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This article refers to Medicare, a United States insurance program. For similarly named programs, see Medicare Medicare is a Health Insurance program administered by the United States Government , covering people who are either age 65 and over, or who meet other special criteria. It was first passed on July 30, 1965 by President Lyndon B. Johnson as amendments to Social Security legislation. ADMINISTRATION The Centers For Medicare And Medicaid Services (CMS), a component of the Department Of Health And Human Services (HHS), administers Medicare, Medicaid , the State Children's Health Insurance Program (SCHIP), and the Clinical Laboratory Improvement Amendments (CLIA). Along with the Departments Of Labor and Treasury , CMS also implements the insurance reform provisions of the Health Insurance Portability And Accountability Act of 1996 (HIPAA). The Social Security Administration is responsible for determining Medicare eligibility and processing premium payments for the Medicare program. TAXES IMPOSED TO FINANCE MEDICARE Medicare is partially financed by Payroll Tax es imposed by the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act of 1954. In the case of employees, the tax is equal to 2.9% (1.45% withheld from the worker and a matching 1.45% paid by the employer) of the wages, salaries and other compensation in connection with employment. Until December 31, 1993, the law provided a maximum amount of wages, etc., on which the Medicare tax could be imposed each year. Beginning January 1, 1994, the compensation limit was removed. In the case of self-employed individuals, the tax is 2.9% of net earnings from self-employment, and the entire amount is paid by the self-employed individual. BENEFITS Generally, Medicare is available for people age 65 or older, younger people with disabilities, and people with End Stage Renal Disease (permanent Kidney failure requiring Dialysis or Transplant ). People under 65 and disabled must be receiving disability benefits from either Social Security or the Railroad Retirement Board for at least 24 months before automatic enrollment occurs. In 2003, Medicare provided health care coverage for 41 million Americans. Enrollment is expected to reach 77 million by 2031, when the Baby Boom generation is fully enrolled. The "Original Medicare" program has two parts: Part A (Hospital Insurance), and Part B (Medical Insurance). Neither Part A nor Part B pays for all of a covered person's medical costs. The program contains Premium s, Deductible s and co-pays (payments due from the covered individual). Only a few special cases exist where Prescription Drug s are covered by Original Medicare, but as of January 2006, Medicare Part D provides more comprehensive drug coverage. Medicare Advantage plans are another way for beneficiaries to receive their Part A, B and D benefits. Part A: Hospital Insurance Part A covers Hospital stays. It will pay for Nursing Home stays if within certain amount of time after a hospital stay that lasted 72 hours with the count starting at the first midnight after admission and not counting any hours of the discharge date. The nursing home stay must be for something found wrong during the hospital stay or for the main cause of hospital stay. For instance, hospital stay for broken hip and then nursing home stay for physical therapy would be covered for 2 weeks. If patient refuses to eat or has some other ailment that requires constant nurse supervision then the nursing home stay would be covered for a longer period of time. Most people do not pay a monthly Part A premium, because they or a spouse have had 40 or more quarters where they paid FICA taxes. For Medicare eligible members who do not have 40 or more quarters of Medicare-covered employment, Part A may be purchased for a monthly premium of:
Part B: Medical Insurance Part B helps cover doctors' services, outpatient hospital care, and some other medical services that Part A does not cover, such as durable Medical Equiptment (DME). Medicare's DME coverage included payment for Cane s, walkers, Wheelchair s, and Mobility Scooter s for those with mobility impairments, depending on medical necessity. Part B is optional coverage and may be deferred if the beneficiary or their spouse is still actively working. There is a lifetime penalty (10% per year) imposed for not taking Part B if not actively working. Everyone with Medicare Part B pays an Insurance Premium for this coverage, which for 2006 is $88.50 per month. It is common for this premium to be automatically deducted from a beneficiaries monthly Social Security check. Some people may qualify to have other governmential programs pay this premium for them. Part C: Medicare Advantage plans For the last 20 years, the Federal government has offered Medicare beneficiaries the option to receive their Medicare benefit through private Health Insurance plans, instead of receiving it from the Original Medicare plan (Part A and Part B). At one time the Medicare program called these Medicare + Choice plans, but they have often been colloquially referred to as Part C. The Medicare Modernization Act changed compensation and business practices for insurers that offer these plan. In conjunction with this, CMS re-branded these plans as Medicare Advantage (MA) plans. In addition to offering comparable coverage to Part A and Part B, Medicare Advantage plans may also offer Part D coverage. Part D: Prescription Drug plans Medicare Part D went into effect on January 1, 2006. Anyone with Part A or B is eligible for Part D. It was made possible by the passage of the Medicare Prescription Drug, Improvement, And Modernization Act . In order to receive this benefit, a person with Medicare must enroll in a stand-alone Prescription Drug Plan (PDP) or Medicare Advantage plan with prescription drug coverage (MA-PD). These plans are approved and regulated by the Medicare program, but are actually administered by private health insurance companies. PAYMENT FOR SERVICES Medicare processes over one billion fee-for-service claims per year, making it the nation’s largest purchaser of s, 47 cents of every dollar received by U.S. hospitals, and 27 cents of every dollar spent on physician services is funded by Medicare or Medicaid. With regard to physicians, Medicare uses the Resource-Based Relative Value Scale (RBRVS) to determine how much money each doctor should earn, although it is criticized for not paying doctors enough because of the low conversion factor. Because of the nature of RBRVS, it is possible to pay all doctors more or less depending on how much money the person paying (CMS in this case) is willing to pay. For institutional care such as hospital and nursing home care, Medicare uses prospective payment systems. A prospective payment system is one in which the health care provider receives a set amount of money for each episode of care provided to a patient, regardless of the actual amount of care used. The actual allotment of funds is based on a list of Diagnosis Related Groups (DRG). The actual amount depends on the kind of diagnosis made at the hospital. There are some issues surrounding Medicare's use of DRGs because if the patient uses less care, the hospital gets to keep the remainder. This, in theory, should balance the costs for the hospital. However, if the patient uses more care, then the hospital has to cover its own losses. This results in the issue of "upcoding," when a physician makes a more severe diagnosis to hedge against accidental costs. CRITICISM Medicare faces continuing financing issues. In its annual report to Congress, the Medicare Board of Trustees stated that the program's hospital insurance trust fund could run out of money before the end of the next decade. The trustees have made such projections in the past, but this one was much bleaker than the outlook reported just last year. Part of the cost of Medicare is fraud (See Insurance Fraud ), which Medicare estimates costs it billions of dollars a year. LEGISLATION AND REFORM
President Bill Clinton attempted an overhaul of Medicare through his ambitious Health Care Reform Plan in 1993-1994 but it proved unsuccessful. In 2003 Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act, which President George W. Bush signed into law on December 8, 2003. SEE ALSO
REFERENCES Lawrence R. Huntoon, M.D., Ph.D., "Medicare: Incompetence-Based Bureaucracy", ''Journal of American Physicians and Surgeons'', Winter 2004 . EXTERNAL LINKS Governmental links - current
Governmental links - historical
Non-governmental links
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