CMA Alert | June 9, 2022

2022 Medicare Trustees Report | Additional Two Years of Solvency Projected, But Attention Still Needed

Every year, the Social Security and Medicare Boards of Trustees release reports on the fiscal health of the Medicare and Social Security programs.  On June 2, 2022, the Trustees released their 2022 annual reports: the Medicare Trustees report is available here, and a fact sheet summarizing the reports is available here.  As noted in the fact sheet:

• The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits. [emphasis added]
• The Supplementary Medical Insurance (SMI) Trust Fund [which funds Parts B and D of Medicare] is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries.

As noted by reporter Michelle Stein at Inside Health Policy (6/2/22), “Medicare trustees […] projected the Part A trust fund would be insolvent in 2028 — two years later than they predicted in the previous report but two years earlier than the Congressional Budget Office’s recent 2030 projection — and attributed a better-than-expected economic recovery, COVID-related deaths among seniors and deferral of other health care visits during the pandemic as partially responsible for their new projection.”  Demographics – specifically an aging population – and the rising costs of health care, continue to put significant pressure on Medicare’s financing.

The projected life of the HI trust fund has varied considerably over the years, based on a number of factors, including the health of the economy.  Congress has never let the fund become insolvent.  What happens if the fund does become insolvent?  The fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits. That means a 10% reduction in what there is to spend on Part A – not a situation we want to get to, but a far cry from “bankruptcy” or “going broke” that many policymakers claim.

Addressing Medicare’s Fiscal Solvency

As the Center for Medicare Advocacy routinely notes, there are various ways to address Medicare’s solvency, by raising revenues, reducing spending, or both.  For example, a May 2021 issue brief written by Center for Medicare Advocacy Visiting Scholar Marilyn Moon examines how Medicare has operated over time, how well it is doing at present, and what changes have been used in the past to keep the program financially strong.  The brief outlines potential short-term and long-term funding solutions through raising additional revenues. (Also see, e.g., this CMA Alert (Feb. 11, 2021).) 

One significant and obvious option, which is ignored by most policymakers, is to look at the Medicare Advantage (MA) program. There is consistent, and growing evidence that the Medicare Advantage program is paid more than traditional Medicare would spend on the same beneficiary, and such spending is growing per person, with significant implications for the Medicare programmatic spending (see, e.g., this CMA Alert (March 31, 2022); also see this CMA Alert (March 18, 2021).  

As the Center noted in a recent CMA Alert (March 3, 2022), when it comes to Medicare policy discussions on Capitol Hill, two things are commonly raised:

1. Active support for Medicare Advantage (MA), and
2. The looming insolvency of the Part A Trust Fund.

Despite the painfully obvious connection between these two, however, they are rarely discussed together. In fact, policymakers in both parties continue to ignore their obligation to address inflated Medicare Advantage payments.

As highlighted in another recent CMA Alert (May 5, 2022), while there is an apparent lack of appetite on either side of the aisle to address MA overpayments, a change in control of Congress could lead to further efforts to bolster the MA program by, among other things, expanding enrollment opportunities into MA and making the MA program the default selection for new enrollees. 

As Congress continues to dodge the issue of MA overpayments, they will, at some point, have to turn attention back to trust fund solvency and overall programmatic spending.  We urge policymakers, and the public in general, to beware of proposals that paint traditional Medicare as the problem, and Medicare Advantage as the solution.  Without significant policy changes, we simply cannot afford this path.

Medicaid SCOTUS Decision

This week the Supreme Court of the United States ruled 7-2 in Person v. Marstiller, Sec’y of the Fla. Agency for Health Care that states can take money Medicaid beneficiaries win in personal injury litigation for future medical expenses to recoup payments the program made for their prior care.

Justice Thomas delivered the majority opinion of the Court:

Medicaid requires participating States to pay for certain needy individuals’ medical costs and then to make reasonable efforts to recoup those costs from liable third parties. Consequently, a State must require Medicaid beneficiaries to assign the State “any rights . . . to payment for medical care from any third party.” 42 U. S. C. §1396k(a)(1)(A). That assignment permits a State to seek reimbursement from the portion of a beneficiary’s private tort settlement that represents “payment for medical care,” despite the Medicaid Act’s general prohibition against seeking reimbursement from a beneficiary’s “property,” §1396p(a)(1). The question presented is whether §1396k(a)(1)(A) permits a State to seek reimbursement from settlement payments allocated for future medical care. We conclude that it does.

