Center for Medicare Advocacy

Advancing Access to Medicare and Healthcare

November 2015 – Budget Act of 2015 Mitigates Increased Part B Premiums And Deductibles; Other Issues

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LEGISLATIVE UPDATE: CONGRESS MITIGATES INCREASES IN 2016 PART B PREMIUM AND DEDUCTIBLE

Bipartisan Budget Act of 2015 – Overview

On Monday November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015.  This wide-ranging budget agreement includes provisions that averted a pending government default by raising the nation’s debt ceiling, and prevents relief from budgetary “sequester” spending limits that have constrained social service programs.  The bill also provides temporary stability to the Social Security Disability Insurance fund.  On the Medicare front, it will mitigate, but not eliminate, Part B premium increases for some and Part B deductible increases for all in 2016.

In short, the Budget Act will keep 2016 Part B premiums for those who are not “held harmless” – roughly 30% of the Medicare population – to approximately $120 per month. Similarly, the Act will keep the 2016 Part B deductible for everyone to roughly $167 per year. Absent this Congressional action, these figures would have been significantly higher. The costs of keeping these amounts down will be repaid by beneficiaries over a number of years through an addition, or surcharge, to their monthly Part B premiums.

The exact figures remain estimates since, as of the date of publication of this issue brief, the Centers for Medicare & Medicaid Services (CMS) has not yet released the final 2016 Part A and B premium, copay and deductible amounts.

Background

On July 22, 2015, the Medicare and Social Security Trustees issued the 2015 Annual Report of the Boards of Trustees of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund.  The Trustees report projected a significant increase in Part B premiums for some, and a significant increase in the deductible for all.  

Premiums

In part due to increased Part B expenditures (see below), the monthly Part B premium (currently $104.90) was projected to increase to $159.30 in 2016 (a $54, or 52% increase) for approximately 30% of beneficiaries.

  • The 30% of affected individuals are:
    • Those who will be new Medicare enrollees in 2016;
    • Those with income-related premiums (incomes higher than $85,000 for individuals);
    • Those beneficiaries who pay their premiums directly instead of having it deducted from their Social Security checks (or those who don’t collect Social Security, such as certain government employees); and
    • Individuals dually eligible for Medicare and Medicaid (these costs will be paid for by state Medicaid agencies rather than individuals).

Because Social Security announced that there will be no cost of living adjustment (COLA) to Social Security payments next year, the remaining 70% of beneficiaries will be protected by a “hold harmless” provision of the Medicare statute, meaning their premiums will stay at the same rate next year ($104.90).  Because of this provision, higher increased costs would have been borne by the 30% of individuals described above, rather than a lower amount spread across the entire Medicare population.

The Budget Act will keep 2016 Part B premiums for those who are not held harmless – roughly 30% of the Medicare population – to approximately $120 per month.   

Those individuals who already pay a higher Part B premium due to their income will pay a proportionately higher amount.

Deductible

Similarly, because the Part B deductible is tied to the premium by statutory formula, the Trustees Report estimated that the deductible will increase from $147 in 2015 to $223 in 2016 (an increase of $76).  There is no “hold harmless” provision that applies to the deductible, so it would apply to all Medicare beneficiaries.  Many Medicare beneficiaries, though, have supplemental or other coverage that includes coverage of the deductible.  However, state Medicaid agencies, employer plans, and certain Medigap plan carriers will pay these increased costs which could, among other things, affect premiums.  Those without any supplemental coverage that covers the Part B deductible would pay the full amount. 

The Budget Act will keep the 2016 Part B deductible for everyone to roughly $167 per year. 

            Repaying the Loan

The cost of limiting the increases in 2016 will be paid for by a loan of general revenue from the Federal Treasury to the Part B Trust Fund. Medicare beneficiaries will pay back the loan over time from set increases to future premiums.  Starting in 2016, beneficiaries who are not subject to the hold harmless provision – roughly 30% of Medicare beneficiaries – will pay an additional $3 in their monthly Part B premium for a number of years until the loan is repaid.  Starting in 2017 and beyond, all beneficiaries will pay an additional $3 on top of their monthly premium amount, unless they are held harmless under the rules described above.  Higher income individuals who are subject to a higher income-related Part B premium will pay a higher additional amount, but apparently not more than roughly $12 per month.

