slightly during the period 1977-90. In 1977, total beneficiary liability accounted for about 18.0 percent ($4.5 billion) of all Medicare expenditures; in 1983 and 1990, the comparable figures were 17.6 percent ($11.4 billion) and 16.5 percent ($20.0 billion), respectively (Figure 3.16).
[TABULAR DATA 3.15 OMITTED]
As shown in Table 3.17, SMI coinsurance, the largest component of beneficiary cost-sharing liability, increased from $1.5 billion to $9.7 billion from 1977 to 1990, an AARC of 15.2 percent. As a share of all beneficiary cost-sharing liability, SMI coinsurance increased from 34.4 percent in 1977 to 48.7 percent in 1990. The increase in SMI coinsurance payments from 1977 to 1990 is directly related to the corresponding large increase in total SMI expenditures during this period. The SMI coinsurance rate has remained at 20 percent of the Medicare-allowed charge since the beginning of the program.
[TABULAR DATA 3.17 OMITTED]
Beneficiary cost-sharing liability for the HI deductible, the second-largest component of total liability, rose from $844 million in 1977 to $4.5 billion in 1990, representing an AARC of 13.8 percent. As a proportion of all beneficiary liability, the HI deductible liability amount increased from 18.8 percent in 1977 to 22.6 percent in 1990. The increase in the HI deductible payments during this period is related to the growth in the number of people using HI inpatient hospital services and, more significantly, to the increase in the cost of a day of care in an inpatient hospital, which provides the basis for calculating the annual HI deductible amount. The average Medicare payment for a day of inpatient hospital care rose from $144 in 1977 to $579 in 1990 (Helbing, 1992). Paralleling this rise, the HI deductible increased from $124 in 1977 to $592 in 1990, about a fivefold increase.
The cost-sharing amount paid by beneficiaries for the SMI deductible rose from $1.0 billion in 1977 to $2.0 billion in 1990, an AARC of a relatively modest 5.2 percent. The SMI deductible, as a proportion of all beneficiary cost-sharing liability, dropped from 23.4 percent in 1977 to 10.1 percent in 1990, reflecting the fact that the SMI annual deductible changed only once during the period 1977-90 (from $60 to $75, effective January 1, 1982). Most of the increase in the deductible expenditures is related to growth in the number of persons using SMI services. In a period of rising prices, the increase in the deductible did not fully reflect price changes. Persons using SMI services could meet the deductible with fewer services. Program payments were made for an increasing proportion of the services used by beneficiaries. For this reason, beneficiary cost sharing as a share of total SMI expenditures decreased from 37.0 percent in 1977 to 26.4 percent in 1990 (Table 3.15).
The HI inpatient hospital coinsurance liability rose from $171 million in 1977 to $569 million in 1990, an AARC of 9.7 percent. The share of inpatient hospital coinsurance liability relative to the total cost-sharing liability remained consistently small during this period, ranging from only about 2 to 4 percent. This reflects the structure of the Medicare HI inpatient hospital coinsurance provisions, which require beneficiaries to be in the hospital for more than 60 covered days in a benefit period before being liable for a coinsurance amount. In 1990, only about 2 percent of all Medicare beneficiaries discharged from the hospital incurred an inpatient hospital coinsurance liability (Helbing, 1993).
As shown in Figure 3.18, there was a substantial drop in HI beneficiary cost-sharing liability from 1988 ($5.0 billion) to 1989 ($3.9 billion), followed by a large increase in 1990 (to $6.0 billion). These sharp moves reflect the implementation and subsequent repeal of MCCA 1988, which was in effect for calendar year 1989 only.
MCCA represented the most significant expansion and restructuring of Medicare since its inception in 1966. The dramatic decline in beneficiary HI cost sharing during 1989 reflected the following provisions:
* Beneficiaries had to pay only a single annual HI deductible amount ($564 in 1989).
* All beneficiary HI inpatient hospital coinsurance liability was eliminated.
* Beneficiaries had to pay a SNF coinsurance amount of only $25.50 per day for the first 8 covered days of SNF care during a stay.
