CMA Alert | September 2, 2021

Medicare is at a Crossroads – Time to Dispel Myths Hindering an Historic Expansion of Benefits

Congress is in the midst of putting together an historic legislative package that would expand and strengthen our country’s safety net in a number of ways, including broad changes to health coverage.  This could include adding dental, hearing and vision coverage to the Medicare program, a long-overdue and critical update to the nation’s flagship insurance program.  In an effort to thwart this historic opportunity, opponents of such expansion are circulating various myths about Medicare and Medicare beneficiaries. We aim to dispel these myths with the facts.

1. Critical Dental, Hearing and Vision Services Are Needed and Largely Unaffordable for Most Medicare Beneficiaries

Myth: Medicare beneficiaries are “wealthy” and don’t need dental, vision and hearing coverage.

Fact: Most Medicare Beneficiaries Are Not Wealthy and Cannot Afford These Services

A recent column by the editorial board of the Washington Post offered general support for the developing legislative package, but cautioned against some of the provisions, noting: “While some seniors could use the dental, vision and other new Medicare benefits Democrats are considering, extending these generous new entitlements to wealthy beneficiaries should not be a priority.”

Contrary to regular assertions, the vast majority of Medicare beneficiaries are not “wealthy” and many struggle to afford the healthcare that they have, and must, of course, pay full freight for things not covered by their insurance. As noted in a report by the Kaiser Family Foundation (KFF) analyzing 2019 data, “many Medicare beneficiaries lived on limited incomes and modest, if any, savings, with wide disparities by age, gender and race/ethnicity.” Among the key findings, the report noted:

• “Half of all Medicare beneficiaries lived on incomes below $29,650 per person in 2019; one in four had incomes below $17,000 per person
• Half of all Medicare beneficiaries had savings below $73,800 per person in 2019; one fourth had less than $8,500 per person in savings, and 12% had no savings or were in debt.”

Further, only 5% of Medicare beneficiaries had incomes above $117,700 in 2019.  A 2019 KFF report analyzing out-of-pocket spending found that “Medicare beneficiaries spent $5,460 out of their own pockets for health care in 2016, on average, with more than half (58%) spent on medical and long-term care services ($3,166), and the remainder (42%) spent on premiums for Medicare and other types of supplemental insurance ($2,294).” People over 85, women and those with multiple chronic conditions spent more than the average.  The same report found that “half of all beneficiaries in traditional Medicare spent at least 12% of their income on out-of-pocket health care costs in 2016. One quarter of all beneficiaries spent at least 23% of their incomes on health-related services in 2016, while 10% spent nearly half of their income” – with greater burdens generally borne by lower-income, older and those with multiple chronic conditions.

Fact: The Need for Dental, Hearing and Vision is Great

The unmet need among Medicare beneficiaries for dental, hearing and vision care is great. As noted by the Kaiser Family Foundation (KFF), “Lack of dental care can exacerbate chronic medical conditions, such as diabetes and cardiovascular disease, contribute to delayed diagnosis of serious medical conditions, and lead to preventable complications that sometimes result in costly emergency room visits.”  As noted in a recent STAT article highlighted in a Center Weekly Alert, hearing loss impacts two-thirds of adults over age 70, and is understood to be leading risk factor contributing to the development of dementia. According to the New York Times, “[i]n 2016, 39 percent of Medicare beneficiaries reported having trouble seeing even with their glasses, and only 58 percent of those beneficiaries reported having had an eye exam in the previous 12 months.”

Medicare is a social insurance benefit that should be equitable in coverage to all. While there is certain assistance for lower-income individuals, and higher premiums charged for certain higher-income individuals, Medicare is not a means tested program.  Access to benefits should not be differentiated by income, as some coverage expansion proposals would do by only extending benefits to lower-income individuals.  Everyone should have equal access to all benefits – regardless of their income and whether or not they choose to enroll in a private plan.

2. Dental, Vision and Hearing Benefits Should be Comprehensive and Available for all Beneficiaries, Not Just Through Private Plans

Myth: These “extra” benefits (dental, hearing and vision) are already available in private Medicare Advantage plans so we don’t need to expand them to everyone in traditional Medicare. 

A common talking point used by those opposed to expanding Medicare benefits is that such benefits are “duplicative” or provide “duplicate coverage” to what is already available through private Medicare Advantage (MA) plans.  For example, according to a recent statement issued by AHIP, the health insurance lobbying organization, “Lawmakers are considering using Medicare Advantage to pay for adding new dental, vision, and hearing benefits in traditional Medicare. These are important benefits, but adding them to Medicare Part B is duplicative and paying for them by cutting Medicare Advantage benefits is unfair to the tens of millions of seniors who actively choose to enroll in Medicare Advantage.” Neither of these points are accurate.

