DHHS Eagle graphic
ASL Header
Mission Nav Button Division Nav Button Grants Nav Button Testimony Nav Button Other Links Nav Button ASL Home Nav Button
US Capitol Building
HHS Home
Contact Us
dot graphic Testimony bar

This is an archive page. The links are no longer being updated.

Testimony on 1998 Medicare Budget by Bruce C. Vladeck, Ph.D.
Administrator, Health Care Financing Administration
U.S. Department of Health and Human Services

Before the House Committee on Ways and Means, Subcommittee on Health
February 13, 1997


Mr. Chairman, I am pleased to have the opportunity to present the Administration's plan for modernizing Medicare. I am enthusiastic about the initiatives we have undertaken to ensure that Medicare is strengthened for the 38 million Americans who depend upon it, offers the best possible medical care, and enters the next century in robust condition.

We think it is important to put a human face on the equation and to be fully aware of the serious impact such proposals would have on Americans least able to bear these additional cost burdens. Although only 10-12% of Medicare beneficiaries fall below the Federal poverty line, nearly 75% have incomes below $25,000. [CHART #I] Medicare is often described as a middle-class benefit, but beneficiaries are middle class precisely because they have Medicare. Recent data indicates that the elderly already spend a formidable 2 1 % of their income on health care, compared to 8% spent by the non-elderly.[CHART #2]

The Medicare provisions in the president's FY 1998 Budget have two p goals: (1) to extend the life of the Medicare Trust Fund into the next decade, which will contribute to reduction of the deficit; and (2) to modernize Medicare. Through sound judgment and careful planning, we can guarantee that the Medicare program of the future will continue to provide the same protections to the elderly and disabled as it does today.


Under present law, the Hospital Insurance (M) Trust Fund would be depleted early in 200 1, based on the Board of Trustees' intermediate estimates. The President's budget proposals would extend the life of the Trust Fund by another 6 years. It would provide adequate financing through the next 10 years, leaving us time to tackle imminent fiscal problems precipitated by retiring baby boomers. Savings would be achieved through a combination of scored savings from reductions in payments to hospitals, home health agencies, skilled nursing facilities, managed care plans, and other providers. As was proposed in the previous two balanced budget initiatives, it would permanently extend the 25 percent Part B premium. Finally, the liability associated with some home health services would be reallocated to the Part B side of the program.

Moderating Medicare's Rate of Growth

The President's budget includes explicit proposals to achieve $100 billion in savings over the next 5 years. Medicare per capita spending growth over the next five years (1997-2002) will slow from the current projected gross rate of 7.4% to 5.3%. In 2002, this will lower our average per capita spending from $7,800 to $7, 100. These savings come from substantial reductions in payments to providers.

Hospitals - We propose a series of hospital savings proposals, including a reduction in the hospital PPS update of 1.0 percentage point each year to account for increases in productivity, reinstatement of the reduction in capital payments from OBRA 90, reforms to the direct payment for medical education to reduce the growth of hospital-based residents and encourage more training in primary care, and reductions in the indirect medical payment to more closely reflect the cost of teaching activities. In addition, we propose to use a more up-to-date base year in calculating payments to PPS-exempt hospitals, to set ceilings and floors for these hospitals' target rates, and to reduce the annual update to payments and cut capital payments for PPS-exempt hospitals. We also propose a moratorium on new long-term care hospitals and to move to a PPS for hospital outpatient department services. Overall, these proposals result in $33 billion in savings from hospitals over 5 years.

SNF and Home Health - As I will describe in detail later, we will be moving to case-mix adjusted prospective payment systems for these providers. These payment systems will incorporate payment reductions equal to $7 billion for SNFs and $14 billion for home health agencies (HHAs) over five years.

