-HCFA the Medicare and Medicaid Agency FACT SHEET February 1997 Contact: HCFA Press Office (202)690-6145 _________________________________________________________________ MEDICARE The Medicare program helps to pay for health care services furnished to people 65 and over and for persons receiving Social Security disability benefits after two years. Also served by Medicare are individuals of any age who have end-stage renal (kidney) disease (ESR) and need dialysis or kidney transplants. Medicare currently covers more than 38 million people, of whom approximately 5 million are disabled under Social Security and approximately 270,000 are ESR patients. The Medicare program has two parts: Hospital Insurance (Part A) and Medical Insurance (Part B). HOSPITAL INSURANCE (Part A) What's Covered? * Inpatient hospital services, including room, meals, nursing care, operating room services, blood transfusions, special care units, drugs and medical supplies, laboratory tests, therapeutic rehabilitation services, and medical social services. * Skilled nursing facility care for continued treatment and/or rehabilitation following hospitalization. * Home health care services prescribed by a physician for treatment and/or rehabilitation of homebound patients, including part-time or intermittent nursing services. * Hospice care for the terminally ill. What's not covered? * Long-term or custodial care. * Personal convenience services such as televisions and telephones, private-duty nurses or the extra costs of private rooms when not medically necessary. Paying the Bills * For the first 60 days of inpatient hospital care in calendar year 1997, Medicare pays all approved charges except for a $760 deductible for which the beneficiary is responsible. * For days 61 through 90, Medicare pays for all covered services except for $190 per day coinsurance payments for which the patient is responsible. * From the 91st through the 150th day, the beneficiary coinsurance rate is $380 a day, but coverage beyond 90 days in any benefit period is limited to the number of lifetime reserve days available. * Each beneficiary has 60 lifetime reserve days that can be used only once. If a beneficiary has been out of a hospital or skilled nursing facility for 60 consecutive days, but is then readmitted to a hospital, a new benefit period begins and the beneficiary is again responsible for a $760 deductible for the first 60 days of inpatient care and coinsurance for days 60-90. * If services of a skilled nursing facility are needed for continued care of a patient after at least three consecutive days of hospital inpatient care, not including the day of discharge, Medicare will pay for all covered services for the first 20 days. From the 21st through the 100th day, the beneficiary is responsible for paying $95 a day in 1997. Medicare does not pay for skilled nursing facility care beyond 100 days in each benefit period. * If a person is homebound and requires skilled care, Medicare can pay for medically necessary home health care, including part-time or intermittent nursing care, physical therapy, speech therapy, occupational therapy, medical social services, and medical supplies and equipment. * For terminally ill patients, Medicare will pay for care from a Medicare-certified hospice, where the specialized care includes pain relief, symptom management and supportive services in lieu of curative services. Financing Hospital Insurance The Hospital Insurance Trust Fund is financed mainly from a portion of the Social Security payroll tax (the FICA deduction). The Medicare part of the payroll tax is 1.45 percent from the employee and 1.45 percent from the employer. MEDICAL INSURANCE (PART B) Coverage Medical Insurance helps to pay for physician services, outpatient hospital services (including emergency room visits when the patient is treated and released), outpatient surgery, diagnostic tests, clinical laboratory services, outpatient physical therapy and speech therapy services, medical equipment and supplies, rural health clinic services, renal dialysis and a variety of other health services and supplies. * Generally, Medical Insurance does not cover routine physical examinations, preventive care, services not related to treatment of illness or injury, and outpatient prescription drugs to be self-administered. * Screening pap smear and mammography examinations are exceptions to the rule against Medicare coverage of routine physical examinations. Medicare covers screening pap smear tests at intervals of three years for detection of