Fact: Expanding Dental, Vision and Hearing Benefits Would Not be “Duplicative” or Unfair

In 2021, roughly 42% of Medicare beneficiaries are enrolled in Medicare Advantage (MA). Since dental, hearing and vision services are not generally covered under Part B, there is clearly no “duplication” of coverage for the roughly 58% of Medicare beneficiaries who are not in MA plans.  While many MA plans offer some of these optional services, they are “supplemental” and are offered at a plan sponsor’s discretion on an annual basis, using rebate dollars (discussed below). 

There are no requirements regarding the scope of such optional coverage offered by MA plans. Instead of uniform and comprehensive coverage for these services were they covered under Part B, a 2021KFF report notes that

 “[alt]hough these benefits are widely available, the scope of specific services varies. For example, a dental benefit may include preventive services only, such as cleanings or x-rays, or more comprehensive coverage, such as crowns or dentures. Plans also vary in terms of cost sharing for various services and limits on the number of services covered per year and many impose an annual dollar cap on the amount the plan will pay toward covered services.”

The 2021 KFF report focusing on Medicare and dental coverage found that, as of 2019, nearly half of all Medicare beneficiaries (47%) have no dental coverage at all.  Of the MA enrollees who are in plans that offer some dental coverage, there are usually significant limitations.  For example, more than half (59%) of MA enrollees are in a plan with a maximum dental benefit of $1,000 or less (among those in plans with an annual limit), and for more extensive dental services (beyond preventive services), “50% coinsurance and caps are the norm”.

A May 2021 fact sheet by the Center for Medicare Advocacy, Justice in Aging and Families USA outlines why simply offering oral health coverage through MA plans (or Medigap plans) is not the solution for various reasons:

• MA is not the right coverage choice for everyone,
• MA coverage of these services, if available, is not free or comprehensive,
• Keeping such coverage only in MA adds to the complex set of choices beneficiaries must make with respect to how they access their benefits, and
• Expanding MA adds to the cost of the Medicare program.

Fact: Expanded Benefits Should be Added to Part B of Medicare

Instead of limiting these benefits to MA or other private plans, as noted in our  joint fact sheet,  “adding oral health coverage into Part B integrates oral health with the delivery of other health benefits, including preventive services. Using Part B’s coverage criteria, payment structure, rate setting, appeals, and low-income beneficiary protections that are already in place also minimizes administrative complexity and makes the benefit easier to navigate.”  Further, MA plans would have to cover such benefits to the same extent required under Part B, rather than set their own criteria and impose their own limitations.

In short, if dental, hearing and vision benefits were added to Medicare Part B, they would be available to all Medicare beneficiaries – not just those who choose (or are forced by their employer) to enroll in a private plan.

3. Now is the Time to Expand Medicare Coverage

Myth: Medicare is going “broke. This is no time to add benefits.

Fact: Medicare is “not going broke” and if properly implemented in Medicare Part B, these benefits will not negatively impact the Trust Fund

With Congress poised to act, there is currently a rare opportunity to make meaningful improvements to Medicare and other critical programs. Yet the associated costs and concerns about the Medicare Trust Fund are often raised as barriers to doing so.

Fact: The 2021 Medicare Trustees Report is Unchanged Since 2020

The annual release of the Medicare Trustees report, which projects the fiscal health of the Medicare program, focusing on the Part A Trust Fund, often serves as an impetus for calling for Medicare changes and cuts.  The 2021 report released on August 31, 2021, projects that the Part A Trust Fund will be depleted by 2026 – unchanged from last year’s projection, despite the impact of the COVID-19 pandemic. 

As we noted last year, and in previous years, even if the Trust Fund were to be depleted as projected, the program would still be able to pay out approximately 90% of Medicare Part A benefits. While not ideal, this is far from “bankruptcy.”  Further, the date of projected insolvency is an estimate, and could easily change again – as it has many times before.

The Trust Fund largely reflects the health of the economy. At various times since 1970, the trustees have projected Trust Fund insolvency in as few as four years or as many as 28 years.  While the Part A Trust Fund is mostly funded by payroll taxes, Medicare Part B, which would cover these expanded benefits, is funded by a certain percent of general revenues and premiums, and therefore cannot “go broke.”

Medicare’s fiscal solvency can be strengthened through various means, including by addressing ongoing Medicare Advantage overpayments, discussed below. In a May 2021 issue brief, 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.

