Medicare and Health Reform

The Affordable Care Act set up new ways for health care to be administered to people using Medicare, including Accountable Care Organizations (ACOs) and medical homes. With a managed care approach, ACOs were formed in order to streamline Medicare, so that services are delivered at a higher quality, more efficiently, and more cost effectively for both the patient and the government.

Medicare Part D, the prescription drug insurance program, also changed under the health law. The federal law added protections so that seniors don’t run out of coverage for their medications.


Medicare Part D Changes

Some Medicare recipients have already experienced some of the benefits of health reform on the program, especially if they take prescription medications. Health reform eliminates the coverage gap, also known as the “doughnut hole” in Medicare Part D coverage by phasing it out by 2019.

By eliminating the doughnut hole, a period when members must pay the full price of drugs, elderly patients can continue their prescribed treatments without skipping days. The laws also requires brand-name drug manufacturers to offer a 50 percent discount during the coverage gap, and authorizing Medicare to negotiate for lower drug costs.

Any Medicare beneficiary who hit the initial limit for Medicare Part D spending was issued a $250 rebate check in 2011, in an effort to begin solving the coverage gap problem. Since 2013, members could receive subsidies for prescription drugs, and this assistance will increase until 2020, when the doughnut hole is filled.

The law ensures that Medicare members never pay over 25 percent of drug prices out-of-pocket.


Copays for Preventive Care Eliminated

Prior to the ACA, Medicare beneficiaries were required to pay an annual deductible for physician services, in addition to 20 percent of the cost of service. After health reform, certain preventive care such as wellness visits, cancer screenings, immunizations, and colonoscopies have not required a copayment for the past year and a half.

Obamacare makes free preventive care a requirement for all types of insurance coverage, including Medicare. No more copays means receiving quality care at no additional cost.


Independent Payment Advisory Board (IPAB)

The Independent Payment Advisory Board was set up to recommend ways to reduce Medicare spending if Medicare per capita growth rates go over certain targets. This board of individuals will submit their proposals to the HHS, who will implement their measures unless Congress is opposed.

Though accused of being a rationing board, the IPAB is not legally permitted to make changes that involve rationing care, or modifying benefits, eligibility, premiums, or taxes, or from suggesting payment reductions for specific providers before 2020.


Changes in Care and Payment

Several overhauls have taken place in how Medicare members receive their care. ACOs, as mentioned, are one method, as well as the Center for Medicare and Medicaid Innovation being started to test quality of care, and payment and service delivery models.

The Federal Coordinated Health Care Office was set up within CMS to improve the care delivered to dual eligibles (Medicare and Medicaid). A pilot program to bundle payments for post-acute care, value-based purchasing were also put in place.


Medicare Advantage Adjustments

Under the health law, federal backing for Medicare Advantage plans was reduced. Starting in 2011, the law froze the maximum amount Medicare pays privately sold medical and hospital plans per county.

In 2012, phases in reductions for Medicare Advantage plan payments in relation to fee-for-service expenses began to take place in each county. Advantage plans must also meet MLR standards, maintaining a loss ratio of at least 85 percent by 2014.