cervical cancer, or more frequently for women at high risk of developing cervical cancer. Medicare also covers screening mammography examinations every two years for women 65 and over; annually for women age 50 to 65; annually for women age 40 to 50 at high risk of developing breast cancer; every two years for women age 40 to 50 who are not at high risk; and one time for women 35 to 40. Medicare covers flu shots. The shots are free for those enrolled in Medicare Part B from physicians who accept Medicare payment as full payment. Medicare also covers vaccinations against pneumonia. Paying the Bills Medicare pays 80 percent of fee schedule amounts for most covered services after a beneficiary's payments for services have reached the annual deductible of $100. After meeting the deductible, beneficiaries can limit their out-of-pocket costs to the 20 percent coinsurance amount by choosing physicians and suppliers who accept Medicare assignment, which means they accept Medicare fee schedule amounts as full payment for their services. * "Participating" physicians and suppliers agree to accept Medicare assignment in all cases. Directories listing participating physicians and suppliers are available for examination in local Social Security offices, state and local offices on aging, and senior citizens organizations. Copies can be obtained from Medicare carriers. * Physicians who do not accept assignment can charge up to 15 percent above the Medicare fee schedule amounts, and beneficiaries are responsible for the difference. Physicians who overcharge beneficiaries can be required to make refunds. Funding Medical Insurance Persons enrolled in Medicare Part B pay a monthly premium. The premium established by Congress for calendar year 1997 is $43.80. The general tax revenues of the federal government support approximately 75 percent of the program costs. MANAGED CARE Medicare beneficiaries may have lower out-of-pocket costs and added coverage if they choose to enroll in prepaid health care plans that participate in Medicare instead of receiving services under traditional fee-for-service arrangements. Most Medicare beneficiaries live in areas served by prepaid plans. Medicare contracts with health maintenance organizations (HMOs) and competitive medical plans (CMPs) to provide care to Medicare beneficiaries. Medicare prepays a fixed amount per member, per month for all Medicare-covered benefits. Many organizations offer additional benefits not covered by Medicare. ENROLLMENT AND CLAIMS Enrollments in Medicare are handled by the Social Security Administration. Claims for payments for services to beneficiaries are processed by insurance companies under contract with HCFA. Appeal procedures are available for persons whose claims have been denied or who are dissatisfied with the amount paid. Contractors known as fiscal intermediaries make payments for services provided by hospitals, skilled nursing facilities, home health agencies and hospices. Generally, payments made for inpatient hospital stays are based on the diagnoses of patients' illnesses. Claims for the services of physicians, other medical professionals and suppliers are processed by contractors known as carriers. QUALITY OF CARE Surveys and Certification The Health Care Financing Administration maintains an extensive survey and certification program to ensure that providers and suppliers serving Medicare and Medicaid beneficiaries are complying with federal standards for health, safety, and quality of care. HCFA oversees annual, unannounced inspections of approximately 17,400 nursing homes and 9,800 home health agencies. The agency's quality assurance activities also cover approximately 6,300 hospitals and 157,000 clinical laboratories. Providers and suppliers that are not in compliance and fail to correct deficiencies are dropped from the Medicare and Medicaid programs. MEDICARE BENEFIT OUTLAYS, FISCAL YEARS In billions of dollars (Excluding Administrative Costs) TYPE OF SERVICE 1991 1992 1993 1994 1995 1996 (est.) 1997 (est.) HOSPITAL INPATIENT 60.8. 69.0 75.0 80.9 87.5 94.6 102.1 SKILLED NURSING FACILITIES 2.5 3.7 5.0 7.1 9.1 10.6 12.3 HOME HEALTH 4.9 7.1 9.6 12.1 15.1 16.9 19.9 HOSPICE 0.5 0.8 1.0 1.4 1.9 2.0 2.1 PHYSICIANS, OTHER PRACTITIONERS 31.0 32.3 33.8 37.3 40.4 41.0 43.6 HOSPITAL OUTPATIENT 9.2 10.7 11.9 13.6 14.6 16.3 17.9 GROUP PRACTICE 3.4 3.8 4.6 5.5 6.3 7.7 11.1 INDEPENDENT LABS 1.7 1.7 2.0 2.0 2.1 1.9 2.1 TOTAL * 113.9 129.1 142.9 159.3 176.9 191.1 210.9 * Totals may not be exactly the sum of the columns because of rounding