Managed care - Through a series of policy changes, the plan would address the flaws in Medicare's current payment methodology for managed care. Specifically, the reforms would create a national floor to better assure that managed care products can be offered in low payment areas, which predominantly rural communities. In addition, the proposal includes a blended payment methodology, which combined with the national minimum floor, would dramatically reduce geographical variations in current payment rates. The plan would reduce reimbursement to managed care plans by approximately $34 billion over 5 years. Savings will come from three sources: (1) Because HMO payments are updated based on projections of national Medicare per capita growth, when the traditional fee-for-service side of the program is reduced, HMO payments are reduced; (2) The carve-out of the medical education and DSH payments from the HMO reimbursement formula (these funds will be paid directly to academic health centers); and (3) A phased-in reduction in HMO payment rates from the current 95% of fee-for-service payments to 90%. A number of recent studies have validated earlier evidence that Medicare significantly overcompendated HMOs. A recent HCFA study has validated earlier findings by Mathematica Policy Research that Medicare overpays HMOs. The reduction does not start until 2000 and it accounts for a relatively modest $6 billion in savings over 5 years.

Physicians - We propose to establish a single conversion factor for payments under the physician fee schedule and to reform the method for updating physician fees. By creating incentives to control physician services in high-volume inpatient settings and to make a single payment for surgery where an assistant-at-surgery is used, costs will be reduced. We also propose to expand the settings in which direct payment is made to physician assistants, nurse practitioners and clinical nurse specialists to include home and ambulatory settings. Medicare currently does not have an expansive outpatient drug benefit, though there is coverage of certain kinds of outpatient drugs. Our proposed plan will eliminate the mark-up charged by physicians and suppliers, limiting payments to acquisition costs subject to a limit. In addition to eliminating the current statutory x-ray requirement to determine the need for a service, we also propose to improve access to chiropractic services. These proposals will result in savings of $7 billion over 5 years.

Fraud and Abuse

The President's budget contains a number of proposals to reduce waste, fraud and abuse in the Medicare program. Among these proposals are provisions to require that insurance companies report the insurance status of beneficiaries, to guarantee that Medicare pays appropriately. In addition, we have several proposals to prevent excessive and inappropriate billing for home health services. We are proposing to close a loophole in the current payment calculation by payments to the location where care is actually provided, rather than the billing location. When we implement the PPS, we will eliminate HHA periodic interim payments (PIPs), which were originally established to encourage to join Medicare by providing a smooth cash flow. Since over 100 new agencies join Medicare each month, inducements are no longer needed. We will develop more objective criteria for determining the appropriate number of visits per specific condition, so that we can prevent excessive utilization.

Finally, the President's budget calls for the repeal of several provisions in the HIPAA that could hamper our ability to fight fraud and abuse. First, the President is proposing to eliminate the broad new exception to the anti-kickback statute when providers are at "substantial financial risk." These terms are undefined and somewhat broad. Additionally, the Congressional Budget Office assigned a cost to this provision because it could be easily abused by those wishing to profit from referrals. Second, the President is proposing to eliminate the requirement that advisory opinions be issued in response to specific requests as to how certain business arrangements may or may not be considered to violate the anti-kickback laws. This provision will hamper the government's ability to prosecute fraud and is impractical because it is difficult, if not impossible, to determine intent based on the submission of the requester. Third, the President is proposing to reinstate the "reasonable diligence" standard. HIPAA eliminated the current standard for use of reasonable diligence and made providers subject to civil monetary penalties only if they act with deliberate ignorance or reckless disregard.


The President's Budget modernizes Medicare and brings it into the twenty-first century through major structural changes in seven areas: Prudent Purchasing; Modernizing Managed Care Choices; Preventive Care; Beneficiary Protections; Program Improvements; Integrated Quality Management; and Improving Access in Rural Areas. [CHART # 3]


As more beneficiaries are choosing to enroll in managed care, there has been a lot of talk about fee-for-service being the "residual," as though it were somehow not important. We must recognize that even if we double the rate at which beneficiaries are moving into managed care in the short-term, the majority of beneficiaries will still be in fee-for-service. Therefore, we need to look for ways to improve our purchasing power. Over the past several years, private sector purchasers of health services have developed a variety of innovative ways they pay for health services. It is ironic that HCFA, the largest purchaser of health services in the U.S., has often been shackled by outdated statutory payment and administrative pricing provisions, which prevent us from adapting to today's marketplace.