In short, Medicare is not “going broke.” As we have also noted in previous years, the Trustees’ projection should not be used as an excuse to cut Medicare benefits for older and disabled people, nor, in the current context, should it be used as a barrier to expand benefits. This is particularly true since the proposed dental, hearing, and vision benefits would be covered under Medicare Part B, not through Part A and the Trust Fund.

Fact: There is Untapped Potential for Cost Savings in Medicare

Unlike the Part D prescription drug benefit that Congress created in 2003, the costs of which were not offset, Congress aims to pay for much of the expense of this additional Medicare coverage through various means – including by reducing the costs of certain prescription drugs paid for by both the Medicare program and its beneficiaries.

Again, the expansion in coverage is currently being contemplated under Medicare Part B, which would not affect the Part A Trust Fund and, unlike Part A, has no designated Fund subject to depletion. Further, it is highly likely that spending to expand Medicare coverage to include dental, hearing and vision coverage will actually yield savings to the Medicare program in other areas. Citing a 2020 study in Health Affairs, a June 2021 New York Times article by Mark Miller notes that “poor oral health was associated with higher rates of diabetes, cardiovascular disease and pulmonary infections. Vision loss and hearing loss are associated with a higher risk of falls, depression and cognitive impairment, and hearing loss with higher rates of hospitalization.”  Adequately treating mouths, eyes and ears will improve overall health and reduce the risk of more costly interventions.

Fact: Medicare Savings Could be Achieved by Correcting the Imbalance in Medicare Advantage Payment

Overpayments to Medicare Advantage (MA) plans continue to negatively impact Medicare’s finances.  The Medicare Payment Advisory Commission (MedPAC) noted in a March 2021 report to Congress that Medicare payments to MA plans average 104% of spending in traditional Medicare.  It is through this excess funding, in part, that MA plans are able to offer benefits that are not available to those in traditional Medicare.

Taking full advantage of a broken payment system, according to MedPAC’s report, “[a]lmost all plans (about 87 percent) bid to provide Part A and Part B benefits for less than what the [traditional] Medicare program would spend to provide these benefits […] Although plan bids average less than [traditional Medicare] spending, payments for these plans’ enrollees can exceed [traditional Medicare] spending because the benchmarks (including the quality bonuses) can be high relative to their area’s [traditional Medicare] spending”.  A portion of the difference between the plan bid and the Medicare benchmark becomes the “rebate” plans can use to offer extra benefits such as dental, hearing and vision.

As discussed in a recent CMA Alert, the Kaiser Family Foundation (KFF) released a report last month outlining how Medicare spending is higher and growing faster per person for beneficiaries in MA than in traditional Medicare.  Despite most plans submitting bids below the local benchmarks, KFF notes that the MA program “has never generated savings relative to traditional Medicare” and while higher payments have led to coverage of some limited extra benefits for plan enrollees, “the higher payments have also led to higher Medicare spending than would have occurred under traditional Medicare and higher Medicare Part B premiums paid by all beneficiaries, including those in traditional Medicare.”

The KKF report concludes, in part:

As more Medicare beneficiaries enroll in private plans, differences in Medicare payments across Medicare Advantage and traditional Medicare will lead to even higher Medicare spending, and more generous benefits for beneficiaries in Medicare Advantage than traditional Medicare. That higher spending increases Part B premiums paid by all Medicare beneficiaries, including those who are not in a Medicare Advantage plan, and contribute to the financing challenges facing the Medicare [Part A] Trust Fund. Further, these projections raise questions of equity between Medicare Advantage and traditional Medicare because the faster growth in spending per Medicare Advantage enrollee, compared to traditional Medicare beneficiaries, is in part due to rising rebates to private plans, which cover the cost of benefits not available to traditional Medicare beneficiaries. Although taking steps to address the fiscal challenges facing Medicare are not front and center in current Medicare policy discussions, policymakers may soon be on the lookout for options to achieve Medicare savings to fund other spending priorities or extend the solvency of the Medicare [Part A] Trust Fund. This analysis suggests that reducing the difference in payments between Medicare Advantage and traditional Medicare would generate savings, with the potential for reductions in extra benefits for Medicare Advantage enrollees.

Not surprisingly, the insurance industry is reluctant to correct this imbalance.  AHIP’s CEO recently stated that “Asking 27 million Americans to pay for new dental, vision, and hearing benefits in lieu of services they affirmatively chose and have come to rely on is unnecessary and unfair.”

In other words, all Medicare beneficiaries are subsidizing the limited dental, hearing, vision and other benefits only available through MA plans, to the minority of beneficiaries who choose MA. It’s time we spread this funding around in a more equitable way, to benefit all Medicare beneficiaries – both those in private plans and those in traditional Medicare. To continue with the status quo would be “unnecessary and unfair” to the Medicare program as a whole.

