Legislative Watch

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April 2004

By George G. Olsen, JD

The provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA or the Medicare Modernization Act) that establish the new Medicare comprehensive prescription drug benefit have tended to obscure the myriad of other critical Medicare reforms and benefits created by that legislation. In point of fact, the Medicare Modernization Act is a far-reaching law that significantly enhances the congeries of benefits available to seniors and the disabled. Indeed, one of the message points that the Centers for Medicare and Medicaid Services (CMS) is using to educate the public about the legislation is: “Better Benefits—More Choices.” This article focuses on some of the new health care services that MMA makes available to Medicare beneficiaries.

Beginning in 2005, all persons enrolling in the Medicare Program will be entitled to coverage for an initial physical examination. The examination includes measurement of height, weight, and blood pressure; an electrocardiogram; and education, counseling, and referral to other preventive services provided by Medicare including vaccinations, mammography screening, pap smear screens and pelvic examinations, prostate cancer screening, colorectal screening, diabetes self-management, bone mass measurement, glaucoma testing, medical nutrition therapy, cardiovascular screening, and diabetes testing. The purpose of the initial physical examination is to identify Medicare beneficiaries who have diseases and conditions that, if diagnosed early, can be treated and managed, resulting in fewer serious health consequences. CMS anticipates that the examination will be especially helpful to persons who are obese, or who have asthma, heart disease, or diabetes.

CARDIOVASCULAR AND DIABETES SCREENING
Medicare will provide cardiovascular screening for beneficiaries starting next year. Coverage will include a blood test for the early detection of cardiovascular disease or an elevated risk of cardiovascular disease by testing cholesterol levels and other lipid or triglyceride levels. In the future, additional medical indications may be added to the coverage if recommended by the US Preventive Services Task Force and approved by the Secretary of Health and Human Services (HHS). This new benefit will help at-risk Medicare beneficiaries identify, treat, and manage their conditions at an early stage. This benefit does not have a deductible or co-payment that must be paid by the Medicare beneficiary.

The Medicare Modernization Act recognizes the enormous human and financial toll that diabetes imposes on those who suffer from the disease as well as the steep costs that must be incurred by the nation’s health care system to treat the disease. In 2002, nearly 18 million people, approximately 6.3% of the US population, had diabetes. It is the sixth leading cause of death, the leading cause of blindness among adults aged 20 to 74, and the leading cause of treated end stage renal disease. The cost to the nation of caring for those with diabetes has been estimated to be $132 billion annually.

Commencing in 2005, Medicare coverage will be provided for diabetes screening tests for beneficiaries at risk for diabetes. The tests will include a fasting plasma glucose test as well as other tests that the HHS Secretary determines to be appropriate. Individual risk factors that establish eligibility for the benefit include: hypertension, dyslipidemia, obesity, prior identification of impaired fasting glucose or glucose tolerance, or at least two of the following—overweight, family history of diabetes, history of gestational diabetes or delivery of a baby over nine pounds, and age 65 or older. Beneficiaries who qualify for the coverage will receive care free of any deductible, co-payment, or other fee.

In addition to the screening, Medicare beneficiaries who have diabetes will be able to take advantage of a provision in the comprehensive drug benefit that establishes drug therapy management programs for patients with multiple chronic diseases. These programs are designed to help ensure the best therapeutic outcomes from pharmaceutical therapies and reduce the risk of adverse medication events. Note too that the new Medicare drug benefit covers insulin and associated diabetic supplies (including syringes) beginning on January 1, 2006.

The MMA also phases in coverage for fee-for-service chronic care improvement programs. These disease management programs are intended to improve clinical outcomes, enhance beneficiary satisfaction, and control the costs of care for chronic conditions. These programs may be run by disease management organizations, health insurers, physician group practices, and other integrated delivery systems.

HOME HEALTH AND HOSPICE BENEFITS
The legislation contains a number of provisions designed to improve the Medicare home health benefit and increase access for beneficiaries to such services. The Medicare Modernization Act revises the home health annual update from a fiscal year basis to a calendar year basis. In 2004, the first calendar quarter will be frozen at the prevailing rates for FY 2004. The new calendar year update will become effective April 1, 2004, and is pegged at the market basket minus 0.8% for each of calendar years 2004 (last three quarters), 2005, and 2006. The rate returns to the full market basket in 2007.