Specifically, from 1988 to 1989, the inpatient hospital deductible amount decreased from $4.0 billion to $3.6 billion, the SNF coinsurance amount decreased from $331 million to $236 million, and the inpatient hospital coinsurance payments decreased from $671 million to $60 million. Although MCCA removed the inpatient hospital coinsurance, the coinsurance payments shown in 1989 represent a coinsurance liability incurred in 1988 by beneficiaries discharged from an inpatient hospital in 1989.
The most notable impact of the MCCA was on beneficiary cost sharing for the use of SNF services. The MCCA provisions precipitated a dramatic increase in Medicare SNF utilization during 1989. The unprecedented expansion in Medicare SNF payments (from $0.8 billion to $2.9 billion) under MCCA reflected an increase in the number of certified beds and admissions, reduction of coinsurance requirements, increased use of covered days of care, and longer lengths of stay. The changes in SNF coverage guidelines in 1988 (prior to MCCA) also contributed to the increase in SNF payments. As a result, even with the repeal of MCCA in 1989, Medicare SNF payments remained at a level ($2.0 billion) more than twice the amount recorded for 1988. With the termination of MCCA effective January 1, 1990, the Medicare SNF law reverted to the coverage and cost-sharing provisions in effect during 1988. This combination of changes produced the significant increase in SNF coinsurance liability from 1989 to 1990 (from $236 million to $892 million).
The Medicare HI inpatient hospital deductible and coinsurance amounts registered in 1990 were found to be comparable to those recorded in 1988. That is, the HI deductible amount rose from $4.0 billion in 1988 to $4.5 billion in 1990, and the HI coinsurance amount dropped from $671 million in 1988 to $569 million in 1990, reflecting, most likely, a drop in the proportion of discharges that involved coinsurance liability and a decrease in the average length of stay.
Liability by demographic characteristics
An estimated 27.1 million Medicare beneficiaries, or 79 percent of all Medicare enrollees, used covered Medicare services and incurred cost-sharing liability (deductible, coinsurance, and balance billing) amounting to $20.0 billion during 1990. The average liability incurred per beneficiary with any liability was $737 (Table 3.19).
[TABULAR DATA 3.19 OMITTED]
The amount of liability differed with the sex of the beneficiary. Total liability for covered services was considerably higher for females ($11.4 billion) than males ($8.5 billion) because three-fifths of all Medicare enrollees with any liability during 1990 were female. As shown in Figure 3.20, a higher proportion of females (827 per 1,000 enrollees) incurred cost-sharing liability than males (744 per 1,000). Males, on the other hand, incurred a higher average cost-sharing liability than females ($793 versus $701).
Medicare cost-sharing liability varied considerably with the age of the beneficiary for persons 65 years of age or over. The proportion of enrollees with liability was substantially less for beneficiaries age 65 to 74 (738 per 1,000 enrollees) than for beneficiaries age 85 or over (897 per 1,000 enrollees), a difference of 22 percent. Similarly, the average liability per person for the younger beneficiaries ($650) was substantially less than that for the older beneficiaries ($869).
The number of beneficiaries incurring cost-sharing liability and the average liability per beneficiary varied slightly by race. A higher proportion of white beneficiaries (800 per 1,000 enrollees) incurred Medicare cost-sharing liabilities than did beneficiaries of all races other than white (753 per 1,000). On the other hand, of all races other than white beneficiaries incurred a somewhat higher average liability than did white beneficiaries ($822 versus $73 1).
The average cost-sharing liability for urban beneficiaries ($768) was about 16 percent higher than for rural beneficiaries ($664). Rural beneficiaries (795) incurred cost-sharing liabilities at a slightly higher rate per 1,000 enrollees than did urban beneficiaries (781).
Because of the high costs associated with renal dialysis, the average cost-sharing liability for beneficiaries with ESRD was significantly higher than for aged or disabled beneficiaries. The average cost-sharing liability for beneficiaries with ESRD was $5,040, or about seven and eight times higher, respectively, than that for aged ($717) and disabled ($665) beneficiaries without ESRD. The proportion of beneficiaries with ESRD who received services (992 per 1,000 enrollees) was about 25 percent and 30 percent higher, respectively, than that for aged (794) and disabled (763) beneficiaries without ESRD.
