Healthcare Survival Medicaid vs Medicare - Case Study Example

Medicare Medicare is a national program that offers insurance for people who are 65 years and older and for people under the age of 65 who have chronic kidney failure or who have specific disabilities.  The Health care Finance Administration (HCFA) oversees the program along with the U.S. Department of Health and Human Services (HHS). 1 The Centers for Medicare and Medicaid Services or “CMS” is a part of the Department of Health and Human Services (HHS). The CMS manages Medicaid, Medicare, the Clinical Laboratory Improvement Amendments (CLIA) and the State Children’s Health Insurance Program (SCHIP). CMS also puts into practice the insurance reform provisions of the HIPAA (Health Insurance Portability and Accountability) Act of 1996. Medicare is partly financed by taxes imposed by the Federal Insurance Contributions Act (FICA), as well as the Self-Employment Contributions Act (1954). Normally, Medicare is available for those people who are 65 years or older, younger people with specific disabilities and patients with End Stage Renal Disease or permanent kidney failure which requires transplant or dialysis. People below the age of 65 and disabled must receive disability benefits from either the Railroad Retirement Board or Social Security for at least two years before automatic enrollment happens. In the year 2003, Medicare offered health care coverage for circa 41 million Americans. At this rate enrollment will reach 77 million by 2031, the period when the Baby Boom generation is enrolled. Medicare has numerous parts. Part A covers Hospital Insurance. Part B involves Medical Insurance, which cover doctors' services, outpatient hospital care, as well as other medical services not covered by Part A. Neither of these parts (A and B) pays everything for a covered person's medical costs. The program has deductibles and co-pays (those payments that are due from the covered individual). Initially, there were certain medical needs such as drug prescriptions that were excluded. Starting from January 2006, Medicare Part D will offer coverage for prescription drugs through an intricate coverage model. Generally, people do not pay a monthly Part A premium if they or their partner have more than 40 quarters of Medicare-covered employment. Part A does cover hospital stays. However, it covers nursing home stays if it is within a particular amount of time after a hospital stay that lasted a full three days (72 hours), with the count starting at the first midnight following admission (hours of the discharge date are not counted). The nursing home stay should be for something found wrong while the person is in the hospital or for the main cause of the hospital stay. For example, hospital stay for a broken hip, followed by nursing home stay for physical rehabilitation would be covered for 14 days. If the patient has an ailment requiring constant nurse care then nursing home stay is covered for a longer period of time. For Medicare eligible members with less than 40 quarters of Medicare-covered employment, Part A can be purchased for a monthly premium. Part B is an optional coverage and can be delayed if the beneficiary or his/her wife/husband is still actively working. There is a lifetime penalty in place (10% per year) for those actively working but not taking part in Part B. When it comes to physicians, Medicare deploys the Resource-Based Relative Value Scale (RBRVS) to establish how much money a doctor should earn, although it faces criticism for not paying doctors adequately because of the low conversion factor. The nature of RBRVS is such that the doctors’ pay depends on how much money the person (CMS in this case) is willing to pay. For hospital and nursing home care, Medicare has prospective payment systems. In a prospective payment system the health care provider gets a fixed amount of money for every episode of care given to a patient, while not really considering the actual amount of care used. Medicare also covers medical devices, like powerchairs and mobility scooters for those requiring such machines. Today, Medicare faces financing issues. In one its annual reports to the Congress, the Medicare Board of Trustees revealed that there was a possibility that the program's hospital insurance trust fund could be bankrupt in the foreseeable future. Part of the immense cost of Medicare is fraud, which Medicare believes costs billions of dollars annually. Medicaid Medicaid was formed through Title XIX of the Social Security Act on July 30, 1965. Each state in the United States oversees its own Medicaid program. The CMS monitors the state-run programs and sets up requirements for quality, funding, service delivery, and eligibility standards. The Medicaid policies for services, eligibility, and payment are not easily comprehensible and differ considerably, even among similar sized states or those with geographic proximity. It is not necessary for someone who is eligible for Medicaid in one state to be eligible in another, and the services given by the states can differ considerably in duration, amount, or scope. Concomitant to that, state legislatures may change Medicaid services, eligibility, and/or reimbursement during the year. State participation in Medicaid is not obligatory; still, all states have taken part since 1982. In some states, Medicaid gives private health insurance companies the contract with that state’s Medicaid program, whereas other states pay providers (doctors, clinics and hospitals) directly