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Insurers want Medicare Levy surcharge hike

by Joanna Mather

Private health funds want wealthy Australians who refuse to take out basic hospital cover to be hit with a surcharge of up to 2 per cent.

The call comes despite the fact the number of individuals paying the surcharge hit a record low of 164,535 in 2014-15, the latest figures available.

Singles earning more than $90,000 a year who do not have private health insurance pay the Medicare levy plus a surcharge of up to 1.5 per cent. The threshold for families is $180,000. The surcharge is meant to encourage people into the private system and therefore ease public costs.

Private Healthcare Australia wants the surcharge increased by 50 basis points, which would lift the top rate from 1.5 per cent to 2 per cent.

“Bracket creep in combination with premium increases for some people has resulted in the surcharge…being less than the additional tax, the result being that, over time, individuals and families may choose to pay the surcharge rather than hold private health insurance,” the submission says.

Yet Australian Tax Office data included in the submission shows the number of individuals paying the surcharge has never been lower.

Numbers peaked at 680,000 in 2006-07 and have since dropped back to levels not seen since the scheme was introduced in 1997-98.

The average surcharge amount per person rose from $865 in 2009-10 to $1331 in 2014-15.

“Average [Medicare Levy surcharge] expenditure per individual only increased by 1.1 per cent to $1331 in 2014‐15 compared to previous 12 months. This compares with wages growth rate of around 2.3 per cent in 2014‐15,” the submission says.

Bupa, Australia’s largest health fund, agrees the surcharge needs to be lifted but has not said by how much.

Bupa private health insurance managing director Dwayne Crombie said at existing levels the surcharge was no longer a big enough “stick”.

“The government should reassess what the original policy intent was, and [the levy] would almost certainly have to be higher as a percentage to have the same effect,” he said.

Private Healthcare Australia has also urged the government to crack down on “fraud, waste and low-value care”, which it estimates is costing the health system more than $1 billion a year.

“The key problem with the current compliance process is it relies heavily on the retrospective pursuit of financial gains by practitioners with the goal of recovering costs,” the submission says.

“This is cumbersome, involves long‐drawn‐out legal and administrative processes and is only occasionally successful.”

Data matching could be better used, Private Healthcare Australia says.

“In 2014‐15, the Department of Human Services recovered only 20 per cent of Medicare debts that year due to incorrect claiming, inappropriate practice or fraud.

“PHA believes there is considerable scope to improve Medicare Benefits Schedule compliance using modern data analytics to provide feedback to health professionals generating MBS claims.”


Paul Ryan admits no Social Security, Medicare, Medicaid cuts in 2018

paul ryanPaul Ryan.Win McNamee/Getty Images

  • House Speaker Paul Ryan has long wanted to enact entitlement reforms through cuts to Medicaid, Medicare, and Social Security.
  • Ryan said in December that he wanted to tackle the issue in 2018.
  • On Friday, Ryan admitted that these programs would not see changes in the upcoming legislative year.

House Speaker Paul Ryan on Friday admitted that his biggest “wish list” item isn’t likely to happen in 2018.

Ryan has long wanted to enact reforms to entitlement programs — which usually takes the form of cuts to Medicaid, Medicare, and Social Security. But at an event in Wisconsin on Friday, he said entitlements wouldn’t be addressed by Congress this year.

“I don’t see us tackling it this year,” Ryan said.

Ryan said throughout December that he was hoping to get entitlement reform done in 2018, but there was little appetite from other Republican leaders and President Donald Trump heading into a midterm election year.

The Wisconsin Republican said the GOP’s slim 51-to-49 majority in the Senate prevents any significant overhaul because Democrats are not on board and could filibuster any cuts. Also, Ryan said, any bill dealing with Social Security can’t go through the process of budget reconciliation, which allows a bill to pass the chamber with a simple majority.

Given that reality, Ryan said Democrats have to be on board with any changes to the three major programs.

“No matter what you do you’re going to have to find bipartisan consensus to fix these thorny, long-term problems, and we don’t have that right now,” Ryan said.

In addition to the tricky congressional calculus, Trump promised during the 2016 presidential election that there would be no cuts to the programs. He was hesitant to support entitlement reform measure during a press conference with Republican leaders at their Camp David policy summit.

Ryan said that while the issue won’t be addressed in the short-term, he stressed the need to address them in the future because they are “going bankrupt,” a characterization disputed by some policy experts.

“I would like to find a way — and I don’t know what exactly that’s going to be — how do we get bipartisan consensus to fix these looming, debt problems we’ve got on the horizon,” Ryan said.

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Ask the Expert: Guidelines on starting Medicare coverage

I’ll turn 65 this year. As a retiree, I currently receive medical benefits from my former employer. I know that at 65, Medicare becomes my primary coverage. I’m told to apply three months before my birthday. What’s the procedure? Also, I’m currently receiving Social Security benefits as a widower.

If you already receive Social Security benefits, you don’t have to do anything. You’ll automatically be enrolled in Medicare when you turn 65.

People who are not yet receiving Social Security must telephone Medicare at 800-633-4227 to enroll. Those for whom Medicare will become primary health insurance at 65 — and that includes people who currently have retiree medical benefits from a former employer — have a six-month Medicare enrollment window. The window opens three months before their 65th birthday and ends three months after that birthday. It’s smart to sign up at least one month before turning 65 because Medicare starts the month after you enroll.