There was substantial variation in Medicare beneficiary cost-sharing liability during 1990 by area of residence. As shown in Table 3.21, an estimated 34.8 percent (9.4 million) of all beneficiaries incurring cost-sharing liability resided in the South Region. The North Central and Northeast Regions accounted for 25.2 percent (6.8 million) and 22.7 percent (6.1 million), respectively, of all beneficiaries with cost-sharing liability; the West Region accounted for 16.4 percent (4.4 million). In each region other than the West, the proportion of enrollees incurring Medicare cost-sharing liabilities was greater than their share of Medicare enrollment.
[TABULAR DATA 3.21 OMITTED]
The number of beneficiaries incurring cost-sharing liability was concentrated in several States. Five States--California (8.6 percent), New York (7.6 percent), Florida (6.9 percent), Pennsylvania (6.0 percent), and Texas (5.4 percent)--accounted for more than one-third (9.3 million) of all beneficiaries with liability and 37.3 percent ($7.4 billion) of total Medicare beneficiary cost-sharing liability. The average liability for beneficiaries incurring liability in these States was $796, or about 8 percent higher than the national average ($737).
The average cost-sharing liability per person, by State of residence, was highest in the District of Columbia ($928), New Jersey ($827), New York ($827), Florida ($817), Louisiana ($809), and California ($808). On the other hand, the lowest average cost-sharing liabilities were recorded in Vermont ($533), Maine ($562), South Carolina ($581), Utah ($584), and Nebraska ($586). The average cost-sharing liability in the District of Columbia was 74 percent higher than in Vermont. The highest average liabilities per person were concentrated in the Northeast. Figure 3.22 shows the State distribution of the average cost-sharing liabilities incurred by program beneficiaries.
Type and amount of liability
In 1990, HI accounted for an estimated 61 percent ($62.3 billion) of all Medicare payments ($101.4 billion) but for only 30 percent ($6.0 billion) of all beneficiary cost-sharing liability ($20.0 billion). Conversely, SMI accounted for 39 percent ($39.1 billion) of all payments and 70 percent ($14.0 billion) of beneficiary cost-sharing liability. This pattern reflects substantial differences in the cost-sharing structure of the HI and SMI programs.
Under HI, as shown in Table 3.23, an estimated 6.5 million beneficiaries, or 24 percent of all Medicare beneficiaries, incurred HI cost-sharing liability. Total HI cost-sharing liability amounted to $6.0 billion or an average liability of $921 per person. The inpatient hospital deductible accounted for about 75 percent ($4.5 billion) of all HI cost-sharing liability; HI coinsurance was responsible for only 25 percent ($1.5 billion). This reflects the Medicare HI cost-sharing provisions by which beneficiaries who are hospitalized must pay a deductible for each benefit period, but thereafter no coinsurance is required until the 61st day of a hospital stay (or the 21st day of a SNF stay).
[TABULAR DATA 3.23 OMITTED]
Under SMI, 27.0 million Medicare beneficiaries used covered services and incurred cost-sharing liability during 1990 amounting to $14.0 billion, an average liability of $519 per person. The SMI annual deductible accounted for only an estimated 14 percent ($2.0 billion) of all SMI cost-sharing liability. SMI coinsurance, on the other hand, accounted for 70 percent ($9.7 billion) of all SMI liability; balance-billing liability was responsible for 16 percent ($2.2 billion). These figures reflect the SMI copayment provisions by which beneficiaries are responsible for only one SMI deductible each year ($75 in 1990) but thereafter are liable for a 20-percent coinsurance amount on the Medicare-allowed charge for each SMI claim rendered during the year. In addition, beneficiaries are responsible for paying the difference (balance billing) between the physician's submitted charge and the Medicare-allowed charge on unassigned claims.
