Section 5. Medicare Medicare, authorized under title XVIII of the Social Security Act, is a nationwide health insurance program for the aged and certain disabled persons. It consists of two parts: the hospital insurance (part A) program and the supplementary medical insurance (part B) program. ELIGIBILITY Most Americans age 65 or older are automatically entitled to protection under part A. Persons age 65 or older who are not ``fully insured'' (i.e., not eligible for monthly Social Security or railroad retirement cash benefits) may obtain coverage, providing they pay the full actuarial cost of such coverage. For those who are not automatically entitled to part A benefits, the full monthly premium, as of January 1, 1994, is $245. Also eligible, after a 2-year waiting period, are people under age 65 who are receiving monthly Social Security benefits on the basis of disability and disabled railroad retirement system annuitants. (Dependents of the disabled are not eligible.) Most people who need a kidney transplant or renal dialysis because of chronic kidney disease are, under certain circumstances, entitled to benefits under part A regardless of age. Part B of Medicare is voluntary. All persons age 65 or older (whether ``insured'' or not) may elect to enroll in the supplementary medical insurance program by paying the monthly premium. Persons eligible for part A by virtue of disability or chronic kidney disease may also elect to enroll in part B. The premium, as of January 1, 1994, is $41.10 per month. NUMBER OF BENEFICIARIES In fiscal year 1994, approximately 32.1 million aged and 4.1 million disabled will have protection under part A. Of those, it is estimated that 7.0 million aged and 0.9 million disabled will actually receive reimbursed services. In fiscal year 1994, 31.4 million aged and 3.7 million disabled will be enrolled in part B. About 26.7 million of the aged and 3.0 million of the disabled will receive part B reimbursed services. TABLE 5-1.--NUMBER OF AGED AND DISABLED ELIGIBLE ENROLLEES AND BENEFICIARIES, AND AVERAGE AND TOTAL MEDICARE BENEFIT PAYMENTS [Persons in thousands] ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Fiscal year Projected average annual ------------------------------------------------------------------------------------------------------------ growth (percent) 1996\1\ -------------------------- 1975 1980 1985 1990 1991 1992 1993\1\ 1994\1\ 1995\1\ (estimate) (actual) (actual) (actual) (actual) (actual) (actual) (estimate) (estimate) (estimate) 1975-85 1985-90 1990-96 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Part A: Persons enrolled (monthly) average): Aged............................................... 21,795 24,571 27,123 29,801 30,456 30,808 31,630 32,054 32,432 32,763 2.2 1.9 1.6 Disabled........................................... 2,047 2,968 2,944 3,270 3,380 3,561 3,833 4,094 4,389 4,683 3.7 2.1 6.2 Total.............................................. 23,842 27,539 30,067 33,071 33,836 34,369 35,463 36,148 36,821 37,446 2.3 1.9 2.1 Beneficiaries receiving reimbursed services: Aged............................................... 4,906 5,943 6,168 6,070 6,110 6,710 6,820 6,960 7,100 7,230 2.3 -0.3 3.0 Disabled........................................... 456 721 672 680 700 735 805 865 935 1,000 4.0 0.2 6.64.6 Total.............................................. 5,362 6,664 6,840 6,750 6,810 7,445 7,625 7,825 8,035 8,230 2.5 -0.3 3.4 Average annual benefit per person enrolled:\2\\3\ Aged............................................... $326 $853 $1,563 $1,971 $2,007 $2,324 $2,539 $2,800 $3,009 $3,260 17.0 4.7 8.7 Disabled........................................... $345 $948 $1,806 $2,139 $2,177 $2,527 $2,665 $2,861 $3,024 $3,232 18.0 3.4 7.1 Total.............................................. $327 $863 $1,587 $1,987 $2,024 $2,345 $2,553 $2,807 $3,010 $3,257 17.1 4.6 8.6 Part B: Persons enrolled (average): Aged............................................... 21,504 24,422 27,049 29,426 29,910 30,471 30,982 31,354 31,697 32,000 2.3 1.7 1.4 Disabled........................................... 1,835 2,698 2,672 2,907 3,023 3,163 3,383 3,656 3,954 4,244 3.0 1.7 6.5 Total.............................................. 23,339 27,120 29,721 32,333 32,933 33,634 34,365 35,010 35,651 36,244 2.4 1.7 1.9 Beneficiaries receiving reimbursed services: Aged............................................... 11,311 16,034 20,199 23,820 24,115 25,603 25,994 26,682 27,355 27,968 6.0 3.4 2.7 Disabled........................................... 797 1,669 1,933 2,184 2,276 2,522 2,772 3,031 3,326 3,620 9.3 2.5 8.8 Total.............................................. 12,108 17,703 22,132 26,004 26,391 28,125 28,766 29,713 30,681 31,588 6.2 3.3 3.3 Average annual benefit per person enrolled:\2\ Aged............................................... $153 $347 $705 $1,250 $1,342 $1,403 $1,474 $1,593 $1,781 $1,957 16.5 12.1 7.8 Disabled........................................... $259 $615 $1,021 $1,602 $1,758 $1,847 $1,994 $1,863 $2,005 $2,181 14.7 9.4 5.3 Total.............................................. $161 $374 $733 $1,282 $1,380 $1,445 $1,525 $1,621 $1,806 $1,983 16.3 11.8 7.5 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\Represents current law. Does not include regulations or legislative proposals. \2\Does not include administrative cost. \3\Includes Part A catastrophic benefits beginning in fiscal year 1989. There are no catastrophic benefits after fiscal year 1990. Source: Health Care Financing Administration, Division of Budget. TABLE 5-2.--BENEFIT PAYMENTS BY SERVICE UNDER MEDICARE PART A AND PART B FISCAL YEARS 1975, 1980, 1993, 1995 AND 1996 [In millions of dollars] ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ 1975 1990 1993 1995 (est.)\1\ 1996 (est.)\1\ Projected average annual ------------------ 1980 ---------------------------------------------------------------------------- growth (percent) Fiscal year: (percent) 1985 ------------------------------ Percent Amount (percent) Percent Amount Percent Amount Percent Amount Percent Amount 1990-96\1\ 1975-85 1985-90 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Part A: For inpatient hospital services............ 70.5 $9,947 67.4 65.0 55.2 $59,208 52.5 $75,021 50.1 $87,833 49.6 $96,110 16.3 5.5 8.4 For skilled nursing facility services...... 1.9 273 1.2 0.8 2.7 2,843 3.5 5,027 3.8 6,598 3.7 7,093 7.3 38.9 16.5 For home health services................... 0.9 133 1.5 2.7 3.1 3,352 6.7 9,529 8.6 15,074 8.9 17,217 30.5 11.9 31.4 For hospice services....................... 0.0 0 0.0 0.0 0.3 318 0.7 958 0.8 1,341 0.8 1,538 NA NA 30.0 -------------------------------------------------------------------------------------------------------------------------------------------------- Total benefit payments................... 73.3 10,353 70.1 68.6 61.3 65,721 63.3 90,535 63.3 110,846 62.9 121,958 16.5 6.6 10.9 ================================================================================================================================================== Part B: For physician services..................... 21.7 3,067 23.0 24.1 27.0 $28,968 23.6 33,800 22.9 $40,150 22.6 $43,762 18.5 11.5 7.1 For outpatient services.................... 3.7 529 5.3 5.6 7.8 8,365 8.3 11,916 8.5 14,833 8.7 16,915 22.2 16.4 12.5 For other medical and health services...... 1.2 169 1.6 1.6 3.9 4,165 4.7 6,682 5.4 9,393 5.8 11,205 20.6 30.4 17.9 -------------------------------------------------------------------------------------------------------------------------------------------------- Total benefit payments................... 