Underlying Causes of Increase in Part B Expenditures

While Congress has acted to address next year’s Medicare Part B cost-sharing increases, the Center remains concerned about the expenses underlying these increases.  A major cause of the Part B increase is likely the parallel increase in so-called "outpatient" Observation Status, the use of which has more than doubled since 1999. The result of this misguided policy, under which inpatient-level hospital services are billed as outpatient “Observation,” is that unprecedented amounts of hospital care are being billed to Medicare Part B, rather than Part A. This was never intended by the law.

Part A is called “Hospital Insurance” in the Medicare Act. Yet, thousands of patients stay in hospitals for many days only to learn they were not admitted as inpatients. Instead, they are classified as outpatients on Observation Status. One of the myriad consequences of this policy is that Part B expenses are skyrocketing – increasing Part B premiums and deductibles and cost shifting to Medicare beneficiaries. These costs should not be included in calculating the share of Part B costs that beneficiaries must pay.

Congressman Joe Courtney (CT-2) wrote the Secretary of Health and Human services asking her to review the link between Observation Status and Part B costs. We hope this will help lead to real reform of the so-called outpatient Observation policy and Part B cost-sharing.

For more information, see the Center’s following Weekly Alerts:

ADVOCACY UPDATE: COVERAGE OF HOME INFUSIONS

Medicare Limits on Coverage for Home Infusions Should Be Corrected

Individuals in traditional Medicare who require intravenous or injectable medications are often stunned to learn they have to leave home to obtain this necessary care. This is true even when they are receiving other Medicare-covered home health services.   

Obtaining coverage for both the medication and the professional services necessary for the infusion or injections requires billing both Medicare Parts D and B.  However, Medicare Part B only pays for the administration of certain types of drugs that cannot be self-administered, and only when provided in an outpatient setting, such as a hospital, infusion center, or doctor’s office.  Medicare Part D will cover the intravenous or injectable medications covered under a beneficiary’s prescription drug plan, but not the skilled services and necessary supplies required to actually administer the medication.

When beneficiaries are unable to travel to an approved outpatient setting or need to receive their infusions at home, traditional Medicare will not cover the professional services, equipment or medication. Most beneficiaries are thus forced to travel to an outpatient setting in order to receive Part B coverage for the skilled services and equipment.

The outpatient requirement under Part B effectively denies Medicare coverage for home infusions and forces medically compromised beneficiaries to leave home in order to receive intravenous or injectable medications. This requirement puts vulnerable patients at risk of further illness, infection and injury. Further, the outpatient requirement adds to the overall cost of treating beneficiaries, creating unnecessary expenses to the Medicare program.

Medicare Advantage and Private Insurance Covers Home Infusion

Importantly, most private insurance and Medicare Advantage plans do cover both the medication and professional services in the home for some time. Unfortunately, traditional Medicare continues to lag behind in this regard.

The Centers for Medicare & Medicaid Services (CMS) takes the position that it does not have authority to cover home infusions under Part D. The National Home Infusion Association (NHIA) has spearheaded efforts to change the law and is actively supporting The Medicare Home Infusion Site of Care Act of 2015 (S.275/HR 605). This legislation would allow home infusions to be covered under traditional Medicare.

The Medicare Home Infusion Site of Care Act provides a pathway for reimbursement of services and equipment required for home infusions under Part B, while the drugs required for infusion would continue to be covered under Part D. The Bill would require the Secretary of the Department of Health and Human Services to develop safety, efficacy, and quality standards for home infusion. Infusion agencies would need to be accredited and demonstrate expertise in home infusion as well as meet uniform safety requirements established by the Secretary.  Under this Bill, infusion services and equipment would not be covered under Medicare’s home health benefit under Part A, but rather as a separate Part B service. Another approach would be to include such infusions as a covered skilled service under the Medicare Home Health benefit.

Conclusion

Providing necessary infusions and injections at home reduces the risk of infection and other health consequences for beneficiaries who are already medically compromised. These important services should be covered for beneficiaries in traditional Medicare.

  • Note that this section is reprinted from the Center’s October 28, 2015 Weekly Alert:

https://www.medicareadvocacy.org/medicare-limits-on-coverage-for-home-infusions-should-be-corrected/.