Beneficiary-Centered Services - Given the pressures on the federal budget, it is critical that Medicare look beyond traditional purchasing strategies and scan the private industry horizon for new ideas. HCFA's "Beneficiary-Centered Purchasing Initiative" proposals do just that, applying lessons learned from the private sector and our demonstrations. With these proposals, we will have innovative purchasing arrangements which will be powerful tools to control Medicare spending now and in the future.

For example, under our "Centers of Excellence" demonstration, Medicare achieved an average of 12 % savings for coronary artery bypass graft procedures performed, with no reduction in quality. Despite this success, we do not have the authority to make the Centers of Excellence program a permanent part of Medicare. Similarly, while other purchasers of health care services are successfully using disease and case management services to selectively provide services for enrollees with specific conditions (e.g. diabetes, congestive heart failure), we do not have this kind of authority under Medicare fee-for-service. The Office of Inspector General reports indicate that Medicare is paying far more for medical supplies and DME than other federal purchasers such as the Department of Veterans Affairs. Nevertheless, Medicare lacks authority to use competitive bidding to establish payment rates. I urge Congress to re-examine these issues and give the Medicare program the flexibility to pay on the basis of special arrangements, as opposed to statutorily-determined, administered prices.

Post-acute Services - Expenditures for skilled nursing facility (SNF), home health, rehabilitation and long-term hospital services are among the fastest growing components of Part A, and, total Medicare spending. These services are often referred to as "post-acute care services," even though in some cases these services are delivered without a prior hospital stay. The increase in expenditures for post-acute care is due to demographic changes and improvements in the delivery of medicine that allow more care to be delivered in non-hospital settings. In addition, our prospective payment system for hospitals provides the incentives for hospitals to discharge patients more quickly, which also fuels the growth in post-acute care spending. Further, discharges to post-acute care providers may cause Medicare to pay twice for care -- once for the initial hospitalization, and again for care in the post-acute settings.

The President's budget includes a proposal to end these double payments. We propose to limit the definition of a discharge, fory a prospective rate based upon the characteristics of the patients it serves, not on how many services it provides. Because we cannot continue to allow expenditure growth at current levels, we are proposing to implement additional cost limits until we can implement this prospective payment system. Effective FY 1998, we will reduce the current cost limits and introduce a new per beneficiary per year limit. The Administration is proposing a series of policy changes to prevent excessive and inappropriate billing for home health care services, which are described earlier.

In addition, the Administration is also proposing to reallocate some of the home health financing to Part B to restore the post-acute care nature of Part A. Data from our Medicare Beneficiary Survey indicate that home health care plays a significant role in the ability of many elderly to continue to live at home: 1 in 3 home health users live alone, and 4 in 10 have incomes below $10,000. Under the Administration's proposal the first 100 visits following a three-day hospital stay would be reimbursed under Part A, just as this program covers 100 days of skilled nursing care following a hospitalization. All other home health care (visits beyond 100 and those not following a hospital stay) would be paid under Part B. Prior to OBRA 80, the Part A portion of the home health benefit was limited in this way. OBRA 80 legislation eliminated the three-day hospitalization requirement and the Part A and Part B visit limits, and in y a prospective rate based upon the characteristics of the patients it serves, not on how many services it provides. Because we cannot continue to allow expenditure growth at current levels, we are proposing to implement additional cost limits until we can implement this prospective payment system. Effective FY 1998, we will reduce the current cost limits and introduce a new per beneficiary per year limit. The Administration is proposing a series of policy changes to prevent excessive and inappropriate billing for home health care services, which are described earlier.