It is clear that policymakers must confront long-term fiscal challenges facing the Medicare program. While various health policy experts are raising MA overpayments as a potential source of addressing the program’s fiscal solvency (as discussed, e.g., in this CMA Alert), wasteful spending on private MA plans is often overlooked by policymakers – particularly those issuing the loudest warnings of the program’s impending fiscal doom.

Conclusion

Congress is poised to add critical missing benefits to Medicare, including dental, hearing and vision coverage, as well as lowering the cost of prescription drugs. These would be vital steps in the process of ensuring that Medicare adequately and equitably covers and cares for all its beneficiaries. Other important improvements, as discussed in this CMA Alert, await attention.  We urge Congress to pass, and President Biden to sign into law, this critical health care expansion.

CMS Delays Adjusting Medicare Rates for Skilled Nursing Facilities to Reflect Changes in Therapy

Effective October 1, 2019, the Centers for Medicare & Medicaid Services (CMS) implemented a new reimbursement system for skilled nursing facilities (SNFs), called Patient-Driven Payment Model (PDPM).[1] Although CMS intended for PDPM to be budget-neutral, it noted in the April 2021 Notice of Proposed Rulemaking to update Medicare rates for Fiscal Year 2022 that, following implementation of PDPM in October 2019, physical and occupational therapy declined 30%, from 91 minutes per resident per day in FY2019 to 62 minutes per day in FY2020, and concurrent and group therapy increased to 32% and 29%, respectively.[2] CMS identified a 5.3% increase in aggregate spending with PDPM and considered reducing payments to SNFs by 5% ($1.7 billion). In the final rule, however, CMS defers recalibrating the PDPM parity adjustment until the FY2023 SNF PPS Proposed Rule.[3] CMS estimates that the final rule will increase Part A payments to SNFs by approximately $410 million in FY2022.[4]

As required by the Consolidated Appropriations Act, 2021, CMS excludes certain specified blood clotting factors from SNF consolidated billing.[5]

As proposed, beginning with FY2023 for the SNF Quality Reporting System, CMS adds two new measures: SNF Healthcare-Associated Infections Requiring Hospitalization measure (SNF HAI)[6] and the COVID-19 Vaccination Coverage among Healthcare Personnel (HCP).[7]

With respect to the SNF Value-Based Purchasing Program, CMS indicates that it will consider public comments as it develops potential future measures and reiterates its plan to report employee turnover information “in the near future.”[8]

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[1] 83 Fed. Reg. 39,162, 39,183-39,265 (Aug. 8, 2018) 
[2] 86 Fed. Reg. 19,954, 19,986 (Apr. 15, 2021). See “CMS Confirms Steep Decline in Therapy at Nursing Facilities” (CMA Alert, May 6, 2021), https://medicareadvocacy.org/cms-confirms-steep-decline-in-therapy-at-nursing-facilities/ (discussing proposed rule) 
[3] 86 Fed. Reg. 42,424, 42,466-42,471 (Aug. 4, 2021) 
[4] CMS, “Fiscal Year (FY) 2022 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Final Rule (CMS-1746-F)” (Fact Sheet, Jul. 29, 2021), https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2022-skilled-nursing-facility-snf-prospective-payment-system-pps-final-rule-cms-1746 
[5] 42 C.F.R. §489.20(s)(17), as discussed at 86 Fed. Reg. 42,424, 42,442-42,444 (Aug. 4, 2021) 
[6] 86 Fed. Reg. 42,424, 42,480 (Aug. 4, 2021) 
[7] 86 Fed. Reg. 42,424, 42,489 (Aug. 4, 2021) 
[8] 86 Fed. Reg. 42,424, 42,511 (Aug. 4, 2021)

Study: Long-Term Care Facilities in Socially Isolated Neighborhoods Are Associated with 30-Day Mortality Risk

The coronavirus pandemic disproportionately impacted nursing homes. To date, according to the Centers for Medicare & Medicaid Services (CMS), over 134,000 residents have died from COVID-19, accounting for just under one-third of the pandemic’s overall death toll. The pandemic also exacerbated long-standing issues of social isolation in nursing homes through the visitation restrictions imposed by CMS, essentially creating a national lockdown of nursing homes and other long-term care facilities.[1]^, [2] Before the pandemic, it was determined that social isolation could be as damaging to a person’s health as smoking 15 cigarettes a day.[3]

A study recently published in JAMA Network Open sheds even further light on the complexities and potential compounded nature of social isolation in nursing homes during COVID-19. The study, the first of its kind, found that long-term care facilities located in socially isolated neighborhoods were associated with an increased risk of 30-day all-cause mortality among residents. Socially isolated neighborhoods were characterized as those with a high proportion of single person households. Additionally, it found that long-term care facilities were significantly more likely to be in neighborhoods that were socially isolated, compared to those areas that were less isolated.  

