Part B

You are currently browsing the archive for the Part B category.

The President’s Proposal to “Live Within Our Means”

September 29, 2011 in CHIP, Home Health, Medicaid, Medicaid/Medicare, Medicare, Medicare Part D, Part B, Physician Compensation, Public Policy | 3 comments

President Obama released a proposal last week to jump start the economy and reduce the deficit.  The proposal includes many cuts to Medicare and increased cost sharing.  Senators Coburn and Lieberman are supporting these cuts.

Increased cost sharing is a common theme in Medicare, Medicaid, but also for other programs as well.  For instance, the proposal includes increases to TRICARE pharmacy benefit co-payments to be fall more in line with the most popular Federal employee health plan

The proposal, however, also has some interesting provisions.  For instance, it would require providers to secure prior authorization to perform advanced imaging.  This is one of the first moves away from the fee-for-service free-for-all towards managed care (read: rationing).

A pro-competition rule would prohibit ‘pay-for-delay’ where brand drug companies pay off other drug makers to delay their introduction of a generic into the market.  The FTC is charged with enforcing this requirement. The proposal also would reduce the exclusive period of generic biologics.  Weakening patent protection, for this authors perspective, is likely a good idea.

Specific changes under consideration which are related to medicare are highlighted below (with potential savings per year in parentheses):

Read the rest of this entry »

Tags: , , , ,

Estimating the Effects of Consolidating Drugs under Part D or Part B

February 15, 2011 in Medicare Part D, Part B | No comments

Currently, most Medicare beneficiaries are able to receive coverage for prescription drugs under Medicare Part D. Some drugs, however, are still covered by Medicare Part B, which covers physician services. These drugs are generally those furnished incident to a physician’s service and are administered using durable medical equipment.

To simplify coverage policy, Medicare is considering consolidating certain drugs exclusively under either Medicare Part B or Part D. A paper from Acumen, LLC (disclaimer: my current employer) has conducted a study to simulate the financial impacts of consolidating certain drugs under either the Part B or Part D program. Their key conclusions include the following:

  • Part B and Part D per unit prices vary, affecting the financial impact of consolidation (Part D per unit drug prices are roughly 52% higher than Part B prices).
  • On average, beneficiaries lose with B to D consolidations and gain with D to B consolidations.
  • Beneficiaries in the catastrophic phase experience the opposite effect.
  • Consolidation would have a small affect on Part D plan premiums.
  • Beneficiaries currently do not react to financial incentives by substituting drugs (e.g., substituting metered dose inhalants for nebulizer inhalants, substituting pumped for injectable insulin)
  • Consolidation does not substantially increase incentives to switch Part D plans.
  • Overall, Medicare gains with B to D consolidation and loses with D to B consolidation.

Further information on the drug coverage in Medicare Parts B and D is described below.

Read the rest of this entry »

Tags: , ,

Episode-Based Payment Bundling in Medicare

October 19, 2010 in Medicare, P4P, Part B | No comments

Bundled payment has been gaining popularity in the minds of policymakers.  In essence, a bundled payment structure gives providers a single lump sum payment to cover all related services for an episode of care.  In the private sector, the Texas Heart Institute and Geisinger Health System both charge a single lump sum for certain procedures. This payment scheme transfers risk from the payer to the provider, but also gives the provider an incentive an incentive to economize (in both the positive and negative senses) on care.

A paper by Birkmeyer et al. (2010) examines the services which would need to be included to create a bundled payment.  The authors examine 4 surgical procedures: coronary artery bypass (CABG), hip fracture repair, back surgery, and colectomy.  These procedures were chosen since they are 1) common, 2) expensive and 3) involve significant physician discretion in terms of the services provided. Their respective total cost were: $26,515 for back surgery, $27,572 for hip fracture repair, $28354 for colectomy, and $45,358 for CABG.

As the chart below demonstrates, there the paper presents two key findings. First, the vast majority of the costs went to hospitals, mostly for the index hospitalization.  Less than 15% of cost went for readmissions or payments to surgeons. Secondly, a large number of providers are involved in patient care for any one of these bundles. Thus, determining which of the many providers is actually responsible for episode cost may be difficult.

Read the rest of this entry »

Tags: , ,

Does Medicare use CPT codes for payment?

July 13, 2010 in Medicaid/Medicare, Part B | 2 comments

For Part B services, Medicare pays physicians based on the services they provide.  The American Medical Association (AMA) developed Current Procedural Terminology (CPT) codes to create a taxonomy of procedures that physicians perform.  Does the Centers for Medicare and Medicaid Services (CMS) use these codes for payment?

The answer is yes and no.  Officially, CMS uses Healthcare Common Procedure Coding System (HCPCS) codes.  These codes are used to classify about 6,700 distinct services. Although CMS does not officially use CPT codes, the HCPCS are closely related to CPT codes.  In fact, there are two sets of HCPCS codes. “The first set, HCPCS Level I, are based on and identical to CPT codes…Level II HCPCS codes are used by medical suppliers other than physicians, such as ambulance services or durable medical equipment.”

The Medicare Administrative Contractor (MAC) actually process the payment for these claims.  There are 4 MACs for durable medical equipment claims and 15 MACs for processing Part A and B claims.

Tags: , ,