Most enrollees experience relatively small annual cost-sharing liabilities. However, a number of Medicare enrollees each year remain at risk for a substantial amount of beneficiary cost-sharing liability. As shown in Figure 3.24, in 1990, Medicare beneficiaries with less than $500 in cost-sharing liability accounted for about 64.1 percent (17.3 million) of all beneficiaries with cost-sharing liability (27.1 million). This cohort accounted for only 16.5 percent ($3.3 billion) of all beneficiary liability. In contrast, the remaining 35.9 percent (9.7 million) of the beneficiaries with cost-sharing liability were responsible for 83.5 percent ($16.7 billion) of the total beneficiary liability. Beneficiaries incurring more than $5,000 in cost-sharing expenses accounted for only 1.5 percent (404,900) of the persons with liability but were responsible for 16.2 percent ($3.2 billion) of all liability.
The average liability for beneficiaries with less than $500 in cost-sharing liability was $190 per person, and the average for beneficiaries with more than $5,000 in liability was $7,973 per person. For beneficiaries with more than $15,000 in cost-sharing liability, the average liability was $21,119 per person.
Liability by type of coverage
As shown in Table 3.25, total Medicare expenditures (program payments plus beneficiary cost-sharing liability) amounted to an estimated $121.4 billion in 1990. Medicare paid 83.5 percent ($101.4 billion) of the total expenditures incurred by beneficiaries for covered services. By type of coverage, Medicare paid for 91.2 percent ($62.3 billion) of all HI expenditures ($68.3 billion) and 73.7 percent ($39.1 billion) of all SMI expenditures ($53.0 billion).
[TABULAR DATA 3.25 OMITTED]
Total beneficiary cost-sharing liability amounted to 16.5 percent ($20.0 billion) of total Medicare expenditures. Most of this beneficiary liability ($14.0 billion) occurred under the SMI program. Some of the beneficiary cost-sharing liability is paid by Medicare supplemental private insurance (medigap) policies and some is paid through State Medicaid programs, with the balance representing beneficiary out-of-pocket expenses. Approximately 17 percent of the aged Medicare population has neither medigap nor Medicaid coverage and, as such, is at full risk for Medicare cost-sharing liability (Lewin/ICF, 1989).
An estimated 7.1 million enrollees (or 20.8 percent of all Medicare enrollees) did not incur any Medicare expenditures during 1990. Another 9.8 million beneficiaries (28.5 percent) incurred total expenditures of less than $500 for services, and their average expenditure was $251 per beneficiary. In contrast, about 9.7 million beneficiaries (28.4 percent of all enrollees) incurred $2,000 or more in total expenditures; their average expenditure was $11,449 per beneficiary. Beneficiaries with $15,000 or more in expenditures for covered services represented only 6.3 percent (2.2 million) of all enrollees, but they accounted for 53.6 percent ($65.1 billion) of all expenditures, 56.6 percent ($57.4 billion) of all program payments, and 38.9 percent ($7.8 billion) of all cost-sharing liability. The average total expenditure for this group was $30,008 per beneficiary.
About 26.6 million HI enrollees (or 78.9 percent of all HI enrollees) incurred no HI program expenditures during 1990. However, about 89 percent (6.4 million) of those beneficiaries who received HI (7.1 million) services incurred expenditures of $2,000 or more. These HI beneficiaries accounted for 98.8 percent ($67.5 billion) of all HI expenditures and had an average expenditure of $10,608 per person. Beneficiaries with $15,000 or more in HI expenditures, representing only 3.7 percent (1.3 million) of all HI enrollees, accounted for 52.3 percent ($35.7 billion) of total expenditures, 53.7 percent ($33.5 billion) of all program payments, and 37.3 percent ($2.2 billion) of all cost-sharing liability; their average total expenditure was $28,279 per beneficiary.