In addition, the Administration is also proposing to reallocate some of the home health financing to Part B to restore the post-acute care nature of Part A. Data from our Medicare Beneficiary Survey indicate that home health care plays a significant role in the ability of many elderly to continue to live at home: 1 in 3 home health users live alone, and 4 in 10 have incomes below $10,000. Under the Administration's proposal the first 100 visits following a three-day hospital stay would be reimbursed under Part A, just as this program covers 100 days of skilled nursing care following a hospitalization. All other home health care (visits beyond 100 and those not following a hospital stay) would be paid under Part B. Prior to OBRA 80, the Part A portion of the home health benefit was limited in this way. OBRA 80 legislation eliminated the three-day hospitalization requirement and the Part A and Part B visit limits, and in so doing made Part A responsible for almost all of the financing of home health. The restoration of non-post acute visits to Part B makes the home health benefit consistent with the Medicare statute's original intent and its division of services between Part A and Part B.

Contractor Reform - While modernizing our payment methods for purchasing health care services for beneficiaries is an essential step toward modernization, we must modernize the way we purchase administrative services. The President's budget contains a proposal that would end the requirement that all Medicare contractors (that is, carriers and intermediaries) perform all Medicare administrative activities. It gives HCFA the tools to take advantage of innovations and efficiencies in the private sector when it comes to utilization review, beneficiary and provider services, and claims processing. It builds upon the authority granted in the Health Insurance Portability and Accountability Act (HIPAA), where payment integrity activities (such as audits) could be separately contracted. This provision also would allow us to use the same competitive requirements that apply throughout the government when awarding new contracts, and expand our pool of potential contractors beyond insurance companies to other entities that may be well-qualified to do the work.


Under our Medicare Choices initiative, we would expand managed care options, provide beneficiaries with comparative information on all of their health care choices, ease comparison among options by increasing standardization of benefits, provide a coordinated open enrollment period and other open enrollment opportunities and institute Medigap reforms. Let me address each of these components separately.

Expanded Managed Care Options - Currently, HCFA can contract with Health Maintenance Organizations (HMOs) and Competitive Medical Plans (CMPs) to serve as Medicare managed care plans. The Administration believes that Medicare beneficiaries should have more managed care choices, comparable to those available in the private sector. Thus, the President's budget would expand managed care options to include Preferred Provider Organizations (PPOs) and Provider Sponsored Organizations (PSOs). We believe that direct contracts with alternative managed care models such as PSOs are the key to expanding managed care to rural areas.

Comparative Information - Under current law, beneficiaries may obtain comparative information on Medigap options through State Insurance Counseling Grant Programs. Some of these programs also address managed care options. There are no mechanisms, however, to ensure that beneficiaries are aware of all their options, in both managed care and Medigap. Under the President's budget, the Secretary will develop and provide comparative information to beneficiaries on all managed care plans and Medigap plans in the area. This information will be used by State Insurance Counseling Grant Programs to assist beneficiaries in understanding their coverage options. The costs of preparing and disseminating this information and supporting the State Counseling Grant Program will be financed by the Medigap and managed care plans.

Standardized Benefits - While comparative information will be helpful to beneficiaries, making an informed decision among the array of available coverage options would be hampered unless differences in benefit packages are addressed. Under the President's budget, the Secretary win establish standardized packages for certain additional benefits offered by managed care plans. For example, if the Secretary established a standardized package for outpatient prescription drugs, plans could offer enrollees this benefit only according to the structure established by the Secretary. The development of standardized additional benefit packages will make it possible for beneficiaries to compare these benefits on the basis of cost and quality. The National Association of Insurance Commissioners (NAIC) will also review the current standard Medigap packages to see if changes could be made to ease comparison with the standard managed care benefits.