26.7 3,765 29.9 31.4 38.7 41,498 36.7 52,398 36.7 64,376 37.1 71,882 19.2 13.7 9.6 ================================================================================================================================================== Total.................................... 100.0 14,118 100.0 100.0 100.0 107,219 100.0 142,934 100.0 175,222 100.0 193,840 17.3 9.1 10.4 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\Represents projections of current law. Source: Health Care Financing Administration, Division of Budget. TABLE 5-3.--BENEFIT PAYMENTS BY SERVICE UNDER MEDICARE PART A AND PART B, FISCAL YEARS 1975 THROUGH 1995 [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 ---------------------------------------------------------------------------------------------------------------- Part A For inpatient hospital services............. 9,947 11,742 14,265 16,687 19,068 22,860 27,841 32,788 36,108 39,193 For skilled nursing facility services.... 273 308 351 355 371 392 398 453 538 548 For home health service.............. 133 217 289 357 433 524 655 1,102 1,456 1,716 For hospice services.. 0 0 0 0 0 0 0 0 4 4 ----------------------------------------------------------------------------------------- Total benefit payments....... 10,353 12,267 14,905 17,399 19,872 23,776 28,894 34,343 38,102 41,461 ========================================================================================= Part B For physician services 2,874 3,437 4,286 4,954 5,947 7,282 8,860 10,649 12,889 14,582 For radiology and pathology services... 193 251 313 373 449 531 654 743 609 615 For outpatient service 529 727 965 1,194 1,457 1,803 2,213 2,867 3,345 3,530 For other medical and health services...... 169 257 303 331 406 528 618 547 644 746 ----------------------------------------------------------------------------------------- Total benefit payments....... 3,765 4,672 5,867 6,852 8,259 10,144 12,345 14,806 17,487 19,473 ========================================================================================= Total........... 14,118 16,939 20,772 24,251 28,131 33,920 41,239 49,149 55,589 60,934 ---------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------- 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994\1\ 1995\1\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Part A For inpatient hospital services................ 45,218 46,283 47,264 48,969 52,442 59,208 60,491 69,145 75,021 81,627 87,833 For skilled nursing facility services.......... 550 577 630 742 2,327 2,843 2,512 3,645 5,027 6,152 6,598 For home health service........................ 1,908 1,939 1,815 2,010 2,251 3,352 4,995 6,985 9.529 12,533 15,074 For hospice services........................... 34 68 104 137 211 318 479 808 958 1,138 1,341 -------------------------------------------------------------------------------------------------------- Total benefit payments......................... 47,710 48,867 49,813 51,858 57,231 65,721 68,477 80,584 90,535 101,450 110,846 ======================================================================================================== Part B For physician services......................... 16,223 18,553 21,926 24,243 26,176 28,968 31,127 32,304 33,800 35,868 40,150 For radiology and pathology services........... 565 (\2\) (\2\) (\2\) (\2\) (\2\) (\2\) (\2\) (\2\) (\2\) (\2\) For outpatient service......................... 3,917 4,937 5,793 6,466 7,321 8,365 9,234 10,671 11,916 12,985 14,833 For other medical and health services.......... 1,103 1,679 2,218 2,973 3,370 4,165 5,153 5,620 6,682 7,899 9,393 -------------------------------------------------------------------------------------------------------- Total benefit payments......................... 21,808 25,169 29,937 33,682 36,867 41,498 45,514 48,595 52,398 56,752 64,376 ======================================================================================================== Total.......................................... 69,518 74,036 79,750 85,540 94,098 107,219 113,991 129,179 142,934 158,202 175,222 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Represents estimates of current law. Does not include legislative proposals. Includes catastrophic benefits, in fiscal years 1989 and 1990. \2\Not available. Physician services for fiscal years 1986 through 1994 include radiology and pathology services. Source: Health Care Financing Administration, Division of Budget. TABLE 5-4.--HISTORICAL AND PROJECTED AMOUNTS OF PART A (HOSPITAL INSURANCE) AND PART B (SMI) DEDUCTIBLE, COINSURANCE AND PREMIUMS\1\ -------------------------------------------------------------------------------------------------------------------------------------------------------- Inpatient hospital\2\ Skilled HI monthy premium\6\ SMI premium ----------------------------------------- nursing ----------------------------- ------------------- 60 lifetime facility For benefit periods beginning in First 60 61st thru reserve days 21st thru SMI calendar year days 90th day (nonrenewable) 100th day Effective Full Reduced deductible Effective Amount deductible coinsurance coinsurance coinsurance date amount amount date per day\3\ per day\4\ per day\5\ -------------------------------------------------------------------------------------------------------------------------------------------------------- 1966................................. $40 $10 (\7\) (\7\) ......... ....... NA $50 7/66 $3.00 1967................................. 40 10 (\7\) $5.00 ......... ....... NA 50 ......... 3.00 1968................................. 40 10 $20 5.00 ......... ....... NA 50 4/68 4.00 1969................................. 44 11 22 5.50 ......... ....... NA 50 ......... 4.00 1970................................. 52 13 26 6.50 ......... ....... NA 50 7/70 5.30 1971................................. 60 15 30 7.50 ......... ....... NA 50 7/71 5.60 1972................................. 68 17 34 8.50 ......... ....... NA 50 7/72 5.80 1973................................. 72 18 36 9.00 7/73 $33 NA 60 \8\9/73 6.30 1974................................. 84 21 42 10.50 7/74 36 NA 60 7/74 6.70 1975................................. 92 23 46 11.50 7/75 40 NA 60 ......... 6.70 1976................................. 104 26 52 13.00 7/76 45 NA 60 7/76 7.20 1977................................. 124 31 62 15.50 7/77 54 NA 60 7/77 7.70 1978................................. 144 36 72 18.00 7/78 63 NA 60 7/78 8.20 1979................................. 160 40 80 20.00 7/79 69 NA 60 7/79 8.70 1980................................. 180 45 90 22.50 7/80 78 NA 60 7/80 9.60 1981................................. 204 51 102 25.50 7/81 89 NA 60 7/81 11.00 1982................................. 260 65 130 32.50 7/82 113 NA 75 7/82 12.20 1983................................. 304 76 152 38.00 ......... 113 NA 75 ......... 12.20 1984................................. 356 89 178 44.50 1/84 155 NA 75 1/84 14.60 1985................................. 400 100 200 50.00 1/85 174 NA 75 1/85 15.50 1986................................. 492 123 246 61.50 1/86 214 NA 75 1/86 15.50 1987................................. 520 130 260 65.00 1/87 226 NA 75 1/87 17.90 1988................................. 540 135 270 67.50 1/88 234 NA 75 1/88 24.80 1989................................. \9\560 NA NA \10\25.50 1/89 156 NA 75 1/89 31.90 1990................................. 592 148 296 74.00 1/90 175 NA 75 1/90 28.60 1991................................. 628 157 314 78.50 1/91 177 NA 100 1/91 29.90 1992................................. 