About 5.7 million SMI enrollees (or 17.4 percent of all SMI enrollees) incurred no SMI program expenditures during 1990. Another 10.1 million beneficiaries (31.0 percent of all SMI enrollees) incurred expenditures ranging from $1 to $499; their average expenditure was $253 per beneficiary. In direct contrast to the HI program, nearly four-fifths (25.2 million) of all SMI enrollees had no SMI expenditures or SMI expenditures of less than $2,000; this cohort accounted for only 23.5 percent ($12.5 billion) of all SMI expenditures, an average of $494 per person. Beneficiaries with $15,000 or more in SMI expenditures (representing 0.9 percent of all SMI enrollees) accounted for 13.0 percent ($6.9 billion) of all SMI expenditures, 13.6 percent ($5.3 billion) of all SMI payments, and 11.2 percent ($1.6 billion) of all SMI cost-sharing liability. Their average expenditure was $23,899 per beneficiary.
As previously noted, the HI beneficiary is responsible for paying an inpatient hospital deductible for each benefit period. As shown in Table 3.26, during 1990, an estimated 6.6 million beneficiaries were discharged from inpatient hospitals and incurred 7.7 million HI deductibles, an average of 1. 16 deductibles per person. The total HI deductible liability amounted to $4.5 billion, an average of $681 per person.
[TABULAR DATA 3.26 OMITTED]
An estimated 1.1 million beneficiaries, representing 16.4 percent of all persons discharged from inpatient hospitals, had two or more HI deductibles during 1990. These beneficiaries had a total of 2.3 million HI deductibles and were responsible for deductible liability amounting to $1.4 billion, an average liability of $1,254 per person.
Under HI, beneficiaries do not incur inpatient hospital coinsurance or lifetime-reserve cost-sharing liability until hospital services are received for more than 60 covered days of care during a benefit period. As shown in Table 3.27, an estimated 134,580 beneficiaries, or about 2.0 percent of all persons (6.6 million) discharged from inpatient hospitals during 1990, incurred HI coinsurance liability. These persons incurred 3.1 million cost-sharing days and an estimated $569 million in HI coinsurance and lifetime-reserve cost-sharing liabilities, an average of $4,225 per person.
[TABULAR DATA 3.27 OMITTED]
Among the persons incurring coinsurance and lifetime-reserve liabilities, an estimated 61.6 percent (82,490) had 61-90 covered days of inpatient hospital care during 1990. The average number of cost-sharing days for this group was 13.4 days per person, and their average liability was $2,021 per person. Beneficiaries with more than 90 covered days of care (44,780) accounted for 33.2 percent of all persons with coinsurance and/or lifetime-reserve liability. Their average number of cost-sharing days was 42.3 days and their average cost-sharing liability was $8,683. The remaining 5.2 percent (6,860) of persons with cost-sharing days had fewer than 61 covered days of care during 1990; their average number of cost-sharing days and average liability was 7.3 days per person and $1,765 per person, respectively. This cohort represents beneficiaries discharged from an inpatient hospital during 1990 but whose benefit period began during the previous year and included cost-sharing days of care from a related stay.
SNF beneficiaries must pay a coinsurance amount for each covered SNF day after the 20th and through the 100th day of a benefit period. As shown in Table 3.28, an estimated 640,820 beneficiaries (approximately 10 percent of all persons discharged from inpatient hospitals during 1990) used Medicare SNF services during 1990. More than 50 percent (321,680) of all SNF beneficiaries incurred coinsurance liability amounting to $891.8 million, an average of $2,772 per person with liability. These beneficiaries used 12.0 million SNF coinsurance days, an average of 37.3 days per person.
[TABULAR DATA 3.28 OMITTED]
Nearly 50 percent (320,140) of all persons using covered SNF services had less than 21 covered days of care during 1990. Based on the SNF cost-sharing provisions, these beneficiaries should have incurred no coinsurance liability during their stays in the SNF during 1990; however, a small number (1.4 percent) of the persons in this cohort incurred some coinsurance liability from a related stay in 1989 that occurred during the same benefit period. About 14.3 percent (91,620) of the persons with SNF covered services had 81 or more covered days of care during the year and incurred coinsurance liability amounting to $529.5 million.