As a current Social Security beneficiary, you’ll receive a letter from Medicare three months before your 65th birthday saying you’ve been automatically enrolled in Medicare Part A (for hospital coverage) and Part B (for doctors’ services). Part A is free. The letter will explain that your monthly Part B premium will be automatically deducted from your Social Security check.

You’ll also be given the option to turn down Medicare Part B, but that only makes sense for 65-year-olds who have alternative primary health insurance through their own or their spouse’s current employment at a company with more than 20 workers. In your case, as you already know, you’ll need Part B because retiree coverage becomes secondary when you turn 65.

Social Security beneficiaries are automatically enrolled in Medicare at 65.


By Lynn Brenner


GREG DILL: How Medicare covers mental health services

Let’s hope it never happens, but there may come a time in your life when you need mental health care. Your Medicare covers a wide variety of such services, in both hospital inpatient and outpatient settings.

If you have Medicare Part A (hospital insurance), you’re eligible for mental health services when you’re admitted to a hospital as an inpatient. You can get these services either in a general hospital or a psychiatric hospital that only cares for people with mental health conditions.

If you’re in a psychiatric hospital (instead of a general hospital), Part A only pays for up to 190 days of inpatient psychiatric hospital services during your lifetime.

Medicare pays for inpatient hospital stays on the basis of “benefit periods.” A benefit period begins the day you’re admitted to a hospital as an inpatient. It ends when you haven’t received any inpatient care for 60 days in a row.

If you go into a hospital after one benefit period has ended, a new benefit period begins. You must pay the inpatient hospital deductible ($1,340 in 2018) for each benefit period.

There’s no limit to the number of benefit periods you can have. But remember, there’s a lifetime limit of 190 days for inpatient psychiatric hospitals.

After you pay the deductible, Medicare covers inpatient hospital care for the first 60 days with no coinsurance on your part for each benefit period.

For days 61-90, your coinsurance is $335 per day of each benefit period.

If you’re in the hospital beyond 90 days, your coinsurance is $670 per “lifetime reserve day” for each benefit period (you have up to 60 reserve days over your lifetime).

In addition, you’ll pay 20 percent of the Medicare-approved amount for mental health services you get from doctors and other providers while you’re a hospital inpatient.

Your Medicare Part B (medical insurance) covers partial hospitalization in some cases. 

Partial hospitalization provides a structured program of outpatient psychiatric services as an alternative to inpatient psychiatric care. It’s more intense than care you get in a doctor’s or therapist’s office. This treatment is provided during the day and doesn’t require an overnight stay.

Medicare helps cover partial hospitalization services when they’re provided through a hospital outpatient department or community mental health center. Along with partial hospitalization, Medicare may cover occupational therapy that’s part of your mental health treatment and/or individual patient training and education about your condition.

Medicare only covers partial hospitalization if the doctor and the partial hospitalization program accept Medicare as full payment.

For Part B to cover a partial hospitalization program, you must meet certain requirements, and your doctor must certify that you would otherwise need inpatient treatment.

Under Part B, you pay a percentage of the Medicare-approved amount for each service you get from a doctor or other qualified mental health professional if they accept Medicare rates.

You also pay coinsurance for each day of partial hospitalization services provided in a hospital outpatient setting or community mental health center. The Part B deductible ($183 in 2018) applies as well.

Your doctor or other health care provider may recommend you get services more often than Medicare covers. Or they may recommend services that Medicare doesn’t cover. If this happens, you may have to pay some or all of the costs. It’s important to ask questions so you understand why your doctor is recommending certain services and whether Medicare will pay for them.

All of the above applies to people with Original Medicare. If you’re in a Medicare Advantage (Part C) health plan, check with the plan for details of how it covers mental health care.

For more information on your Medicare mental health benefits, I recommend this Medicare-mental health brochure at . Look for it under the “publications” tab. 

Greg Dill is Medicare’s regional administrator for Arizona, California, Nevada, Hawaii, and the Pacific Territories. You can always get answers to your Medicare questions by calling 1-800-MEDICARE (1-800-633-4227).


ACOs flock to Medicare Shared Savings Program

Dive Brief:

Dive Insight:

The sharing savings program lets providers and hospitals earn a bonus if they meet spending and quality targets, in an effort to improve care coordination and lower healthcare costs. ACOs in the program now include about 10.5 million Medicare beneficiaries, an increase from 9 million in 2017.

“This growth is an encouraging sign that more ACOs are preparing to take on risk, but it’s vital to recognize all the time and effort for these ACOs to be ready to assume risk. We need to continue to improve the ACO program as a whole to provide the stability and demonstrated success necessary for ACOs to feel confident to enter into these risk-based ACO models.”

So far, results from ACOs have been mixed, but there have been notable successes. A recent analysis from the focusing on the first three years showed that most ACOs in the program reduced spending and improved care quality.

The report found that the groups cut spending by a total of $3.4 billion in the three years studied for a net reduction of nearly $1 billion, but also discovered large differences between an ACO’s success. About half of the reduction came from 36 ACOs, and three in that group were responsible for a quarter of that amount.

The inspector general report also found the highest performing ACOs usually have sicker beneficiaries and were more likely to include only physicians. ACOs also, on average, had better quality scores than fee-for-service providers in more than 80% of 33 individual measures.

The most improved quality measures were in areas like flu vaccines, depression screening, fall risk and body mass index, according to the report. 

Recommended Reading:

  • Healthcare Finance News CMS: Medicare adds 124 ACOs for 2018
  • Modern Healthcare More Medicare ACOs will take on risk in 2018