Open Enrollment Opportunities - Under Federal law, aged individuals have a once in a life-time opportunity to select the Medigap plan of their choice when they first join Medicare at age 65; individuals who become eligible for Medicare because of a disability or end-stage renal disease beneficiaries have no such choice. If a beneficiary enrolls in a managed care plan and is later dissatisfied, he or she may not have the opportunity to select the Medigap plan of his or her choice; for example, drug coverage may be unavailable due to the individual's poor health status. As a result some beneficiaries are reluctant to try managed care or are fearful of being locked into managed care options with no opportunity to return to fee-for-service and Medigap.

The President's budget gives all new beneficiaries, not just aged beneficiaries, the opportunity to choose the managed care or Medigap plan of their choice when they first enroll in Medicare. In addition, each year all Medigap and managed care plans will have to be open for a one month coordinated open enrollment period. Additional open enrollment opportunities will be available under certain circumstances -- such as, when a beneficiary's p care physician leaves a plan or when a beneficiary moves into a new area. While the concept of coordinated open enrollment is not new and was included in the 1995 Conference Agreement, the key difference in our proposal is the inclusion of Medigap plans.

Other Medigap Reforms - In addition to addressing open enrollment, there are other Medigap reforms included in the President's budget. We would like to eliminate the ability of Medigap insurers to impose pre-existing condition exclusion periods. Under the policy in the President's budget, a Medigap plan cannot impose an exclusion period for a beneficiary who has recently enrolled in another Medigap plan, Medicare managed care, or employer-based plan. This is similar to the policy included in a bi-partisan bill introduced by Mrs. Johnson and others during the last session and we look forward to working together toward enactment this year.

Our final Medigap reform addresses rating. There are currently no federal requirements regarding the rating methodology used by Medigap plans. As a result, plans can use low premiums to entice beneficiaries to enroll in their fledgling stages, but as the company matures it raises the premiums to unaffordable levels. Under the President's budget, Medigap plans would be required to use community rating to establish premiums. The movement to community rating would be subject to a timetable and transition rules developed by the NAIC. Given that managed care plans are required to charge all enrollees the same premium Medigap plans should not be allowed to charge differential premiums based on age. Also, if choice is an important goal then premium structures such as attained age rating, which in effect make Medigap unaffordable as beneficiaries age, should not be allowed.


One of the core elements of our restructuring agenda is modernization of Medicare's coverage of preventive care. The cost-effectiveness of illness prevention is well-known; in the long run, preventive medicine pays for itself The President's budget would make some significant improvements in the area of preventive benefits. I would note that there is a bipartisan consensus on many of these proposals as indicated by the similarities between our initiatives and legislation sponsored by Chairman Thomas, Mr. Cardin and Mr. Bilirakis. We look forward to working with you to enact these new benefits:

Colorectal Screening Coverage - Colorectal cancer is the second most common form of cancer in the U.S. and has the second highest mortality rate. Yet, despite the demonstrated importance of early detection, Medicare does not pay for procedures used to detect colorectal cancer when used as a screening tool. The President's budget would provide such coverage, thereby increasing the possibility of early detection and treatment of colorectal cancer.

Mammography Coverage - Forty-eight percent of new breast cancer cases and 56 percent of breast cancer deaths occur in women age 65 and over. For this reason, the early detection and treatment of breast cancer is a high priority for HCFA. Although Medicare covers both screening and diagnostic mammography, only 40 percent of all eligible beneficiaries over age 64 (excluding those in managed care) received a mammogram in the two-year period from 1994 through 1995. In addition, only 14 percent of eligible beneficiaries without supplemental insurance received mammograms during the first two years of the screening mammography benefit, which began in 1991.

The President's budget expands coverage for screening mammograms to provide for an annual mammogram for women age 65 and over. This is consistent with the recommendations of most major breast cancer authorities. The budget also proposes to waive cost-sharing for mammogram services in order to encourage their use.