652 163 326 81.50 1/92 192 NA 100 1/92 31.80 1993................................. 676 169 338 84.50 1/93 221 NA 100 1/93 36.60 1994................................. 696 174 348 87.00 1/94 245 184 100 1/94 41.10 1995\11\............................. 720 180 360 90.00 1/95 264 185 160 1/95 46.10 1996\11\............................. 748 187 374 93.50 1/96 285 186 100 1/96 42.80 1997\11\............................. 788 197 394 98.50 1/97 307 185 100 1/97 47.10 1998\11\............................. 836 209 418 104.50 1/98 332 183 100 1/98 52.10 1999\11\............................. 884 221 442 110.50 1/99 359 197 100 1/99 53.80 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\For services furnished on or after January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible for the year in which the services were furnished. For services furnished prior to January 1, 1982, the coinsurance amounts are based on the inpatient hospital deductible applicable for the year in which the individual's benefit period began. \2\For care in psychiatric hospital--190 day lifetime limit. \3\Always equal to \1/4\ of inpatient hospital deductible through 1988, and for 1990 and later, eliminated for 1989. \4\Always equal to \1/2\ of inpatient hospital deductible through 1988, and for 1990 and later, eliminated for 1989. \5\Always equal to \1/8\ of inpatient hospital deductible through 1988 and for 1990 and later. For 1989 it was equal to 20 percent of estimated Medicare covered average cost per day. \6\Not applicable prior to July 1973. Applies to aged individuals who are not fully insured, and to certain disabled individuals who have exhausted other entitlement. The reduced amount is available to aged individuals who are not fully insured but who have, or whose spouse has or had, at least 30 quarters of coverage under title II of the Social Security Act. The reduced amount is 75% of the full amount in 1994, 70% in 1995, 65% in 1996, 60% in 1997 and 55% in 1998 and thereafter. \7\Not covered. \8\For August 1973 the premium was $6.10. \9\In 1989, the HI deductible was applied on an annual basis, not a benefit period basis (unlike the other years). \10\In 1989, the SNF coinsurance was on days 1-8 of the 150 days allowed annually; for the other years it is on days 21-100 of 100 days allowed per benefit period. \11\Administration projections under current law using fiscal year 1995 budget assumptions. Note.--In addition to the deductible and coinsurance amounts shown in the table, the first 3 pints of blood are not reimbursed by Medicare. Currently there is no deductible or coinsurance on home health benefits. From January 1973 to June 30, 1982, there was a $60 annual deductible and prior to July 1, 1981, benefits were limited to 100 visits per benefit period under part A and 100 visits per calendar year under part B. Special limits apply to certain benefits: (1) Outpatient physican services for mental illness; 50 percent of approved charges, up to a maximum of $250 in benefits per year; July 1, 1966, through December 31, 1987; $450 in benefits per year, January 1, 1988, through December 31, 1988; $1,100 in benefits per year, January 1, 1989, through December 31, 1989; beginning January 1, 1990, the limit was removed; (2) physical and occupational therapy services furnished by physical therapists in independent practice: maximum annual approved charges July 1, 1973, through December 31, 1981, $80 per year; January 1, 1982, through December 31, 1982, $400 per year; and January 1, 1983, through December 31, 1989, $500 per year; January 1, 1990, and thereafter $750 per year. Source: Health Care Financing Administration, Office of the Actuary, Office of Medicare and Medicaid Cost Estimates. COVERAGE Most individuals establish entitlement to part A on the basis of work in employment covered by either the Social Security or railroad retirement systems. Certain employment is excluded from Social Security (including part A hospital insurance) taxation. The Tax Equity and Fiscal Responsibility Act of 1982 extended the hospital insurance tax to Federal employment effective with respect to wages paid on or after January 1, 1983. Beginning January 1, 1983, Federal employment is included in determining eligibility for protection under Medicare part A. A transitional provision allows individuals who were in the employ of the Federal Government both before and during January 1, 1983, to have their prior Federal employment considered as employment for purposes of providing Medicare coverage. Newly hired employees of State and local governments hired after March 31, 1986, are liable for the HI tax. BENEFITS Part A of Medicare will pay for: 1. Inpatient hospital care.--All reasonable expenses for the first 60 days minus a deductible ($696 in calendar year 1994) in each benefit period. For days 61-90, a coinsurance amount ($174 in calendar year 1994) is deducted. When more than 90 days are required in a benefit period, a patient may elect to draw upon a 60 day lifetime reserve. A coinsurance amount ($348 in calendar year 1994) is also deducted for each reserve day. 2. Skilled nursing facility care.--Up to 100 days (following hospitalization) in a skilled nursing facility for persons in need of continued skilled nursing care and/or skilled rehabilitation services on a daily basis. After the first 20 days, there is a daily coinsurance ($87 in calendar year 1994). 3. Home health care.--Home health visits provided to persons who need skilled nursing care, physical therapy, or speech therapy on an intermittent basis. 4. Hospice care.--Hospice care services provided to terminally ill Medicare beneficiaries with a life expectancy of 6 months or less up to a 210-day lifetime limit. A subsequent period of hospice coverage is allowed beyond the 210-day limit if the beneficiary is recertified as terminally ill. Part B of Medicare generally pays 80 percent of the approved amount (fee schedule, reasonable charges, or reasonable cost) for covered services in excess of an annual deductible ($100). Services covered include the following: 1. Doctor's services.--Including surgery, consultation, and home, office and institutional visits. Certain limitations apply for services rendered by dentists, podiatrists and chiropractors and for the treatment of mental illness. 2. Other medical and health services.--Laboratory and other diagnostic tests, X-ray and other radiation therapy, outpatient services at a hospital, rural health clinic services, home dialysis supplies and equipment, artificial devices (other than dental), physical and speech therapy, and ambulance services. 3. Home health services.