Rural home health agencies will receive increased payments beginning on April 1, 2004. The enhanced payment for home health services furnished in rural areas will be 5% for 1 year. Pursuant to the new law, CMS will conduct several demonstration projects related to home health care:

Consumer-Directed Care Demonstration Project: This project will test consumer-directed personal care services under Medicare for individuals with certain chronic conditions.
Homebound Demonstration Project: This is a 2-year program where certain Medicare beneficiaries with severe and permanent disabling conditions are deemed homebound, regardless of their absences from the home for any reason.
Adult Day Services Demonstration: This 3-year demonstration is intended to test the provision of home health services to home health beneficiaries in an adult day care setting.

The Medicare hospice benefit is enhanced by MMA. The law provides coverage for a one-time consultation service for a terminally ill individual who has not elected the hospice benefit. The benefit includes evaluation of the patient’s need for pain management, symptom management, and care options. The hospice will be paid an amount equal to the payment under the Medicare physician fee schedule for an evaluation and management visit for problems of moderate severity and requiring medical decision-making of low complexity.

In an effort to improve access to hospice care, nurse practitioners will be permitted to serve as the attending physician for patients who elect the Medicare hospice benefit but they will not be authorized to certify a terminal diagnosis—that may be done only by a medical doctor. In addition, the legislation permits the utilization of arrangements with other hospice programs to provide core services in exigent circumstances. Hospices may also contract with other providers for highly specialized services. Furthermore, CMS is required to conduct a demonstration project to evaluate the delivery of hospice care in rural areas pursuant to which beneficiaries who do not have a caregiver at home may receive services in a facility that has 20 or fewer beds.

RURAL HEALTH CARE
The MMA expends nearly $20 billion in additional funding for rural health care services. Indeed, the improvements in Medicare services for beneficiaries in rural areas were a major selling point for members of Congress who represent rural areas of the country. The key rural provisions include:

The law equalizes the urban and rural standardized payment amounts under the inpatient hospital prospective payment system so that all hospitals in all areas of the country, urban or rural, would have a single base payment rate beginning in 2004.
MMA reduces the labor-related share of the wage index employed in the hospital prospective payment system because rural hospitals, whose wage levels are low, were disadvantaged by a high labor-related share.
The legislation increases the cap on the disproportionate share adjustment for rural and small urban hospitals from 5.25% to 12%. This provision is of great benefit to hospitals that serve a disproportionate share of low-income and uninsured patients.
Low volume hospitals—ie, those that are located more than 25 miles from another hospital and have less than 800 discharges a year—are permitted a graduated adjustment payment of up to 25% of the amount that would otherwise be payable under the prospective payment system.

BENEFICIARY EDUCATION
The Department of Health and Human Services has initiated a massive effort to educate senior citizens and disabled individuals about the important new benefits created by the Medicare Modernization Act. Known as the “National Medicare & You Education Program,” this undertaking is a rich and convenient source of information. The central elements of the campaign are:

National Advertising Campaign. The campaign will use radio, television, print media, and the Internet to inform beneficiaries and their caregivers about the various sources of detailed data about the benefits available under Medicare as a result of the new legislation.
Toll-Free Number. Beneficiaries can call 1-800-MEDICARE for data about benefits, enrollment, health plan options, and other critical information. Customer service representatives are available 24 hours a day, 7 days a week. HHS expects that it will receive more than 12.8 million calls to this line in 2004.
Print Materials. CMS has begun to mail more than 39 million copies of a handbook entitled “Medicare & You” to beneficiaries and other interested parties. The handbooks are available in English and Spanish as well as in Braille and large print.
Internet. Extensive information about the Medicare program, including the extensive improvements made by MMA, is available at www.medicare.gov.
Community Outreach. CMS intends to work very closely with State Health Insurance Assistance Programs to provide counseling and information to Medicare-eligible individuals.

George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies and Providers.

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April 2004