ADMINISTRATIVE UPDATE

Snapshot of Recent Final and Proposed Rules Issued by CMS

The Centers for Medicare & Medicaid Services (CMS) has recently issued a number of proposed and final rules of interest to beneficiary advocates.  Here is a partial list:

  • Discharge Planning Proposed Rule — On November 3, 2015, CMS published in the Federal Register a proposed rule that would revise the discharge planning requirements that hospitals, including long-term care hospitals and inpatient rehabilitation facilities, critical access hospitals, and home health agencies, must meet in order to participate in the Medicare and Medicaid programs. According to CMS, the “proposed changes would modernize the discharge planning requirements by: bringing them into closer alignment with current practice; helping to improve patient quality of care and outcomes; and reducing avoidable complications, adverse events, and readmissions.”  The proposed rule would also implement the discharge planning requirements of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act).  Comments are due January 4, 2016.
  • Final Physician Fee Schedule Rule – Includes Advance Care Planning  – On October 30, 2015, CMS released a rule finalizing its proposal that supports patient- and family-centered care for seniors and other Medicare beneficiaries by enabling them to discuss advance care planning with their providers (and provides payment for such services).
  • Final 2016 Hospital Outpatient Prospective Payment Rule – Includes Two Midnight Rule Update– On October 30, 2015, CMS released a hospital payment rule that includes changes to the two-midnight rule related to hospital Observation Status.  According to a CMS Fact Sheet, the final rule, among other things “[m]aintains the benchmark established by the original Two Midnight rule, but permits greater flexibility for determining when an admission that does not meet the benchmark should nonetheless be payable under Part A on a case-by-case basis.”
    • The final rule is to be published in the Federal Register on November 13, 2015, at: http://federalregister.gov/a/2015-27943.
    • CMS Fact Sheet re: two-midnight policy (October 30, 2015) is available here:

https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-10-30-4.html.

CMS Halts Proposed Policy Change on Lower Limb Prostheses Coverage

On November 2, 2015, the Centers for Medicare & Medicaid Services (CMS) announced that they will not finalize a controversial Local Coverage Determination (LCD) regarding payment for Lower Limb Prostheses.

The Center had called for elimination of LCD DL 33787, which would have unfairly and illegally restricted Medicare coverage for beneficiaries in need of lower limb prostheses. The LCD would ignore potential function, eliminate coverage for best-fitting prostheses, and require a ‘normal gait’ for coverage of prostheses – requirements that few, if any, could meet.

The CMS announcement came after over 100,000 people signed a “We the People” petition, asking the White House to take action. In addition to other activities opposing the proposed LCD, the Center for Medicare Advocacy filed a complaint with the Office of Civil Rights on behalf of a beneficiary who would not have been able to obtain coverage for the prostheses he needs under the proposed LCD.

CMS now plans to convene a multidisciplinary Lower Limb Prostheses Interagency Workgroup comprised of clinicians, researchers, policy specialists, and patient advocates from different federal agencies to “develop a consensus statement that informs Medicare policy by reviewing the available clinical evidence that defines best practices in the care of beneficiaries who require lower limb prostheses.”

For more information, see the following Center Weekly Alerts:

LITIGATION UPDATE

  • Bagnall v. Sebelius (Observation Status) No. 3:11-cv-01703 (D. Conn., filed 11/3/2011). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered "outpatient observation" rather than an inpatient admission. When hospital patients are placed on observation status, they are labeled "outpatients," even though they are often on a regular hospital floor for many days, receiving the same care as inpatients.  Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare Part A coverage of post-hospital nursing home care, people on observation status do not have nursing home coverage.  They must either privately pay the high cost of nursing care or forgo that skilled care.  The number of people placed on observation status has greatly increased in recent years.

As previously reported, on September 23, 2013, a federal judge in Connecticut granted the government’s motion to dismiss the lawsuit.  Plaintiffs appealed, but limited the appeal to the issue of the right to an effective notice and review procedure for beneficiaries placed on observation status.

On January 22, 2015, a three-judge panel of the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on “Observation Status” in hospitals may have an interest, protected by the Constitution, in challenging that classification.  The panel held that the district court erred when it dismissed the plaintiffs’ due process claims, and it sent the case back to that court for further proceedings.

Update: The parties are now in discovery on the question of whether plaintiffs have a “protected property interest” in Part A coverage of their hospital stays, such that they would have due process rights. Plaintiffs have received voluminous documentation from the government. The law firm of Wilson Sonsini Goodrich & Rosati, which has helped the Center in previous litigation, is providing pro bono assistance with the discovery process.