--Unlimited number of medically necessary home health visits for persons not covered under part A. The 20 percent coinsurance and $100 deductible do not apply for such benefits. Table 5-4 illustrates the deductible, coinsurance and premium amounts for both part A and part B services from the inception of Medicare. ADMINISTRATION Responsibility for administration of the Medicare program has been delegated by the Secretary of Health and Human Services to the Administrator of the Health Care Financing Administration (HCFA). Much of the day-to-day operational work of the program is performed by ``intermediaries'' and ``carriers'' which have responsibility for reviewing claims for benefits and making payments. In general, hospitals and other providers paid under part A of Medicare can nominate, subject to HCFA's approval, a national, State, or other public or private agency to serve as a fiscal intermediary between themselves and the Federal Government. The Secretary enters into contracts with insurance organizations to serve as carriers. The carrier must perform its obligations under the contract efficiently and effectively and must meet such requirements as to financial responsibility, legal authority, and other matters as the Secretary finds pertinent. The carrier must ensure that payments made to providers under part B on a reasonable cost or reasonable charge basis (as may be applicable) are reasonable. Medicare administrative costs in fiscal year 1993 amount to approximately 1.9 percent of total program outlays. Hospitals The Social Security Amendments of 1983 (Public Law 98-21) altered the way in which Medicare pays hospitals. From the inception of the program, Medicare had paid hospitals on a ``reasonable cost'' basis. Effective October 1, 1983, Medicare began paying under a prospective payment system. Medicare payments for inpatient operating costs of hospitals are determined in advance and made on a per discharge basis. A fixed amount per case is paid based upon the type of case or ``diagnosis-related group'' (DRG) into which the case is classified. The payment system is not applied to direct medical education costs and certain other costs. Certain hospitals are excluded from the system: psychiatric, long-term care, children's cancer and rehabilitation hospitals. Excluded hospitals continue to be paid based on reasonable costs subject to certain rate of increase limitations. Additional payments are made for extraordinarily costly cases, for the indirect costs of medical education, and for hospitals serving a disproportionate share of low income patients. An adjustment is made for the wage level in the area in which the hospital is located. In addition, there are certain other exceptions and adjustments including those for sole community providers, national and regional referral centers, and cancer treatment centers. The prospective payment system was phased in over 4 years from payments based on an individual hospital's historical costs to payments based on the new payment rates. In addition, the system was phased in from payments representing nine regional payment levels to one national payment level for each DRG. There are separate payment levels for large urban, other urban, and rural areas. OBRA 1990 (P.L. 101-508) included a phaseout of the other urban/rural payment differential designed to eliminate the different payment levels for other urban and rural hospitals by fiscal year 1995. Once the phaseout is complete, there will be two payment levels for large urban and other hospitals. Hospitals and other institutional providers receiving payment under Medicare part A submit bills on behalf of the beneficiary and agree to accept the program's payment as payment in full. In general, providers are permitted to charge beneficiaries only the deductible and coinsurance amounts authorized by law. Physicians Medicare part B provides insurance coverage for physician services and for certain other medical services. To be entitled to benefits under Medicare part B, individuals must enroll in part B and pay a monthly premium. Payments are made for services covered under part B after an annual deductible requirement of $100 has been satisfied. Payment is set at 80 percent of the Medicare fee schedule or other payment amount. Beneficiaries are responsible for the remaining 20 percent as coinsurance. A few services are exempt from deductible and coinsurance requirements. Beginning January 1, 1992, a new physician payment system is being phased in over 5 years. It is based on a fee schedule that assigns relative values to services. Relative values reflect three things: physician work (time, skill and intensity involved in the service), practice expenses, and malpractice costs. These relative values are adjusted for geographic variations in the costs of practicing medicine. These adjusted relative values are then converted into a dollar payment amount by a conversion factor. Medicare payment is made either on an ``assigned'' or ``unassigned'' basis. By accepting assignment, physicians agree to accept the Medicare approved amount as payment in full. Thus, if assignment is accepted, beneficiaries are not liable for any out-of-pocket costs other than standard deductible and coinsurance payments. In contrast, if assignment is not accepted, beneficiaries may be liable for charges in excess of the Medicare approved charge, subject to certain limits. This is known as balance billing. Medicare's participating physician program was established in 1984 to provide beneficiaries with the opportunity to select physicians who have agreed to accept assignment on all services provided during a 12-month period. Nonparticipating physicians continue to be able to accept or refuse assignment on a claim- by-claim basis. A number of incentives are provided to encourage physicians to sign participation agreements. These include: higher payment levels, more rapid claims payment, and widespread distribution of participating physician directories. TABLE 5-5.--PARTICIPATING INSTITUTIONS AND ORGANIZATIONS (JUNE 1984, 1989, 1990, 1991, 1992 AND 1993) ---------------------------------------------------------------------------------------------------------------- 1984 1989 1990 1991 1992 1993 ---------------------------------------------------------------------------------------------------------------- Hospitals............................... 6,675 6,508 6,520 6,487 6,457 6,417 Short stay.......................... 6,038 5,582 5,549 5,480 5,427 5,343 Long stay........................... 637 926 971 1,007 1,030 1,074 Skilled nursing facilities.............. 5,952 8,198 8,937 9,674 10,589 11,308 Home health agencies.................... 4,684 5,546 5,730 5,826 6,175 6,828 Independent laboratories................ 3,801 4,613 4,879 4,926 7,526 7,547 Clinical laboratory independent act (CLIAs)................................ .......... .......... .......... .......... .......... 159,172 Outpatient physical therapy providers... 791 1,082 1,195 1,317 1,435 1,618 Portable X-ray suppliers................ 269 418 443 462 473 493 Rural health clinics.................... 420 484 551 692 899 1,106 Comprehensive outpatient rehabilitation facilities............................. 48 170 186 193 207 222 Ambulatory surgical centers............. 155 1,096 1,197 1,335 1,476 1,626 Hospices................................ 108 703 825 1,057 1,199 1,395 Facilities providing services to renal disease beneficiaries.................. 1,335 1,888 1,992 2,130 2,269 2,410 Hospitals certified as both renal transplant and renal dialysis centers............................ 147 164 166 168 166 164 Hospitals certified as renal transplant centers................. 16 50 52 58 65 65 Hospital dialysis facilities........ 117 163 174 198 212 217 Non-hospital renal dialysis facilities......................... 645 1,121 1,217 1,320 1,430 1,558 Dialysis centers only............... 359 332 1,882 331 337 347 Inpatient care...................... 51 58 52 55 59 59 Hospital and skilled nursing facility beds: Hospitals........................... 1,144,142 1,103,359 1,104,574 1,101,823 1,096,647 1,089,196 Short stay...................... 1,023,465 973,013 970,480 966,577 960,616 951,433 Long stay....................... 530,403 130,346 134,094 135,246 136,031 137,763 Skilled nursing facilities.......... 