Two seismic shifts in Medicare, and what they mean for you

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Medicare Doctor consulting with patient. Photo by Tetra Images - Rob Lewine/Getty Images

Phil Moeller explains how two major Medicare policy changes will affect your health care. Photo by Rob Lewine/Tetra Images/Getty Images

Editor’s Note: Journalist Philip Moeller, who writes widely on health and retirement, is here to provide the Medicare answers you need in “Ask Phil, the Medicare Maven.” Send your questions to Phil.

Moeller is a research fellow at the Center on Aging & Work at Boston College and co-author of “How to Live to 100.” He wrote his latest book, The New York Times bestseller “How to Get What’s Yours: The Secrets to Maxing Out Your Social Security,” with Making Sen$e’s Paul Solman and Larry Kotlikoff. He is now working on a companion book about Medicare. Follow him on Twitter @PhilMoeller or e-mail him at medicarephil@gmail.com.


Did you feel the ground shift beneath your feet last week? Let me rephrase that to include West Coast readers: Did you feel the ground shift a lot beneath your feet last week? Well, it did, at least in terms of Medicare benefits and how the agency goes about its core job of paying health care providers for the care they provide to Medicare beneficiaries.

These were really important changes, and while the Maven does admit a tendency to go overboard about tremors and such, you need to know this stuff.

Beginning in 2016, doctors will get paid by Medicare for having voluntary consultations with patients and their families about end-of-life medical planning and needs. Early indications are that doctors will get paid $75 to $85 for initial and follow-up half-hour sessions. If it turns out that doctors aren’t being paid enough to make them eager to offer these services to Medicare patients, this figure could go up over time. Whatever the price, it’s a bargain in terms of the potential benefits it can bring patients and their families.

As noteworthy as the change was in its own right, there was nearly no backlash from the “death panel” crowd who had harped so much on that feature of Obamacare. Remember when vice presidential candidate Sarah Palin managed to cow the White House and caused it to back away from end-of-life counseling in the Affordable Care Act? What were we thinking? Don’t answer that. Just be grateful the mood of America is changing, and perhaps this phony issue has, shall we say, met its own demise.

Bringing end-of-life discussions into the mainstream of medical care is long overdue. People are living longer, often much longer. This is mostly good news, but it does mean that record numbers of Americans are reaching their 80s and 90s. When they get there, the natural course of physical decline will render them less able to take care of themselves. Likewise, cognitive decline will make it very hard for them to navigate the very demanding sets of planning tasks surrounding end-of-life medical, estate and legacy issues. More likely than not, many of the family members who could help them will no longer live nearby as has been the case for earlier generations of aging Americans.

Lump all these factors together, and it’s clear that building proactive health care plans for our later years is essential. Doing so can take enormous emotional and financial stress off seniors and their families and friends. Planning ahead is crucial. Coping with a parent or other loved one in decline is challenging in its own right, but much, much harder if it has to be done in a crisis environment. Making good decisions in a crisis is the exception, not the rule.

While it’s terrific that doctors will now be able to have more of these conversations, getting Medicare beneficiaries and their families to participate in them is hardly a foregone conclusion. We don’t like to talk about death and dying, even though such conversations can be immensely helpful and often create a sense of positive acceptance and closure for everyone involved. If you want to know more, including how to set up such discussions, visit The Conversation Project.

The second major announcement was that Medicare will change how it pays for hip and knee replacements, common in-patient procedures that seniors receive. Right now, Medicare pays these individual costs as they are incurred during the replacement process. The range of costs — for the surgery and related tests and procedures — is enormous, raising questions about whether many beneficiaries are receiving medical care that is unneeded and much more costly than need be.

In announcing the change, the Centers for Medicare and Medicaid Services reported that the average costs in some markets for just the hospital costs for such joint replacements are between $16,500 and $33,000. That’s an enormous range. Officials want to bring down costs and standardize prices for procedures so they do not vary depending on where a person lives.

Beginning next year, Medicare will set standard fees for all such expenses, bundling them together into a payment for all care provided within 90 days of the initial surgery. This bundled-care approach will be tried out in 75 metro areas. The amount of the fee is still to be determined.

“Incentives to coordinate the whole episode of care — from surgery to recovery — are not strong enough, and a patient’s health may suffer as a result,” the Centers for Medicare and Medicaid Services announcement said. “When approaching care without seeing the big picture, there is a risk of missing crucial information or not coordinating across different care settings. This approach leads to more post-surgery complications, high readmission rates, and inconsistent costs. These are not the health outcomes patients want.”

All care providers in the test markets — hospitals, doctors, nursing homes and in-home care agencies — would be required to work together and build coordinated care plans for Medicare beneficiaries undergoing joint replacements. They also would be evaluated and compensated based on patient outcomes.

Coordinating the care of Medicare beneficiaries and basing payments on the quality of that care represent an enormous shift for the Centers for Medicare and Medicaid Services away from the traditional fee-for-service approach to Medicare. Today, most Medicare beneficiaries can select whatever doctors, hospitals and other care providers they wish. So long as the providers participate with Medicare and accept its fee schedules, they can provide a beneficiary’s care. Often, however, there is little or no coordination among different health care providers.

The so-called “doc fix” bill passed by Congress last April ended the system used to set the fees for doctors providing services to Medicare beneficiaries. The old system had called for annual cuts to doctors’ Medicare fees for many years, leading to an annual fix by Congress to override the cuts. The new law junked that old formula and replaced it with a stable fee structure for participating physicians.

But the measure also launched far-reaching changes permitting the Centers for Medicare and Medicaid Services to create programs of care where payments to health care providers would be based on quality and patient outcomes and not just on providing medical services for a fee.

The new joint replacement test is a major step by the Centers for Medicare and Medicaid Services toward quality-based pricing for health care services. The agency has announced a goal of basing half of all Medicare on such care by 2018. This is a big goal, but the Centers for Medicare and Medicaid Services regularly cranks out significant changes to Medicare, and more are surely on the way.

Basing Medicare payments on improved patient outcomes is a terrific goal. But there will be lots of speed bumps along the way. The big takeaway for people on Medicare is not to assume the future will be like the past. Your health plans will be changing. The rules under which your doctors and hospitals are compensated will be changing. The quality of your care may improve, and the cost of that care may decline. But turning “may” into “will” is, more than ever, up to you. I will, however, be here to answer your questions along the way.

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