The impact of health care reform on older workers, retirees and employers

The Patient Protection and Affordable Care Act as amended by the Health Care and Education Reconciliation Act of 2010 impacts everyone who uses or pays for the health care system. Among the new law's effects will be changes in older workers' health care choices as they transition from full-time employees to part-time work or other jobs and, ultimately, to retirement, and the retiree health benefit choices facing their employers. This article reviews the major issues surrounding these changes, including those affecting retiree health benefits, benefits for Medicare-eligible retirees and health care options for older Americans not yet eligible for Medicare. The authors conclude that although employers will be reacting in 2010 and 2011 with regard to some issues surrounding FASB ASC 715-60 and the early retiree reinsurance program, employers should consider waiting to make major changes until regulations are issued and the health plans for active employees have been fully vetted.     

Medicare incentive payments for meaningful use of electronic health records: accounting and reporting developments

The Healthcare Financial Management Association through its Principles and Practices (P&P) Board publishes issue analyses to provide short-term practical assistance on emerging issues in healthcare financial management. In a new issue analysis excerpted in this article, HFMA's P&P Board provides some clarity to the healthcare industry on certain accounting and reporting issues resulting from incentive payments under the Medicare program for the meaningful use of electronic health record (EHR) technology. Consultation on these matters with independent auditors is highly recommended.     

A sign of the times.

Pressure placed on employers to enhance the bottom line comes from a multitude of changes in the marketplace and has resulted in employers seeking to limit their liabilities and expenses for retiree medical care. To address retiree medical issues, employers have adapted a number of strategies that are presented in this article. These include eliminating or modifying benefits, using a defined contribution approach, capping subsidies and enrolling retirees in Medicare HMOs.     

Medicare retiree drug subsidy compliance considerations

Employers and plan sponsors have struggled with many issues associated with Medicare's retiree drug subsidy program. Recent reviews of employer methods for collecting the subsidy from the Centers for Medicare and Medicaid Services (CMS) identified significant gaps that would affect the subsidy payment and create issues in case of an audit. In fact, the Department of Health and Human Services Office of Inspector General (OIG) has placed audits of employer retiree drug subsidy processes in its work plans for 2006 and 2007. This article discusses areas that employers must address now to avoid significant long-term financial and compliance problems in the future.     

Cost and effectiveness of physician peer review in reducing medicare overutilization

There has been concern that some physicians within the U.S. Medicare program may be rendering medical attention unecessarily. To help curb this possible overutilization, peer review committees have been formed in certain areas. These committees of practicing physicians examine utilization practices of doctors.The objective of this study is to determine the cost and effectiveness of the peer review process. In order to do this, we compare the costs and benefits resulting from peer review. The benefits are two types. One type is recoverable overpayments, which peer review has established as amounts that were paid for unnecessary medical attention. The other type is the deterrent to physicians against overutilization, due to the presence of peer review.The findings of this study are that each of the benefits of peer review substantially outweigh its costs, and that the benefits due to the deterrent effect of peer review are evident in all review areas considered.     

A life-cycle model of unemployment and disability insurance

A general equilibrium life-cycle model is developed, in which individuals choose a sequence of saving and labor supply faced with search frictions and uncertainty in longevity, health status and medical expenditures. Unemployed individuals decide whether to apply for disability insurance (DI) benefits if eligible. We investigate the effects of cash transfer and in-kind Medicare component of the DI system on the life-cycle employment. Without Medicare benefits, DI coverage could fall significantly. We also study how DI interacts with reforms of Social Security and Medicare and find that DI enrollment amplifies the effects of reforms.     

The clock is ticking on readmission penalties

Hospital leaders who are considering initiatives to reduce readmissions by improving discharge processes and postdischarge care should begin with five action steps: Ascertain the hospital's Medicare 30-day readmission rates from July 1, 2011, to June 30, 2012. Based on these numbers, estimate the potential readmission penalties the organization may face. Identify a clear strategy or program for the organization to reduce 30-day readmissions and avoid Medicare penalties. Determine the overall direct and indirect costs of this strategy or program. Calculate the potential ROI of the initiative.     

An Empirical Examination of The Nasdaq/CHX Dual-Trading Experiment

We analyze the effects of the SEC's experimental Nasdaq/CHX dual-trading program. The program, which began in 1987 and continues to the present, establishes an experiment in which the costs and benefits of competition between dealer and specialist market structures can be observed directly. Our primary finding is that the program led to significantly reduced mean quoted and percentage spreads for the dual-traded issues. Further, even though the CHX specialists quote lower spreads, they are not able to garner a significant number of trades from Nasdaq.     

The Medicare hospice benefit: the effectiveness of price incentives in health care policy

This article examines the implications of fixed-price reimbursement of providers for access to hospice care by Medicare beneficiaries. Hospices that are offered higher reimbursement rates by Medicare are found to be more likely to become certified to provide care under the Medicare Hospice Benefit program. Each $1.00 increase in the daily routine home care rate raises the probability of certification by 1.7%. In turn, the Hospice Benefit increases access to hospice care by enabling Medicare-certified facilities to serve more patients than they would if they were noncertified. However, care must be taken to set reimbursement rates appropriately. Failure to correctly adjust reimbursement rates for the real costs of certification across different parts of the country leads to disparities in hospice certification and differential access to hospice care for Medicare beneficiaries.     

Flexible benefits and managed care: making it work

The concept of integrating flexible benefits and managed care may seem contradictory. Flexible benefits seek to maximize choice, while managed care attempts to restrict choice. Can these two disciplines be intertwined without delivering conflicting messages to employees? The answer is definitely yes. By following some basic ground rules in design, flexible benefits and managed care can be combined effectively in a way that is attractive to both employers and employees. This article presents some general guidelines for designing a successful "managed flex" program and raises other issues as well, including financial, administrative and communication concerns.     

The Impact of the Inpatient Prospective Payment System and Diagnosis-Related Groups

Abstract

The outpatient prospective payment system for the Medicare program became effective Aug. 1, 2000, as mandated by the Balanced Budget Act of 1997. This outpatient program complements Medicare’s inpatient prospective payment system, which was introduced in 1983. A survey of the literature over the past 20 years is undertaken to review the effects of the inpatient prospective payment system and diagnosis-related groups (DRGs) on inpatient hospital utilization, expenditures, and outcomes. The level of the DRG payment has been questioned, as well as the process of adjusting the payment levels from one year to the next. In addition, past research has speculated that the DRG classification may not be sensitive to severity and is subject to coding ambiguities. These conclusions can be used as input to future research on the new outpatient program, as well as updating research on the inpatient program.     

The Financial Accountability of Australia's Medicare System: A Generational Accounting Analysis

The financial sustainability of publicly funded health care systems is sensitive to the demographics of ageing populations, which have a significant bearing on their financial management, accountability and reporting of their financial performance. This paper examines historical and current trends in demographic structure of Australia's population that are likely to impact on the financial management and accountability practices affecting Australia'suniversal public health care system ('Medicare'). The pay-as-you-go financed funding status of Medicare as represented under both currently required, cash-based accounting principles and proposed accrual-based accounting principles are criticised for not recognising the obligations of the Australian government under Medicare. An alternative system of generational accounting is proposed that projects the financial management costs of Medicare. Data are taken from both historical trends in expenditure and ageing as well as projected demographics. The analysis implies that there is significant intergenerational-inequity in the funding of Medicare, which is not recognised under accrual-based accounting principles that are now being used to evaluate the financial accountability and performance of government entities.