530,403 492,999 508,585 567,199 597,234 616,633 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, BDMS, Decision Support Division. Beginning in 1993, nonparticipating physicians are not allowed to charge more than 115 percent of Medicare's allowed amount for any service. Medicare's allowed amount for nonparticipating physicians is set at 95 percent of that for participating physicians. Thus, nonparticipating physicians are only able to bill 9.25 percent (115 percent times 95 percent) over the approved amount recognized for participating physicians. The limits and participation differentials that now apply to physicians would be extended to other providers and practitioners when billing for a service covered under the physician fee schedule. To provide incentives for physicians to get involved in efforts to stem expenditure increases, the law requires the calculation of annual Medicare volume performance standards (MVPSs), which are standards for the rate of expenditure growth. The relationship of actual expenditures to the MVPS is one factor used in determining the annual update in the conversion factor in a subsequent year. A program to measure outcomes and effectiveness of the new system has been established. (Additional information concerning physician payment is included in appendix E.) Table 5-5 above shows the number of participating institutions and organizations. END STAGE RENAL DISEASE PROGRAM The Medicare program covers individuals who suffer from end stage renal disease, if they are (1) fully insured for old age and survivor insurance benefits, or (2) are entitled to monthly social security benefits, or (3) are spouses or dependents of individuals described in (1) or (2). Such persons must be medically determined to be suffering from end stage renal disease and must file an application for benefits. Approximately 7 percent of the population suffering from end stage renal disease (ESRD) do not meet any of these requirements and thus is not covered for Medicare renal benefits. Benefits for qualified end stage renal disease beneficiaries include all part A (hospital insurance) and part B (supplementary medical insurance) medical items and services. ESRD beneficiaries are automatically enrolled in the part B portion of Medicare and must pay the monthly premium for such protection. Table 5-6 shows estimates of expenditures, number of beneficiaries, and the average expenditure per person from 1974 through 1999. Total projected program expenditures for Medicare end stage renal disease program for fiscal year 1993 are estimated at $6.7 billion. In fiscal year 1993, there were an estimated 184,257 beneficiaries, including successful transplant patients, and also including persons entitled to Medicare on the basis of disability who also have ESRD. When the ESRD program was created, it was assumed that program enrollment would level out at about 90,000 enrollees by 1995. That mark was passed several years ago, and no indication exists that enrollment will stabilize soon. TABLE 5-6.--ESRD MEDICARE BENEFICIARIES AND PROGRAM EXPENDITURES [Expenditures in millions] ------------------------------------------------------------------------ Expenditures HI Fiscal year (HI & SMI) beneficiaries Per person ------------------------------------------------------------------------ 1974.......................... $229 15,993 $14,319 1975.......................... 361 22,674 15,921 1976.......................... 512 28,941 17,691 1977.......................... 641 35,889 17,861 1978.......................... 800 43,482 18,398 1979.......................... 1,010 52,636 19,188 1980.......................... 1,250 55,509 22,519 1981.......................... 1,472 61,930 23,769 1982.......................... 1,651 69,552 29,738 1983.......................... 1,994 78,642 25,355 1984.......................... 2,336 87,929 26,567 1985.......................... 2,824 97,200 29,053 1986.......................... 3,159 106,633 29,625 1987.......................... 3,475 116,937 29,717 1988.......................... 3,909 127,487 30,662 1989.......................... 4,601 139,132 33,069 1990.......................... 5,093 152,541 33,388 1991.......................... 5,654 164,354 34,401 1992.......................... 6,124 174,454 35,104 1993.......................... 6,662 184,257 36,156 1994.......................... 7,266 194,201 37,415 1995.......................... 7,960 204,310 38,960 1996.......................... 8,754 214,564 40,799 1997.......................... 9,617 224,926 42,756 1998.......................... 10,580 235,351 44,954 1999.......................... 11,657 245,806 47,424 ------------------------------------------------------------------------ Note: Estimates for 1979-99 are subject to revision by the Office of the Actuary, Office of Medicare and Medicaid Cost Estimates; projections for 1994-99 are under the fiscal year 1995 budget assumptions. Source: Office of the Actuary, Health Care Financing Administration, Department of Health and Human Services, for fiscal years 1979-99. Table 5-7 shows that new enrollment grew an average annual rate of 9.7 percent from 1986 to 1991. Most of the growth in program participation is attributable to growth in the numbers of elderly people receiving services and growth in the numbers of more seriously ill people entering treatment. Table 5-7 shows the greatest rate of growth in program participation is in people over age 75, at 15.7 percent, followed by the second highest rate of growth in people ages 65 to 74 years old. This age group exhibited a growth rate of 12.2 percent. The largest rate of growth in primary causes of people entering ESRD treatment was diabetes. People with diabetes frequently have multiple health problems, making treatment for renal failure more difficult. TABLE 5-7.--MEDICARE END STAGE RENAL DISEASE PROGRAM NEW ENROLLMENTS BY AGE AND PRIMARY DIAGNOSIS: 1986-91 ---------------------------------------------------------------------------------------------------------------- Average annual Percent Age and primary diagnosis 1986 1987 1988 1989 1990 1991 percent change change 1990-91 ---------------------------------------------------------------------------------------------------------------- Number of new enrollees: Total............................. 32,061 35,081 38,151 42,885 46,658 50,831 9.7 8.9 Age: Under 15 years...................... 420 430 403 405 461 454 1.6 -1.5 15-24 years......................... 1,188 1,247 1,268 1,315 1,271 1,242 0.9 -2.3 25-34 years......................... 2,992 2,852 3,087 3,413 3,438 3,485 3.1 1.4 35-44 years......................... 3,659 3,989 4,340 4,704 5,133 5,501 8.5 7.2 45-54 years......................... 4,450 4,893 5,390 5,904 6,230 6,753 8.7 8.4 55-64 years......................... 7,217 7,885 8,456 9,108 9,819 10,587 8.0 7.8 65-74 years......................... 7,937 8,972 9,669 11,302 12,682 14,097 12.2 11.2 75 years and over................... 4,198 4,813 5,538 6,734 7,624 8,712 15.7 14.3 Diagnosis: Diabetes............................ 9,434 10,488 11,717 14,214 15,939 18,249 14.1 14.5 Glomerulonephritis.................. 4,717 4,958 5,228 5,643 5,779 5,810 4.3 0.5 Hypertension........................ 8,049 9,221 10,325 12,161 13,278 14,633 12.7 10.2 Polycystic-kidney disease........... 1,225 1,248 1,250 1,275 1,402 1,474 3.8 5.1 Interstit Nephritis................. 1,355 1,240 1,233 1,378 1,371 1,497 2.0 9.2 Obstructive Nephropathy............. 846 839 872 954 916 985 3.1 7.5 Other............................... 