Cut waste, fraud and abuse.

Guide to Health Reform (Part 1): Each year the Center for Medicare and Medicaid Services (CMS) announces planned payment increases or decreases to contracting Medicare Advantage plans.  In 2009, Medicare announced a 4.8% decrease in payment that resulted in several hundred health insurance companies canceling their contracts, raising premiums and increasing copayments - - forcing millions of seniors to find new coverage. Democrats have claimed all along that privately administrated Medicare Advantage plans are wasteful and have made them a prime target for major cuts. Many seniors across the country have already felt the impact of targeted cuts to Medicare.  Health Reform promises to further reduce payments to Medicare Advantage Plans, Doctors and Hospitals.  This will be accomplished by reducing the dollar amount of each "fee-for-service" and supplement it with a payment program based on "quality".  These cuts will undoubtably have an impact on the premiums and cost sharing in existing Medicare Advantage and Medicare Supplement policies.

Close the donut hole.

More than 3 million Medicare beneficiaries hit this gap and many start paying the full cost of the drug until they hit catastrophic coverage.  Under Health Reform this gap will start closing this year with a $250 rebate and discounts of 50-70% on name brand and generic drugs starting in 2011. When can you you expect a check for the 2010 rebate?  It appears those checks will start mailing June 2010. Once the donut hole is closed in 2020, seniors will still be responsible for paying 25% of the cost of their drugs!  Sounds like a hole is still open but a 75% decrease is still better than nothing.  Especially since Brand Name drugs are currently not covered in the gap.

What you can expect over the next 10 years.

2010: $250 Rebate on Drug Costs in the Coverage Gap

- You you can expect Medicare will begin narrowing prescription drug coverage gap by providing a $250 rebate which starts this year.

- You can expect reduced Medicare payments to Hospitals, Home Health Agencies, Nursing Homes, Hospices and others.

2011: 50% Discount on drugs in the Coverage Gap

- You can voluntarily enroll in long-term care insurance program that will provide a modest cash benefit to help disabled stay in their homes or cover nursing home costs.

- You can expect a 50% discount on brand name drugs in the coverage gap.

- You can expect Medicare to freeze payments to Medicare Advantage plans, the first step in reducing payments to private insurers who serve 25% of Medicare beneficiaries.

- You can expect the Federal government to Impose a $2.3 billion dollar annual fee on drug makers, increasing over time.

2012: More Competition to Drive Down Costs

- You can expect the Federal government will set-up a program to create Non-Profit Co-ops to compete with commercial insurers.

2013: Standardizes Insurance companies paperwork, first step in driving down administrative costs

- You can expect increases in Medicare payroll taxes for people making more than $250,000 per year. 

- You can expect a 2.3% sales tax on Medical devices.

2014: Prohibits Health Insurers from Denying Coverage

- You will be required to have coverage and penalties if you choose not to be covered.

2015: Payment based on Quality for Medicare Beneficiaries.

- You can expect Medicare will create a program for doctors that will promote increased quality for Medicare Beneficiaries.

- You can expect Medicare will establish an advisory board to help lower health care costs and extend Medicare's solvency.

2020: Coverage Gap Completely Phased Out

- Seniors continue to pay 25% of their drug cost until they hit catastrophic coverage and then their copayments drop to 5% of the cost of the drug.

Medicare Advantage Plans Over billing Medicare

As you can see the overhaul seeks to improve low income subsidy, fix payments to doctors, improve payment accuracy based on quality, and encourage other changes to drive down costs.  You may also have noticed that Medicare Advantage plans are the hardest hit by the overhaul.  The White House claims that these plans over bill Medicare by 14-17%.  This is actually untrue.  Medicare Advantage plans have a contract with Medicare and under these contracts each plan has accepted payment terms defined by the government which equate to 14-17% above standard reimbursement rates.  The target of this reform is to create "performance driven" incentives which drive down the costs of caring for Medicare beneficiaries while increasing quality.

I consider Medicare Sherpa's role in the national healthcare debate as a "curator of information", we do not create new content but help you find trusted sources of information to help you make the most of your time on the Internet.  So if you are getting health insurance through the national Medicare Advantage program or a state approved Medicare Supplement plan, we've documented a few key sources that are providing factual information on the impact of National Healthcare Reform.

AARP: How Health Reform will Help You and Your Families: Get the Facts

MSNBC:  American Health Care: What will the Obama Legislation Mean

PolitiFact: Evaluates Claims made about the Impact of Health Reform

FactCheck: University of Pennsylvania’s Annenberg Public Policy Center

PBS Field Guide to Health Reform: Continuously Updated Terms and Key Players

Consumer Reports: Healthcare Reform - A Consumers Guide

Slates Online Guide to Health Reform: Includes government, bloggers, columnists, news media, academics

Comparing The CBO Scores For Different Health Care Bills

Comparison Charts of House, Senate, and White House Bills/Proposals

About the Author:

My name is Dana Cutter and I am Founder and Editor of Medicare Sherpa. Our staff spends their days searching the Internet for the best content and advice on retirement. On our site you will find articles on Social Security, Medicare Benefits, Prescription Drug Benefits and more. Please feel fee to send me an email with ideas for content, site improvements or general help launching your online persona. I hope you will consider joining and I am looking forward to reading more about you online.

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