On August 26, 2014, the Center filed a nationwide class action lawsuit in United States District Court in Connecticut: Lessler v. Burwell, No. 14-1230 (D.Conn.). The five named plaintiffs, from Connecticut, New York and Ohio, have all waited longer than the statutory 90-day limit for a decision on their Medicare appeals. The current average wait time is over five times the Congressionally-mandated time limit.  The complaint is available here: https://www.medicareadvocacy.org/wp-content/uploads/2014/08/00083998.pdf.

On January 29, 2015, defendant’s motion to dismiss was denied.  On June 10, 2015, the court granted the plaintiffs’ motion for certification of nationwide class of Medicare beneficiaries who have been or will be waiting more than 90 days for a decision on their timely-filed request for an ALJ hearing.  The parties have also conducted discovery.

UPDATE: Briefing of cross motions for summary judgment has been postponed while the parties are in settlement negotiations.

  • Jimmo v. Sebelius (Improvement Standard) No. 11-cv-17 (D.Vt. filed 1/18/11).  As reported during previous Alliance calls, the Settlement in Jimmo was approved on January 24, 2013 during a scheduled fairness hearing.  As previously discussed, CMS has issued revisions to its Medicare Benefit Policy Manual to ensure that Medicare coverage is available for skilled maintenance services in the home health, nursing home and outpatient settings.  CMS also implemented a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve. Pursuant to the Settlement, counsel for the parties are meeting twice a year to discuss problems with implementation and possible solutions, and are in regular contact between meetings.
  • For more information, see the Center’s website at: https://www.medicareadvocacy.org/medicare-info/improvement-standard/
  • Hull v. Sebelius, No. 14-801 (D.Conn.) (Lower level Medicare appeals) On June 4, 2014, the Center filed a complaint in United States District Court in Connecticut against Kathleen Sebelius, Secretary of Health and Human Services (at that time), on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. The case was brought as a class action on behalf of Connecticut Medicare beneficiaries seeking home health care coverage, and the four named plaintiffs represent the thousands of beneficiaries who cannot get a meaningful review of their cases. Instead, Medicare beneficiaries receive almost automatic denials of coverage, which is essentially “rubber stamped” at both the Redetermination and Reconsideration levels. The problem persists throughout the country.

On December 8, 2014, the court granted the government’s motion to dismiss on the grounds that the named plaintiffs, who are dual-eligibles, lack standing because they received coverage from Medicaid.  Plaintiffs filed a motion for reconsideration.

Update: On July 6, 2015, the court reconsidered its order but adhered to its decision granting the government’s motion to dismiss because the plaintiffs lack of standing.  In its reconsideration, the court noted that the Supreme Court has granted certiorari in a case that may shed light on the standing issue at dispute. See Spokeo, Inc. v. Robins, 135 S. Ct. 1892 (2015) (granting cert on the following question presented: Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.).  Plaintiffs appealed the case to the Second Circuit on September 17, 2015, and they plan to ask the court to hold the appeal in abeyance pending the outcome of Spokeo at the Supreme Court.

  • For more information, see the Center’s press release “Lawsuit Challenges Unjust and Inefficient Medicare Appeals Process” (June 5, 2014), available at: https://www.medicareadvocacy.org/lawsuit-challenges-unjust-and-inefficient-medicare-appeals-process/;
  • Olsen-Ecker v. Burwell, No. 15-1468 (D.Conn.) (Lower level Medicare appeals) On October 9, 2015, the Center filed a complaint in United States District Court in Connecticut against Sylvia Mathews Burwell, Secretary of Health and Human Services, on behalf of plaintiffs who have been denied a meaningful review of their Medicare claims at the first two levels of appeal. The case was brought as a class action on behalf of Medicare beneficiaries seeking home health care coverage, and the named plaintiff, like the plaintiffs in Hull, represents beneficiaries who cannot get a meaningful review of their cases. However in this “rubber stamp” case, the plaintiff was not eligible for Medicaid and thus was personally financially liable for the Medicare services under appeal.  A motion for class certification was filed on October 23, 2015. This case is still in its early stages. The Center is interested in hearing about similar problems that beneficiaries are encountering with respect to “rubber stamp” denials of home health or SNF coverage at the first two levels of appeal.  Advocates and beneficiaries are encouraged to contact Ali Bers at abers@medicareadvocacy.org
  • Ryan v. Burwell (Prior Favorable Homebound Determination) On December 19, 2014, the Center for Medicare Advocacy and Vermont Legal Aid filed a class action lawsuit against Sylvia Mathews Burwell, the Secretary of Health and Human Services, to stop Medicare’s practice of repeatedly denying coverage for home health services for beneficiaries on the basis that they are allegedly not homebound, when Medicare has previously determined them to be homebound. (Ryan v. Burwell). The lawsuit was filed in the United States District Court in Burlington, Vermont on behalf of two Vermont residents, Marcy Ryan and John Herbert, as a regional class action lawsuit covering New England and New York.