1,879 2,016 2,182 2,596 2,788 3,456 13.0 24.0 Unknown............................. 2,349 2,804 2,657 2,443 2,408 2,693 2.8 11.8 Missing............................. 2,207 2,267 2,687 2,221 2,777 2,034 -1.6 -26.8 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, Bureau of Data Management and Strategy: Data from the Program Management and Medical Information System, April 1993 update. The rates of growth in older and sicker patients entering treatment for end stage renal disease indicate a shift in physician practice patterns. In the past, most of these people would not have entered dialysis treatment because their age and severity of illness made successful treatment for renal failure less likely. Although the reasons that physicians have begun treating older and sicker patients are not precisely known, it is clear that these practice patterns have, and will continue, to result in steady growth in the numbers of patients enrolling in Medicare's end stage renal program. End stage renal disease is invariably fatal without treatment. Treatment for the disease takes two forms: transplantation and dialysis. Although the capability to perform transplants had existed since the 1950's, problems with rejection of transplanted organs limited its application as a treatment for renal failure. The 1983 introduction to the market of a powerful and effective immunosuppressive drug, cyclosporine, resulted in a dramatic increase in the numbers of transplants being performed and the success rate of transplantation. Table 5-8 indicates that the number of transplants in 1992 was more than double the number performed in 1980. Despite the significant increases in the number and success of kidney transplants, transplantation will not be the treatment of choice for all ESRD patients. A chronic, severe shortage of kidneys available for transplantation now limits the number of patients who can receive transplants. Even absent a shortage of organs, some patients are not suitable candidates for transplants because of their age, severity of illness or other complicating conditions. And some ESRD patients do not want an organ transplant. For all of these reasons, dialysis is likely to remain the primary treatment for end stage renal disease. Dialysis is an artificial method of performing the kidney's function of filtering blood to remove waste products. There are two types of dialysis: hemodialysis and peritoneal dialysis. In hemodialysis, still the most common form of dialysis, blood is removed from the body, filtered and cleansed through a dialyzer, sometimes called an artificial kidney machine, before being returned to the body. Peritoneal dialysis does not require use of a machine. Instead, filtering takes place inside the body by inserting dialysate fluid through a permanent surgical opening in the peritoneum (abdominal cavity). Toxins filter into the dialysate fluid and are then drained from the body through the surgical opening. To be effective, both types of dialysis generally need to be performed several times a week, usually three times. TABLE 5-8.--TOTAL KIDNEY TRANSPLANTS PERFORMED IN MEDICARE CERTIFIED U.S. HOSPITALS ---------------------------------------------------------------------------------------------------------------- Total Living donor Cadaveric donor Calendar year transplants ----------------------------------------------- Number Percent Number Percent ---------------------------------------------------------------------------------------------------------------- 1979............................................... 4,189 1,186 28 3,003 72 1980............................................... 4,697 1,275 27 3,422 73 1981............................................... 4,883 1,458 30 3,425 70 1982............................................... 5,358 1,677 31 3,681 69 1983............................................... 6,112 1,784 29 4,328 71 1984............................................... 6,968 1,704 24 5,364 76 1985............................................... 7,695 1,876 24 5,819 76 1986............................................... 8,976 1,887 21 7,089 79 1987............................................... 8,967 1,907 21 7,060 79 1988............................................... 8,932 1,760 20 7,116 80 1989............................................... 8,899 1,893 21 7,006 79 1990............................................... 9,796 2,091 21 7,705 79 1991............................................... 10,026 2,382 24 7,644 76 1992............................................... 10,115 2,536 25 7,579 75 ---------------------------------------------------------------------------------------------------------------- Source: HCFA, BDMS, OSDM, Division of Special Programs. Since 1983, Medicare has reimbursed outpatient maintenance dialysis on the basis of a fixed rate which is adjusted to reflect the proportion of patients dialyzing at home. Separate rates are established for hospitals and for independent, or free-standing, facilities. Both rates were originally derived from audited costs; both are divided into nonlabor and labor components. The labor component is adjusted by a wage index to reflect differences in wages. In addition, the hospital rate contains two additional adjustments which result in slightly higher rates. One adjustment consists of a 5 percent add-on to the overall rate to account for possible data collection errors, and the second adjustment consists of a $2.10 add-on per treatment to account for hospitals' additional overhead. The fixed rate is paid for each treatment. When this rate structure was implemented in 1983, HCFA estimated that the average payment for independent facilities would be around $127 per treatment and the average payment to hospitals would be approximately $131. In 1986, HCFA proposed to lower the rates, based on 1983 audit data which showed declining costs. The rates HCFA proposed to implement would have resulted in an average rate of $115.40 for independent facilities and an average rate of $119.70 for hospital-based facilities. OBRA 1986 preempted the implementation of these rates by reducing each rate by $2.00. In OBRA 1989, Congress required that these rates be maintained until October 1, 1990. OBRA 1990 increased rates by $1, effective January 1, 1991. The current average payment rate for hospital renal facilities is $130 per treatment and the average payment rate for independent renal facilities is $126 per treatment. The effect of a dialysis rate that has been either fixed or declining since 1983 is less real spending per enrollee on dialysis services. Adjusting for inflation, dialysis reimbursement rates were nearly 65 percent lower in 1991 than they were in 1974. Considerable evidence documents increasing efficiency and lower costs associated with dialysis, but concerns that the rates have adversely affected quality and access to care remain. In OBRA 1987, Congress authorized the Institute of Medicine to conduct a comprehensive study of the ESRD program and the effects of the composite rate. The Institute of Medicine (IOM) study required by OBRA 1987 was submitted to Congress in April 1991. As part of its mandate, the IOM examined several indicators of quality (mortality, morbidity, and dialysis staffing patterns). The IOM also examined the dialysis rate structure, commented on its implications for quality, and made a number of recommendations regarding ESRD dialysis rates. It found no conclusive evidence linking the composite rate to declining quality of care, as measured by mortality and morbidity. Nevertheless, the IOM suggested that there might be an indirect effect on quality of care due to the composite rate structure. It recommended modifications to the current rate structure, including updating the rates yearly and rebasing the rate structure after a comprehensive quality assurance program is established. It also recommended against further reductions in the composite rate and against rebasing the rate using current audit data because, in its opinion, current costs may not include all services providers deem medically appropriate. Recent changes Dialysis payment rates.