These findings lead to the consideration that social isolation experienced by residents in nursing homes is a product of both circumstances within the walls of the facilities and the geographic location of the facilities. The authors of the study recommend that special attention and strategies be implemented to ensure long-term care residents are connected with family and friends.

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[1] Hwang, T.-J., Rabheru, K., Peisah, C., Reichman, W., & Ikeda, M. (May 26, 2020). Loneliness and Social Isolation During the COVID-19 Pandemic. International Psychogeriatrics. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7306546/#r6 
[2] CMS. Press release CMS announces new measures to protect nursing home residents from COVID-19. (March 13, 2020). Available at: https://www.cms.gov/newsroom/press-releases/cms-announces-new-measures-protect-nursing-home-residents-covid-19 
[3] U.S. Health Resources & Services Administration. The “Loneliness Epidemic”. (January 10, 2019). Available at: https://www.hrsa.gov/enews/past-issues/2019/january-17/loneliness-epidemic

Remembering Alfred J. Chiplin, Jr. – Celebrating a Great Friend

Alfred J. “Chip” Chiplin, Jr., Senior Policy Attorney at the Center for Medicare Advocacy, and managing attorney of our Washington, DC office, would have been 74 on September 3rd. Chip’s life was too short but his memory, the vigor of his beliefs, and the valor of his actions live on.

Chip’s impact was wide and deep. Over his 40-year career as an attorney, Chip’s dedication, intelligence, and compassion brought help to myriad individuals, families, and all Medicare beneficiaries. He worked tirelessly for systemic change. As a key architect of the Center for Medicare Advocacy’s ongoing commitment to ensure Medicare access for people with chronic, debilitating, and long-term conditions, Chip’s influence is still felt in everything we do. Among his many accomplishments, he improved the lives of thousands of people with special needs by helping to expand access to Durable Medical Equipment under Medicare Part B. He fought to improve discharge planning, which was particularly lacking for people with disabilities; he was an original editor of the Center’s Medicare Handbook, updated and published annually since 2000.

The Center continues to keep Chip’s vision, spirit, and passion alive through the Alfred J. Chiplin, Jr. Advocacy Award and Fellowship. Like Chip, this program, supports the advancement of civility in society and social justice for all – goals that are as relevant today as ever. The COVID pandemic has highlighted the ongoing, urgent need to address the core challenges that Chip cared about most deeply. Every day, we witness more and more examples of how a lack of health equity and systemic racism continue to create barriers to quality care for our nation’s most vulnerable populations. The Center is committed to combatting these wrongs and to fighting for universal health justice.

Chip brought his full humanity to the work that he loved. As an ordained minister, a choral singer, pianist, and poet, he graced us with his light and effortless smile. He treated everyone he encountered with respect and kindness. His spirit is captured in his own words, in a poem he called Embrace and Dream ―

When you consider the sky,
reach with all you have,
give of your very best,
and taste your dreams.

Chip lived a life that was true to his words. In honor of his birthday, we take a moment to remember all that he gave us, and to remind ourselves to give our very best, as Chip did every day.

Click here to hear reflections from Executive Director Judy Stein about Chip’s legacy in conversation with current Chiplin Medicare & Health Policy Fellow Cinnamon St. John. Ms. St. John’s work with the Center focuses on issues facing individuals with longer-term conditions, health equity matters – especially for people receiving care in facilities – and continued concerns regarding quality care and health disparities exposed by the COVID pandemic.

Free Webinar, September 8th (2-3 pm) | Health Equity, Medicare, and the Modern Civil Rights Movement

Author Dr. David Smith of The Power to Heal: Civil Rights, Medicare, and the Struggle to Transform America’s Health Systemwill discuss Medicare’s role in the nation’s desegregation movement, systemic racism in our health systems, and the role that policy can play combatting current health disparity issues.

This book was the foundation of the documentary Power to Heal: Medicare and the Civil Rights Revolution. Click here to see a trailer of the film narrated by Danny Glover.

Presented by Center for Medicare Advocacy Policy Attorney Kata Kertesz and Chiplin Medicare & Health Policy Fellow Cinnamon St. John.

• Register now at https://attendee.gotowebinar.com/register/1150241310831689230.