On March 25, 2015, the government filed a motion to dismiss on the grounds that plaintiffs lack standing, that the court lacks subject matter jurisdiction, and that plaintiffs have failed to state claim on which relief may be granted.  On July 27, 2015, the court denied the government’s motion to dismiss, finding four separate ground on which the dually eligible plaintiffs have standing. (Compare Hull, above, in which the court rejected similar standing arguments.) The court also found that it had subject matter jurisdiction and that plaintiffs had stated a claim on which relief could be granted.

UPDATE: Oral argument on the plaintiffs’ motion for certification of a regional class took place in Rutland, Vermont on September 21, 2015.  Judge Crawford has since requested additional briefing on whether certain beneficiaries should be included in the class, and whether the class should be “closed,” meaning time-limited to the point where the agency removed a Manual provision which is at issue in the case.  The supplemental briefing will be filed by November 18, 2015.

  • For more information, including a copy of the complaint, see: https://www.medicareadvocacy.org/federal-court-class-action-challenges-medicares-practice-of-repeatedly-denying-home-health-coverage-for-homebound-beneficiaries/.
  • Lodge v. Burwell (Extreme Dental) 3:15-CV-390 (D. Conn., filed 3/17/2015).  This appeal filed in federal court, District of Connecticut, presents an opportunity for the court to review whether surgical treatment to a Medicare beneficiary’s teeth damaged by radiation therapy to the head and neck was 1) properly characterized by an Administrative Law Judge as a covered physician service medically reasonable and necessary as a part of an overall plan of care for cancer or 2) improperly characterized by the government contractor as excluded dental services.  These competing interpretations depend upon how the specific treatment is characterized.

The plaintiff amended the Complaint on June 30, 2015 to add a claim under the Administrative Procedure Act (APA), stating that in 1974 the agency removed the word “routine” from the description of excluded dental services without following proper notice-and-comment procedure.   On August 13, 2015, the government answered the Complaint and attempted to file a motion to dismiss the APA claim as time-barred. The court quickly denied the government’s motion without prejudice to renew because a procedural pre-filing rule had not been followed.

UPDATE: A conference was held with the court on October 21, 2015, and the government re-filed its motion to dismiss on October 22, 2015.  The motion seeks to dismiss the APA claim as barred by the statute of limitations.  Plaintiff’s opposition to the motion to dismiss will be filed by November 16, 2015.

  • Bremby v. Burwell (per se skilled services) was filed on September 22, 2015, in the U.S. District Court for the District of Connecticut (03:15-cv-01397).  It challenges the denial of Medicare home health coverage for a beneficiary who required monthly Vitamin B-12 intramuscular injections.  Intramuscular injections are, by regulation, a per se skilled service, and the beneficiary in this case has a condition (Total Gastrectomy) for which Medicare policy expressly recognizes B-12 injections to be a medically necessary treatment.  The Center is interested in hearing about similar problems that others are encountering with respect to denials of home health or SNF coverage for per se skilled services listed at 42 C.F.R. 409.33(b).  Advocates and beneficiaries are encouraged to contact Wey-Wey Kwok at wkwok@medicareadvocacy.org.

Other examples of health care services that are defined by Medicare as skilled in either a Skilled Nursing Facility or for Home Health care include:

(1) Intravenous or intramuscular injections and intravenous feeding.

(2) Enteral feeding that comprises at least 26 per cent of daily calorie requirements and provides at least 501 milliliters of fluid per day.

(3) Nasopharyngeal and tracheostomy aspiration;

(4) Insertion and sterile irrigation and replacement of suprapubic catheters;

(5) Application of dressings involving prescription medications and aseptic techniques;

(6) Treatment of extensive decubitus ulcers or other widespread skin disorder;

(7) Heat treatments which have been specifically ordered by a physician as part of active treatment and which require observation by nurses to adequately evaluate the patient's progress;

(8) Initial phases of a regimen involving administration of medical gases;

(9) Rehabilitation nursing procedures, including the related teaching and adaptive aspects of nursing, that are part of active treatment, e.g., the institution and supervision of bowel and bladder training programs.

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