to make certain that individuals receive appropriate medical attention. In addition, there are other programs that are funded by the states or their political subdivisions to give health coverage for the destitute and minors. Generally, people find it difficult to differentiate between Medicaid and Medicare, which is wholly a federal health insurance program that is offered for people aged 65 or older, younger people with certain disabilities, and some other groups. While both programs cover similar groups, they are entirely different. For example, Medicaid gives a wider range of health care services than Medicare and does not have deductibles or premiums like the latter. Also, Medicaid provides the biggest portion of federal money spent for health care on people infected with the HIV virus. More than 50% of the people living with AIDS are believed to receive Medicaid payments. Often, poor people who have the HIV virus must be fully infected with AIDS to qualify under the "disabled" category. 2 Medicaid is also called "MassHealth" in Massachusetts and "Medi-Cal" in California. It is a joint federal-state program that gives health insurance coverage to low-income children, old people and people affected with disabilities. In addition, it covers care institutions like nursing home for those who qualify. Medicaid has somewhat become the default nursing home insurance of the middle strata of the society. For all realistic purposes, in the United States the only plan of “insurance” for long-term institutional care is Medicaid. Without the access to alternatives like paying privately or Medicare, most people think better to pay out of their own pockets for long-term care until they turn eligible for Medicaid. Medicare can be termed an "entitlement" program. Medicaid is a form of welfare. So for eligibility for Medicaid, one must become "impoverished" under the program's regulations.3 Unlike Medicare, which is wholly federal, Medicaid is a combined federal-state program. While each state runs its own Medicaid system, it must conform to federal guidelines in order to receive federal money, which pays for more than half the state's Medicaid costs. Those who are not presently in need of long-term care can have the luxury of protecting their assets in advance. When they do require long-term care, they can quickly qualify for Medicaid benefits. The burden of Medicare/Medicaid on hospitals Healthcare financial managers are very much aware of the realities of delivering cost-effective health care to older patients. With the Federal budget ax falling on Medicare payments and targeting them for big discounts in recent years, hospitals are particularly at risk of losing tremendous sums of money when treating Medicare patients. Let us look at this example from some fifteen years back. Estimates by the American Hospital Association (AHA) placed the standard 1990 Medicare shortfan for hospitals at around 6 percent (or $2.8 billion-nationwide). By deploying the AHA model of 5,400 hospitals, the figure converted to an average loss of a stunning $518,500 per hospital. To add to this shortfall, the AHA's 1990 National Hospital Panel Survey revealed that hospitals' net patient margins slipped to 0.6 percent during the first half of 1990, compared to 1 percent in the same period the previous year. That was only the second time in 10 years hitherto that hospital margins fell below 1 percent for the first six months of the year. The AHA survey also found that the country’s hospitals' expenses actually rose during a time when hospitals overall were earning $31.20 per admission, substantially down from $43.33 in the same period the previous year. In the meantime, the survey also showed that outpatient visits, admissions, and staffing increased, whereas lengths of stay dropped somewhat. Figures from Health Care Investment Analysts, Inc.(HCIA) revealed that the number of financially troubled hospitals rose from 538 in 1989 to 704, in 1990. Distressed hospitals, as described by HCIA, experienced considerable decline in payor mix, utilization, capital structure, profitability, or liquidity. Complicating the situation, information provided by the Department of Health and Human Services' Agency for Health Policy and Research revealed that financially distressed hospitals were serving more uninsured or underinsured patients, providing more charity care, and subsequently had lower revenues than solvent hospitals. Distressed hospitals also had higher costs than expected and could securely decrease administrative costs to recover their financial standings. 4 These grim statistics are very much prevalent some fifteen years later and suggest that, to remain viable in the middle of problems linked with treating Medicare and Medicaid patients, hospitals must become practical in managing their care. A geriatric care management model perhaps is the best solution to this problem. Protecting hospital revenue Healthcare costs for the aged are rapidly rising in the United States. The hospitals are getting affected in the process. One way for hospitals to control these costs is to put into practice a geriatric care management system. The purpose of such a system is to alter the way the hospital treats medically difficult Medicare patients and, therefore, reduce needless hospital costs. Such a system necessitates a process for recognizing elderly patients in need of geriatric care management, treating them competently, and reviewing the system itself. An effective process generally results in major cost savings