Healthcare Changes Ahead

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What Could Medicare Diagnosis Codes Mean For Me?

Sometimes the biggest changes are ones you cannot see. For example, high blood pressure is known as the silent killer. There is no doubt that Medicare is going to change, but not what easily seen such as deductibles, co-pays and what they coverage; but how they cover.

Even 30 years ago, rising medical costs were determined to be a big concern according to “An Information paper” prepared for use in 1984 by the Special Committee on Aging United States Senate. In its conclusion: “Medicare’s physician payment policies are no longer working well for the elderly, for taxpayers, or for many physicians. The SMI program’s rising costs for paying physicians-which will make it the third largest Federal domestic program in 1985-are out of control and accelerating…”

That was about the time Medicare started a reimbursement process for hospital named Diagnostic Related Groups (DRGs). By this method hospitals were paid based upon the diagnosis which causes the hospitalization, not actual services provided. As what some would view to be an extension of that concept, a part of Health Care Reform (APPAC) is providing hospitals and healthcare organizations a three year intuitive to be paid by receiving “bundled payments”. If bundled payments become the standard this will become a major change in Medicare.

Currently, providers are paid for each Medicare billable service they provide. Recently, President Obama’s administration announced that over 500 hospital and related health care organizations have agreed to be paid “bundied payments” as a part of this three year study.

Bundling will mean that providers agree to receive less money for an “episode of care”. For example, a senior has a knee replacement, the providers may receive $30,000. Under the bundling system the providers might agree to a 2% discount so that the government would pay $29,400 If cost of care exceeds $29,400 then the Medicare would send a check for the cost overrun depending upon the type of care treated.

Further, under the current system, according to American Medical News in 10/2012, under the APPACA system of bundling, the procedure cost may be $15,00 – $30,00. The bundled payment for the procedure is spent on device implants, facility fees, therapy providers and the surgeons. In the end, the surgeon could expect to receive about $1,500 of the total.

Also watch for private insurance companies to follow Medicare’s lead. Already, United Health Group, Humana, Aetna and some of the Blue Cross companies are making bundled payments to groups of doctors and hospitals.

The objective of “bundled payments” is to lead to better management of care through a team approach, less fragmented care and improved outcomes. Overall, Medicare, as they become more involved in all the country’s health plans hope for lower costs.

So what does this all mean: this is a changing time. Procedures like knee replacements may become less suitable for those at higher risk of complications or failure. I guess the responsibilities to take care of our bodies are more shifted to us to be responsible stewards of what we are given.

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Steven A. Buttice is the president of Medical Reimbursement & Management Services, Inc., a firm specializing in issues affecting seniors, including seminars and consultation on Medicare Plans, Long Term Care and other types of insurance, claims issues, and sales/service of insurance products since 1984.

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