Expanded Benefits for Diabetes Outpatient Self-Management Training and Blood Glucose Monitoring - The third area where we propose to make investments is in services for beneficiaries with diabetes. Under current law, Medicare covers diabetes outpatient self- management training only in hospital-based programs, and covers blood glucose monitoring (including testing strips) only for insulin-dependent diabetics. The President's budget would expand coverage of diabetes outpatient self-management training to non-hospital-based programs, and expand coverage of blood glucose monitoring (including testing strips) to all diabetics.

Preventive Immunizations - Current law provides payment for the administration of pneumonia, influenza, and hepatitis B vaccines, and already waives payment of coinsurance and the Part B deductible for pneumonia and influenza. The President's budget increases payment amounts for the administration of all three types of vaccines, and waives payment of coinsurance and applicability of the Part B deductible for the hepatitis B vaccine. These measures will improve access to adult vaccinations and make the cost-sharing waiver consistent for all covered vaccines.


Reform Beneficiary Coinsurance for Hospital Outpatient Department Services - Coinsurance for Part B services is generally based on Medicare's payment amount. However, for certain outpatient department services (OPDs), coinsurance is a function of hospital charges, which are significantly higher. In addition, as a result of a flaw ("formula-driven overpayment") in the statutory formula determining Medicare's payment for certain OPD services, hospitals have had an incentive to increase their charges. The net effect of charge-based coinsurance and hospitals' increases in their charges is that in 1998, without a change in law, beneficiaries will pay an effective coinsurance rate of 46 percent for OPD services rather than the 20 percent for other Part B services. This effective coinsurance rate is expected to increase to 52 percent by 2007.

The President's budget proposes the establishment of a prospective payment system (PPS) for OPD services in 1999. Total payments to hospitals for OPD services will be established so as to equal total payments that would otherwise apply, minus the effect of the formula driven overpayment. This also assumes the extension of certain OPD policies included in OBRA 93 that are slated to expire in 1999. Coinsurance will be reduced starting in 1999 using the savings from the formula-driven overpayment. It would also be gradually reduced in subsequent years . until it equals 20 percent in 2007.

Part B Enrollment and Premium Surcharge - Under current law, with certain exceptions, beneficiaries who do not enroll in Part B when they are first eligible can enroll subsequently only during an annual open enrollment period from January to March of each year, with coverage effective in July. In addition, for each year that they could have enrolled in Part B but did not, they face a 10 percent premium surcharge. While for most beneficiaries the surcharge is in the 20- 30 percent range, some beneficiaries face a surcharge of 150 percent or more -- an amount which is punitive rather than bearing any relationship to the cost to Medicare of late enrollment.

In recent years, flaws in this enrollment process and inequities in the premium surcharge have become obvious. Beneficiaries who never enrolled in Part B due to availability of other coverage have attempted to enroll after their circumstances changed. For example, beneficiaries may have not have enrolled in Part B because they had generous retiree coverage through their former employers. Years later, however, they were informed that the former employer was now requiring Part B enrollment or was dropping coverage entirely. There are also situations where military retirees did not enroll in Part B because they could obtain physicians' services through a clinic at the military base near their home. Then, years later, the closing of their base necessitated Part B coverage.

The President's budget replaces the annual general enrollment period for Part B with a continuous open enrollment period. Beneficiaries will be able to enroll in the program at any time, with coverage beginning six months after enrollment. Also, the Part B premium surcharge for late enrollment will be revised based on the actuarially determined cost to Medicare of late enrollment. This provision will provide substantial relief to thousands of beneficiaries.


Respite Benefit - The President's budget creates a respite benefit, beginning in FY 1998. This much-needed benefit will provide up to 32 hours of care each year for beneficiaries suffering from Alzheimer's and other irreversible dementia. Respite care may be provided at home or at a day-care facility, and will serve to ease the emotional "burnout" that is commonly experienced by primary caretakers, especially when they are family members. In the spirit of the Administration's efforts to improve the quality of family life, this benefit is an important step toward a community- and family-centered approach to health care.