for the hospital to go with improved patient care and satisfaction A geriatric care management system designed to reorganize the delivery of care for Medicare patients is one way for hospitals to control costs. A system like that is based on the idea that a relatively small part of Medicare patients must be targeted for concentrated care management. This way a hospital can augment the quality of care, steer clear of financial losses, and stop poor clinical outcomes. The patients targeted are generally those who, without proper management, would cater for the majority of hospital problems involving surplus resource use and extended lengths of stay. Because these patients can be prospectively recognized, focused care management techniques can be employed to make certain of proper and efficient hospital care, thus reducing lengths of stay as well as costs. The geriatric care management system thus offers hospitals with ways to decrease a patient's length of stay and to use hospital resources more efficiently. The system focuses on three major functions: detection of patients needing care management, geriatric care management involvement, and program performance assessment. The performance assessment offers information a hospital can use to improve the use of its assets and reduce patients' lengths of stay. Identification: The task of spotting Medicare patients who need geriatric care management begins with an analysis of hospital data that is related to discharged geriatric patients. This process entails analyzing hospital data to recognize DRGs and acknowledging diagnoses as well as individual characters of patients and physicians linked with unsuitable lengths of stay; unnecessary resource use (like pharmacy, laboratory, procedures, imaging services, and x-rays); or tall costs. This analysis compares hospital data with normative data like national Medicare statistics as well as statistics from the managed care industry. Using information acquired through the investigation of hospital data, a process can be planned to prospectively identify Medicare patients who need geriatric care management. Patients targeted for care management includes those whose treatment is liable to cause a financial loss to the hospital, those who can benefit from specialized geriatric care, and those who may have drawn out inpatient stays or who may use hospital resources more than expected under a reasonable, expected course of treatment. Intervention: Once patients in need of geriatric care management are spotted, they should be allocated a geriatric care manager who will organize their hospital stay. Ideally, geriatric care managers would be registered nurses with understanding in both geriatrics and care management, and who are capable of building and maintaining good team bonding within a hospital. They should be trained in the principles of geriatric medicine and the use of care management techniques with the aged people; months of on-the-job training with a knowledgeable geriatric care management coach; and continuing education seminars, preferably bi-annual. The goal of this training should be to offer the hospital with trained and effective geriatric care managers. Under this model, geriatric care managers are allotted to manage patients throughout their hospital stays. Each geriatric care manager can be allocated 15 to 20 patients. Geriatric care management involvement will differ considerably from patient to patient. In general, geriatric care managers work to lessen hospital costs and lengths of stay by working to better the hospital’s operational and administrative side of things. Apart from that, geriatric care managers also help smoothen out the hospital discharge process by working in close proximity with the nursing staff, the patient, his/her family, and the physician. Geriatric care managers serve as reserves to physicians to help improve care and to propose alternative care procedures, settings, and solutions to problems. Performance evaluation: It is vital to evaluate the efficiency of a geriatric care management system. The hospital should be given quarterly performance reports that compare the program with standard data prepared from the original data analysis, as well as other local and national normative data. These performance reports can track data like the number of Medicare patients managed, overall length of stay for managed patients, DRGs of patients managed, number of readmissions, number of outliers, available cost data on managed patients, and money saved through the geriatric care management system. 5 The evaluation also may recognize hospital inefficiencies that add to poor quality and increase Medicare patients' lengths of stay. Inefficiencies may be measured by patient and family approval surveys, physician and nurse approval surveys, morbidity/mortality reports, and reports that track readmission rates. Medicare and Medicaid’s benefit to the society is doubtless. It is a magnanimous tool that ensures that the health related needs of the citizens, from the mansion dweller to the vagabond, are properly met. However, as hospitals are finding out to their chagrin, it is far from a perfect system. The growing awareness of medical benefits has spawned its own share of evil that is badly affecting the health industry’s finances. Some institutions, of course, suffer more than others. Still, there are tools to counter the problem, like the geriatric care management system. All said and done, Medicare and Medicaid’s pros outweigh the cons, for now. Read More