The Aordable Care Act: Before and Aer
Before the ACA Aer the ACA
Medicare Drug and Health Benets
Over three million beneciaries per year reached the Medicare
prescripon drug coverage gap, also known as the “doughnut
hole,” requiring them to pay for 100 percent of the cost of their
drugs. People in the doughnut hole somemes skipped doses,
split their pills, or didn’t take any medicaons altogether because
of the high costs of their drugs.
Beneciaries with Original Medicare were required to pay 20
percent of the cost of most prevenve services out of pocket.
Medicare Advantage plans could charge what they wanted for
prevenve services.
Medicare covered a one-me Welcome to Medicare visit during
the rst 12 months of Medicare enrollment.
Private Medicare health plans, also known as Medicare Advantage
plans, must cover all health services that Original Medicare covers,
but they can require beneciaries to pay more for certain services.
Medicare Advantage plans were not restricted in how much they
spent on administrave costs such as prots versus actual medical
services.
The Aordable Care Act will eliminate the coverage gap or
“doughnut hole” in Medicare prescripon drug coverage by
phasing it out over me. Each year the share of costs paid by
consumers for both generic and brand-name drugs in the coverage
gap will decrease unl it reaches 25 percent—the share people
pay before they hit the gap—in 2020. In 2012, people who reach
the coverage gap will receive a 50 percent discount on brand name
drugs and a 14 percent discount on generic drugs. Last year over
three million people beneted from lower drug costs.
Under both Original Medicare and Medicare Advantage plans,
most prevenve care services are free of charge to beneciaries,
meaning you won’t have to pay a co-pay, coinsurance or deducble
when you receive a service. Some examples of the prevenve
services that now have no cost sharing include mammograms,
certain colonoscopies, prostate cancer screenings, depression
screenings, obesity screenings and counseling, diabetes screenings
and screenings for heart disease. In 2011, over 20 million people
with Medicare received free prevenve services.
The Aordable Care Act added an Annual Wellness Visit with a
primary care provider to the Medicare benet. Beneciaries are
entled to this visit every year, and Medicare pays for the full
cost of the visit. While not a head-to-toe physical, the annual
wellness visit will allow you to meet with your doctor to develop a
prevenon plan based on your needs. For example, providers may
provide a health risk assessment, which is a quesonnaire that
looks at your health status, injury risks, and urgent health needs.
Providers will also take and update family and medical histories,
make a list of beneciaries’ medicaons, and create a schedule for
prevenve services.
Though Medicare Advantage plans must sll provide all benets
that Original Medicare provides and can charge more for some
services, Medicare plans cannot charge more than Original
Medicare for specic services such as chemotherapy and dialysis.
This will help plans from discriminang against beneciaries with
serious health condions such as cancer. Under the Aordable
Care Act, beginning in 2014, plans must spend at least 85 percent
of revenue on medical services for plan members, instead of prots
and markeng costs.
Before the ACA
Aer the ACA
Strengthening Medicare’s Financial Outlook
The Medicare Hospital Trust Fund was due to become insolvent in
2016.
The Aordable Care Act extended the solvency of the Medicare
Hospital Trust Fund for an addional 8 years, unl 2024.
The U.S. Department of Health and Human Services
(which administers Medicare) and the U.S. Department of Jusce
used “pay and chase” methods to detect and prosecute waste,
fraud and abuse. This meant Medicare would oen pay bills and
then try to recollect payments for fraudulent claims aer the fact.
In 2008, the government recovered $2.14 billion in fraudulent
Medicare payments.
Medicare paid Medicare private (Medicare Advantage) plans 9
percent more per enrollee than it cost to provide care for the
same person under Original Medicare.
Individuals earning over $85,000 and couples earning over
$170,000 pay higher Part B premiums but do not pay higher Part D
Medicare drug plan premiums.
The Aordable Care Act strengthens Medicare prepayment review
processes to prevent fraud, waste and abuse. The law increases
coordinaon between the U.S. Department of Health and Human
Services, U.S. Department of Jusce, and state governments
to detect fraud and expands government authority to suspend
payment for services or items during fraud invesgaons. In
addion, the law strengthens penales on providers who engage in
fraud, waste and abuse. In 2011, the government recovered $4.1
billion in fraudulent Medicare payments.
Over a number of years, the Aordable Care Act will gradually
reduce payments to Medicare private insurance companies to
bring them more in line with costs under Original Medicare.
Medicare private health plans will sll be required to provide
coverage that is at least as good as Original Medicare.
In addion to paying higher Part B premiums, individuals earning
over $85,000 and couples earning over $170,000 will pay higher
Part D Medicare drug plan premiums.
The law slows annual increases in Medicare payments to hospitals,
skilled nursing facilies and home health agencies to encourage
greater eciency. The law does not cut payments to Medicare
providers and actually increases payments for primary care.
The law establishes an Independent Payment Advisory Board to
implement policies that will slow Medicare spending. If Congress
takes no acon, recommendaons made by the board could
occur automacally. However, the board cannot change Medicare
eligibility or reduce benets for beneciaries.
Before the ACA
Aer the ACA
Quality of Care Under Medicare
While Medicare measured plan quality, plans would be paid under
the same formula regardless of their quality.
Medicare pays providers for the quanty of care provided
to paents, but not the quality of care. Medicare provider
payments do not encourage or reward providers who do beer
at coordinang their paents’ care or communicang with their
paents’ other providers about their care.
High quality Medicare Advantage plans will receive extra bonus
payments to encourage private plans to increase the quality of care
they provide to enrollees.
The Aordable Care Act tests a variety of delivery system reforms
and care models to improve care quality and care coordinaon
by promong beer communicaon and coordinaon among
providers, paents and caregivers to help prevent problems like
harmful drug interacons, unnecessary hospitalizaons, conicng
diagnoses and failures to connect people with community based
services that can help them manage their health. For example,
the law lowers payments to hospitals with high readmission rates
to create incenves for hospitals to help people get the care they
need aer they leave the hospital, so they don’t need to go back.
Another program involves Accountable Care Organizaons (ACOs).
Accountable Care Organizaons are teams of doctors, hospitals
and other providers that work together to coordinate paents’
care. The law rewards Accountable Care Organizaons that slow
spending growth and meet quality performance standards. It
is important to note that providers enroll in Accountable Care
Organizaons, paents do not and Medicare beneciaries under
Original Medicare will sll be able to see any Medicare provider
they choose. Other policies boost incenves for providers to
report on dierent quality measures, including quality measures
that account for the paent’s experience.