Social Security Disability Demonstration - Lack of health coverage is often a barrier to the disabled in their efforts to go back to work, since after a transition period they are ineligible to receive premium-free Medicare Part A coverage. The Social Security Disability Insurance demonstration (SSDI) will allow certain SSDI beneficiaries to receive premium-free Part A coverage for up to four additional years.


The President's budget will provide authority for HCFA to develop an integrated ospital program to all 50 states. To ensure that the 10 million Medicare beneficiaries living in rural areas do not become second-class citizens in terms of access to health care, our plan updates the payment for Sole Community Hospitals, improves the Rural Referral Center program and reinstates the Medicare Dependent Hospital program to provide resources to those rural hospitals that need it most.


We have looked beyond the immediate concerns of budget reductions and sought to keep our sights on the long-term goal which is safeguarding the vitality of the Medicare program. As our Nation evolves into a society with greater numbers of the elderly and we must preserve Medicare as a strong and vital program. The President's budget modernizes Medicare, extends the solvency of the Hospital Insurance Trust Fund for ten years, reduces the rate of growth in Medicare spending, and contributes to a balanced budget in 2002. It is essential that we protect Medicare, and our payment reforms and strategies will ensure that Medicare continues to be a sound investment in our Nation's health security for years to come.

Mr. Chairman, many of these reforms are initiatives that you, too, have championed. We look forward to working with you, Mr. Rangel, Mr. Thomas, Mr. Stark, and all the Members of the House Ways and Means Committee to further strengthen and improve the Medicare program.

There four charts attached to this testimony.

Chart 1 Almost 75 Percent of Medicare Beneficiaries Have Incomes Under $25,000 $ 5000 $ 5000 - 10000 $10000 - 15000 $15000 - 20000 $20000 - 25000 $25000 - 30000 $30000 - 35000 $35000 - 40000 $40000 - 45000 $45000 - 50000 $50000 +
(Income Range) (Percent Beneficiaries in Income Range)

Chart 2

Older Americans Spend Two and One-Half Times More of Their Income on Out-of-Pocket Costs Than the Non-Elderly

**The elderly (65 and Over) spends 21% of their income on Out-of-Pocket costs than the non-elderly (Under 65) which spends about 8%.

Chart 3
Modernizing Medicare

Prudent Purchasing

  • Centers of Excellence
  • Competitive bidding
  • Global payment for selected services
  • Inherent reasonableness authority
  • Post-acute services payment reform

Improving Choices

  • Expanded managed care options
  • Annual pen enrollment for Medigap and managed care plans
  • Comparative information on all choices
  • Medigap community rating
  • Medigap pre-existing condition reform
  • Standardized additional benefit packages
  • Revised managed care payment

Beneficiary Protections

  • Hospital outpatient coinsurance reform
  • Part B late enrollment surcharge reform
  • Improved financial protections for managed care enrollees

New Benefits

  • Diabetes education
  • Improved mammography benefits with no cost-sharing
  • Colorectal cancer screening
  • Increased payment for vaccines with no cost-sharing
  • Respite benefit for Alzheimers patients

Chart 4
Characteristics of Medicare Home Health Users
  Home Health Users
(Percent of Beneficiaries)
All Medicare Beneficiaries
(Percent of Beneficiaries)
Incomes <$10,000 43% 30%
85+ 25% 11%
Live Alone 33% 26%
Women 68% 57%
2+ADLs 32% 10%
Poor Health 24% 9%

Over all -- Total Medicare Beneficiaries = 38 Million; with Home Health Users accounting for about 9%.

Privacy Notice (www.hhs.gov/Privacy.html) | FOIA (www.hhs.gov/foia/) | What's New (www.hhs.gov/about/index.html#topiclist) | FAQs (answers.hhs.gov) | Reading Room (www.hhs.gov/read/) | Site Info (www.hhs.gov/SiteMap.html)