Under SMI, beneficiaries are responsible for paying the difference (balance billing) between the physician's submitted charge and the Medicare-allowed charge on unassigned physician and supplier claims. MPPRP 1989 established a limit on the amount that a physician can charge Medicare beneficiaries on unassigned claims. This limit is being phased in over a 3-year period beginning January 1, 1991. By 1993, a physician will not be allowed to charge a Medicare beneficiary more than 115 percent of the reduced amount listed in the Medicare fee schedule for non-participating physicians (or 109.25 percent of the non-reduced amount listed in the fee schedule).
As shown in Table 3.29, of the beneficiaries using SMI covered services in 1990 (26.4 million), an estimated 13.6 million persons (51.4 percent) experienced some balance-billing liability during 1990. Their total liability amounted to $2.2 billion, an average of $164 per person with liability. An estimated 84.9 percent (11.5 million) of the SMI beneficiaries with balance-billing liability incurred a liability of less than $250, an average liability of $56 per person. In contrast, approximately 3 percent (408,120) of the beneficiaries with a balance-billing liability incurred a liability of $ 1, 000 or more and accounted for more than 35.4 percent ($789.0 million) of the total balance-billing liability; their average liability was $1,934 per person.
[TABULAR DATA 3.29 OMITTED]
As previously noted, MPPRP established a limit, effective January 1, 1991, on the balance-billing liability for unassigned physician and supplier claims. A simulated balance-billing cap of 109.25 percent in 1990 would have saved Medicare beneficiaries an estimated $1.4 billion in balance-billing liabilities. That is, the total balance-billing liability under the cap would have amounted to $831.5 million, instead of $2.2 billion; the average amount of balance-billing liability would have been reduced by about $61 per person.
Arnett, R.H., III, Cowell, C.S., Davidoff, L.M., and Freeland, M.S.: Health spending trends in the 1980's: Adjusting to financial incentives. Health Care Financing Review 6(3):1-26. HCFA Pub. No. 03198. Office of Research and Demonstrations, Health Care Financing Administration. Washington. U.S. Government Printing Office, Spring 1985. Health Care Financing Administration: Medicare Physician Payment: Report to Congress, FY 1989. HCFA Pub. No. 03287. Office of Research and Demonstrations. Washington. U.S. Government Printing Office, Oct. 1989. Health Care Financing Administration: Understanding the Medicare Physician Fee Schedule and Related Practitioner Payments. Washington. U.S. Government Printing Office, Nov. 1991. Health Care Financing Administration: Board of Trustees Hospital Insurance Trust Fund Report. Baltimore, MD. 1992. Helbing, C.: Hospital insurance short-stay hospital benefits. Health Care Financing Review 1992 Annual Supplement. Pp. 55-96. HCFA Pub. No. 03334. Office of Research and Demonstrations, Health Care Financing Administration. Washington. U.S. Government Printing Office, Oct. 1993. Levit, K.R., Lazenby, H.C., Cowan, C.A., and Letsch, S.W.: National health expenditures, 1990. Health Care Financing Review 13(l):29-54. HCFA Pub. No. 03321. Office of Research and Demonstrations, Health Care Financing Administration. Washington. U.S. Government Printing Office, Fall 1991. Lewin/ICF: The Health Care Financing System and the Uninsured. Washington, DC. Dec. 22, 1989. Petrie, J. and Silverman, H.A.: Medicare enrollment. Health Care Financing Review 1992 Annual Supplement. Pp. 13-22. HCFA Pub. No. 03334. Office of Research and Demonstrations, Health Care Financing Administration. Washington. U.S. Government Printing Office, Oct. 1993. Riley, G., Lubitz, J., Prihoda, R., and Stevenson, M.A.: Changes in distribution of Medicare expenditures among aged enrollees, 1969-82. Health Care Financing Review 7(3):53-63. HCFA Pub. No. 03222. Office of Research and Demonstrations, Health Care Financing Administration. Washington. U.S. Government Printing Office, Apr. 1986.
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|Title Annotation:||Medicare and Medicaid Statistical Supplement|
|Publication:||Health Care Financing Review|
|Date:||Jan 1, 1992|
|Previous Article:||Medicare enrollment.|
|Next Article:||Hospital insurance short-stay hospital benefits.|