In dissent, Justice Sotomayor, joined by Justice Breyer, disagreed with the majority’s interpretation of the Medicaid Act:

These provisions constitute a limited exception to the Act’s default rule prohibiting a State from imposing a lien against the beneficiary’s property or seeking to use any of that property to reimburse itself. Accordingly, a State may claim portions of the beneficiary’s tort award or settlement representing payments for the beneficiary’s medical care, but not those representing other compensation to the beneficiary(e.g., damages for lost wages or pain and suffering). . . . This statutory structure recognizes that it would be “‘fundamentally unjust’” for a state agency to “‘share in damages for which it has provided no compensation.’” . . . Today, however, the Court permits exactly that. It holds that States may reimburse themselves for medical care furnished on behalf of a beneficiary not only from the portions of the beneficiary’s settlement representing compensation for Medicaid-furnished care, but also from settlement funds that compensate the Medicaid beneficiary for future medical care for which Medicaid has not paid and might never pay. The Court does so by reading one statutory provision in isolation while giving short shrift to the statutory context, the relationships between the provisions at issue, and the framework set forth in precedent. The Court’s holding is inconsistent with the structure of the Medicaid program and will cause needless unfairness and disruption. (Emphasis added)

The dissent also notes that the ruling may reduce beneficiaries’ incentive to bring tort claims, may lead to states recovering fewer overall expenses, and also “undercuts Congress’ choice to allow Medicaid beneficiaries to place their excess recovery funds in Special Needs Trusts, protecting their ability to pay for important expenses Medicaid will not cover.”

Background in the case according to the syllabus: “Petitioner Gianinna Gallardo suffered catastrophic injuries resulting in permanent disability when a truck struck her as she stepped off her Florida school bus. Florida’s Medicaid agency paid $862,688.77 to cover Gallardo’s initial medical expenses, and the agency continues to pay her medical expenses. Gallardo, through her parents, sued the truck’s owner and driver, as well as the Lee County School Board. She sought compensation for past medical expenses, future medical expenses, lost earnings, and other damages. That litigation resulted in a settlement for $800,000, with $35,367.52 expressly designated as compensation for past medical expenses. The settlement did not specifically allocate any amount for future medical expenses.”

The full decision is available at: https://www.supremecourt.gov/opinions/21pdf/20-1263_g2bh.pdf

As Interstate Telehealth Emergency Licensure Waivers Expire, Study Examines Impact on Medicare Beneficiaries

The first COVID-19 public health emergency (PHE) was passed on January 31, 2020.[1] Almost two-and-a-half years later, over one million people have lost their lives to the infectious disease, and the nation is still struggling to emerge from the pandemic. According to the Centers for Disease Control and Prevention, 78 percent of the counties in the United States are currently classified as having a “high” COVID-19 community transmission rate.[2]

To reduce exposure to the disease, the Medicare program provided temporary waivers to increase flexibilities around telehealth use during the PHE. It resulted in a 63-fold increase in telehealth use in 2020, with most beneficiaries (92%) accessing telehealth visits from their homes.[3] The Centers for Medicare & Medicaid Services (CMS) allowed individual states to waive within-state licensure requirements for Medicare beneficiaries to receive telehealth services as part of those temporary flexibilities.[4] Additionally, all 50 states and Washington, D.C. also issued emergency orders allowing out-of-state clinicians to perform telehealth across state lines (i.e., interstate telehealth). As of April 2022, most states (37) and Washington, D.C., have ended their emergency declarations resulting in the expiration of many temporary licensure waivers.

A new study published in Health Affairs examines the trends in interstate telehealth use by Medicare beneficiaries, beginning before the pandemic and stretching into its first year (2017-2020). Researchers found that despite the fact that the number of out-of-state telehealth visits grew in 2020, reflecting the overall growth of telehealth services, the percentage of telehealth use that occurred across state lines did not substantially change. A caveat noted by researchers was that the percent of out-of-state telehealth varied by state and was “strongly correlated with the percentage of in-person out-of-state care received by beneficiaries in the state.” For most states, out-of-state telehealth visits amounted to fewer than 1%. States such as Vermont and New Hampshire, along with Washington, D.C., however, relied considerably on out-of-state telehealth.

Researchers also discovered that out-of-state telehealth was primarily used for continuity of care for established patients and routine diagnoses, rather than for new patients. Finally, researchers found that a higher percentage of rural patients used both out-of-state in-person and telehealth service. They noted this was in line with established literature about “health care provider shortages and extended distances that rural patients have to travel for care.”