--OBRA 1989 mandated the continuance of the dialysis rates then in effect until October 1, 1990. In addition, it required the Secretary to follow standard regulatory procedures when proposing rate changes. OBRA 1990 increased the dialysis rates in effect on September 30, 1990, by $1 for services provided on or after January 1, 1991. OBRA 1990 also directed the Prospective Payment Assessment Commission (ProPAC) to conduct a study to determine the costs, services and profits associated with various dialysis treatment modalities. The Commission was also required to make recommendations to Congress by June 1, 1992, on methods and levels of reimbursement for dialysis services. In its June 1992 report, ProPAC indicated that it has adopted an incremental approach to evaluating payment method and level and developing an update. The Commission will evaluate several options for unit of payment, including looking at larger bundles of services across longer time periods, recalculating base rates using more recent data, and using site of service and modality to determine payment. In addition to this study, OBRA 1990 directed ProPAC to make a recommendation to Congress on an appropriate factor to be used in updating payments for services. ProPAC is to submit its recommendations to Congress by March 1 of each year for the succeeding fiscal year. In its March 1994 Report to Congress, ProPAC did not recommend an increase in payments for dialysis services. Limitation of method II payments for home dialysis.--In January 1989, HCFA proposed to limit payments (called method II payments) to suppliers who deal directly with Medicare beneficiaries rather than providing supplies through an approved Medicare dialysis facility. HCFA's proposed rule was in response to information that one supplier received monthly payments nearly twice as high as facilities received for dialyzing patients, either in-facility or at home. These rules were not implemented. Subsequently, the General Accounting Office conducted a study of method II payments. GAO concluded that the differential in payments between method I (payments to dialysis facilities for home dialysis patients) and method II suppliers was not justified. Shortly after GAO's report was released, Congress incorporated GAO's recommendations by enacting a payment limit on method II payments in OBRA 1989. The new limit is 100 percent of the median dialysis rate paid to hospital- based facilities. In the case of home patients on continuous cycling peritoneal dialysis (CCPD), the limit is 130 percent of the median hospital-based dialysis rate. The payment limit took effect on February 1, 1990. Staff-assisted home dialysis demonstration project.--In response to continuing congressional concerns about some home dialysis patients' needs for staff assistance after the limitation on method II payments was imposed, OBRA 1990 established a 3-year demonstration project to determine whether Medicare coverage of staff assistants could be both cost effective and safe for patients. The demonstration was to begin within 9 months of OBRA 1990's enactment for a maximum of 800 participants. The law defines staff assistant services as including: technical assistance with operating the hemodialysis machine and care of patients during home dialysis; and administration of medications in patients' homes. Home dialysis staff assistants must meet minimum requirements specified by the Secretary and any State requirements applicable in the State where the staff assistant practices. The law establishes rather stringent patient eligibility criteria designed to assure that the demonstration is limited to patients whose health problems are exacerbated by travel to a dialysis facility and whose family members are not able to assist them with home dialysis. Payments to an ESRD provider or dialysis facility participating in the demonstration project are to be prospectively determined by the Secretary, made on a per treatment basis, and paid as an add-on to the dialysis rate. OBRA 1990 provides detailed instructions on calculating the payment rate for staff assistants. The payment structure is designed to prevent duplicate payments for labor costs, since the dialysis rate structure already includes labor costs associated with providing in-facility dialysis. OBRA 1990 provided funding of $4 million in each of fiscal years 1991 and 1992 for the demonstration; $3 million in fiscal year 1993; $2 million in fiscal year 1994; and $1 million in fiscal year 1995. The Secretary is directed to submit a preliminary report on the status of the demonstration by December 1, 1992, and a final report by December 31, 1995. The final report is to evaluate the demonstration project and include recommendations regarding eligibility criteria and cost-control mechanisms for providing Medicare coverage of home dialysis aides. Reimbursement for epoetin.--On June 1, 1989 the U.S. Food and Drug Administration (FDA) approved marketing of a drug used to treat anemia associated with chronic renal failure. The drug, epoetin, is a genetically engineered copy of a protein (erythropoietin or EPO) that the body uses to stimulate production of red blood cells. EPO is used as a substitute for transfusions. Medicare began reimbursing for the drug for chronic renal failure patients with a specified level of anemia in 1989. Chronic renal failure patients may include those not on dialysis or transplant patients as long as they have the specified level of anemia. In a break with longstanding policy, Medicare's reimbursement rate for EPO was negotiated in advance of FDA approval and was set at about 80 percent of the anticipated market price. Concern about the eventual costs that EPO would add to ESRD expenditures played a major role in HCFA negotiation of a Medicare reimbursement rate below market price. Reimbursement for the drug varies by the setting in which it is administered. If administered in an approved ESRD facility (either a hospital or an independent facility), payment is made as an add-on to the dialysis rate. For each administration of the drug of less than 10,000 units, the additional payment was initially set at $40. For patients requiring more than 10,000 units, a payment of $30 was initially made, which was an addition to the $40 payment. The maximum payment was $70. Physicians receiving monthly capitation payments for providing services to ESRD patients are reimbursed for drug costs but are not given any additional reimbursement for administering the drug. However, they are reimbursed an additional $2 per treatment for supplies, such as syringes. HCFA suggested that reimbursement for actual drug costs be based on drug prices reported in the Drug Topics red book, blue book or Medispan manuals, although, as a matter of practice, some carriers reimburse drug costs based on actual invoices. Prior to implementing Medicare coverage of EPO, budget estimators