This finding led the researchers to conclude that “interstate telehealth legislation and policy changes are best prioritized at the individual state level.” It was recommended that state governments could determine if they should prioritize out-of-state telehealth by examining how much total care (in-person and telehealth) occurred across state lines. Additionally, it was recommended that since about 66% of out-of-state telehealth services are between a clinician and patient in bordering states, “states with rural counties located along their borders may consider policies such as licensure reciprocity to enable continued telehealth access in rural communities.”

The Center for Medicare Advocacy has been closely monitoring the expansion of telehealth services and its potential impact on beneficiaries since the beginning of the pandemic. We recently released a special report entitled Telehealth and the Medicare Population: Building a Foundation for the Virtual Health Care Revolution. Included in the report are policy recommendations for lawmakers and policy makers. The Center holds the perspective that interstate telehealth is beneficial and should be promulgated where needed.

___________________

[1] Office of the Assistant Secretary for Preparedness and Response. Public Health Emergency Declarations. ASPR. (n.d.). Available at: https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx 
[2] CDC. CDC COVID Data Tracker. Centers for Disease Control and Prevention. (Updated June 7, 2022). Available at: https://covid.cdc.gov/covid-data-tracker/#county-view?list_select_state=all_states&list_select_county=all_counties&data-type=Risk&null=Risk 
[3] ASPE. Medicare Beneficiaries’ Use of Telehealth in 2020: Trends by Beneficiary Characteristics and Location. (December 2021).  Available at: https://aspe.hhs.gov/sites/default/files/documents/a1d5d810fe3433e18b192be42dbf2351/medicare-telehealth-report.pdf 
[4] Andino, J. J., Zhu, Z., Surapaneni, M., Dunn, R., & Ellimoottil, C. Interstate Telehealth Use By Medicare Beneficiaries Before And After COVID-19 Licensure Waivers, 2017-20. Health Affairs. (June 2022). Available at: https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2021.01825?journalCode=hlthaff

Kaiser Family Foundation: Medicare Spending for Skilled Nursing Facilities Increased During Pandemic, While Fewer Residents Were Covered

Kaiser Family Foundation reports that spending for care in skilled nursing facilities (SNFs) by the traditional Medicare program increased by 4% during the coronavirus pandemic, although Medicare spending for most other services declined, and the number of Medicare beneficiaries in SNFs declined.  As the result of higher spending per resident per day and residents’ longer lengths of stay, the Medicare program paid more for each beneficiary’s SNF stay and had higher overall spending for SNF care.  

Medicare Spending for Skilled Nursing Facility Care, 2018-2020

Kaiser explains that three factors appear to have contributed to increased Medicare payments for SNF care – two waivers of statutory limitations in Medicare coverage, which were intended to keep hospital beds open and available, and the new Part A reimbursement system, Patient Driven Payment Model (PDPM), which went into effect October 1, 2019.  Beneficiaries under age 65, although only 10% of beneficiaries in traditional Medicare, accounted for 26% of the increase in Medicare’s spending for SNF care.

Since March 2020, CMS has waived the three-day inpatient hospital stay requirement, which Kaiser calculates accounted for more than 15% of SNF stays in 2020.  CMS also waived the 100-day limit in the SNF benefit period.  In addition, PDPM has not been budget-neutral, as CMS intended, but has resulted in higher daily rates. 

In the proposed annual update to Part A payments to skilled nursing facilities, CMS proposes recalibrating the rates to recapture the PDPM overpayments.  The final rule is expected in August.

To read the Issue Brief, Jeannie Fuglestein Biniek, Juliette Cubanski, and Tricia Neuman, “Amid the COVID-19 Pandemic, Medicare Spending on Skilled Nursing Facilities Increased More than 4% Despite an Overall Decline in Utilization” (Jun. 1, 2022), go to https://www.kff.org/medicare/issue-brief/amid-the-covid-19-pandemic-medicare-spending-on-skilled-nursing-facilities-increased-more-than-4-despite-an-overall-decline-in-utilization/

FREE WEBINAR | Voices of Medicare: Updates from the Field

Wednesday June 21, 2022 @ 2 – 3:00 PM EDT

This presentation will examine real stories of current Medicare Issues told by our advocates.

Presenters and topics will vary, but may include Medicare Advantage Plans costs to the Medicare Program and beneficiaries.

Register Now: https://attendee.gotowebinar.com/register/4143381341987081230

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