had no reliable basis on which to estimate the number of ESRD patients who would use it. HCFA's preliminary estimate was that about 25 percent (25,000 to 30,000) of dialysis patients would use it in the first year of coverage, but that approximately 80 percent (75,000 to 80,000) of dialysis patients would use it by 1994 or 1995. The total yearly costs of providing the drug per user were estimated at $5,600, with Medicare paying $4,480 and the remaining $1,120 paid by other insurers or beneficiaries. Medicare claims for dialysis patients processed for December 1991 indicate that the dose per treatment averaged about 3,399 units. A total of 75,845 ESRD patients received EPO that month. Medicare payments for EPO in December 1991 were $35.2 million. OBRA 1990 revised payments made to dialysis facilities for EPO by establishing payment rates per 1,000 unit increments; abolishing the $70 payment cap; and indexing EPO payment rates for subsequent years. Effective January 1, 1991, payments to dialysis facilities for EPO were limited to $11 per 1,000 unit increments, rounded to the nearest 100 units. OBRA 1993 mandated a reduction in EPO payments to $10 per 1,000 units, rounded to the nearest 100 units (or $1 per 100 units) effective January 1, 1994. OBRA 1990 also extended coverage for self-administration of EPO to home dialysis patients if they are competent to administer it without medical or other supervision. The Secretary is to develop methods and standards to determine who is competent to self-administer the drug. Payments for EPO on behalf of home dialysis patients who self-administer EPO are made on the same basis as payments to facilities. This includes payments to suppliers on behalf of method II patients. Coverage for self-administration of EPO became effective for services provided on or after July 1, 1991. OBRA 1993 permitted all dialysis patients to self-administer EPO. Medicare spending for ESRD services Table 5-9 shows overall per capita Medicare spending by type of ESRD patient from 1986-91. There are four types of ESRD patients: (1) dialysis patients, (2) transplant patients, (3) functioning graft (successful transplant) patients, and (4) graft failure (failed transplant) patients. Dialysis patients are those on dialysis during the year in question. Transplant patients are those who received a transplant during that year. Functioning graft patients are recipients of successful transplants performed during a previous year, and graft failure patients are those who received a transplant during a prior year, but whose transplants failed during the year in question. Per capita spending for ESRD patients averaged $31,899 in 1991 for patients who had at least 1 full year of Medicare entitlement in the prior year. Thus, these expenditure data exclude patients for whom Medicare was a secondary payer. Spending varied significantly by type of patient. Patients with successful transplants had the lowest average annual expenditures at $7,098, followed by dialysis patients at $35,652. Patients whose transplants failed had higher annual costs at $43,373. The highest costs were reported for patients who had a transplant during the year in question; their 1991 per capita costs were reported at $97,252. If their transplants are successful over the long run, however, these patients are ultimately less expensive to serve because they no longer need either expensive acute care or chronic dialysis services. TABLE 5-9.--MEDICARE END STAGE RENAL DISEASE PROGRAM EXPENDITURES BY PATIENT TREATMENT GROUP, EXCLUDING MEDICARE SECONDARY PAYER PATIENTS:\1\ 1986-91 ---------------------------------------------------------------------------------------------------------------- Average annual Treatment group 1986 1987 1988 1989 1990 1991 percent change 1986-91 ---------------------------------------------------------------------------------------------------------------- Total number of patients................... 99,769 108,474 120,431 132,734 145,664 160,805 10.0 Expenditures (per person): Total................................ $24,957 $25,501 $25,852 $27,726 $29,480 $31,899 5.0 -------------------------------------------------------------------- Inpatient.............................. 11,087 11,190 11,384 12,436 12,989 14,067 4.9 Outpatient............................. 8,999 9,057 8,936 8,927 9,860 10,601 3.3 Physician/supplier..................... 4,737 5,122 5,393 6,192 6,358 6,821 7.6 Other\2\............................... 134 132 139 171 272 410 25.1 Dialysis Number of patients......................... 78,228 83,751 92,595 101,816 111,435 122,843 9.4 Expenditures (per patient): Total................................ $26,700 $27,891 $28,674 $31,023 $33,039 $35,652 6.0 -------------------------------------------------------------------- Inpatient.............................. 10,443 10,890 11,403 12,712 13,198 14,098 6.2 Outpatient............................. 10,810 11,040 10,946 10,967 12,165 13,133 4.0 Physician/supplier..................... 5,296 5,812 6,167 7,148 7,361 7,942 8.4 Other\2\............................... 152 149 159 196 315 480 25.9 Transplant Number of patients......................... 3,876 3,729 3,767 3,768 4,351 4,648 3.7 Expenditures: Total................................ $68,036 $70,559 $71,334 $75,892 $81,339 $97,252 7.4 -------------------------------------------------------------------- Inpatient.............................. 51,731 53,128 52,899 56,586 61,236 75,697 7.9 Outpatient............................. 8,270 8,597 8,905 8,890 9,695 10,365 4.6 Physician/supplier..................... 7,936 8,731 9,412 10,292 10,274 10,897 6.5 Other\2\............................... 99 104 117 124 193 293 24.2 Functioning Graft Number of patients......................... 16,627 19,721 22,720 25,524 28,260 31,623 13.7 Expenditures: Total................................ $6,160 $6,184 $6,124 $6,697 $6,885 $7,098 2.9 -------------------------------------------------------------------- Inpatient.............................. 4,120 3,935 3,800 4,119 4,201 4,319 0.9 Outpatient............................. 694 754 780 829 826 842 3.9 Physician/supplier..................... 1,287 1,431 1,480 1,671 1,736 1,778 6.7 Other\2\............................... 59 65 65 78 122 159 21.9 Graft Failure Number of patients......................... 1,038 1,273 1,349 1,626 1,618 1,691 10.3 Expenditures: Total................................ $33,802 $35,541 $37,415 $39,739 $39,330 $43,373 5.1 -------------------------------------------------------------------- Inpatient.............................. 19,416 20,534 21,898 23,398 22,324 24,722 5.0 Outpatient............................. 8,293 8,572 8,476 8,390 9,304 9,810 3.4 Physician/supplier..................... 5,932 6,333 6,932 7,806 7,541 8,538 7.6 Other\2\............................... 161 103 109 145 161 303 13.5 ---------------------------------------------------------------------------------------------------------------- \1\Expenditures were calculated only for persons who had at least one full year of Medicare entitlement prior to the observation year. Thus, any patients for whom Medicare was a secondary payer were not included. \2\Other includes skilled nursing facility and home health services. Source: Health Care Financing Administration, Bureau of Data Management and Strategy: Data from the Program Management and Medical Information System, and the Medicare Automated Data Retrieval System, April 1992 update, 1986-91. HOME HEALTH The hospital insurance (part A) and the supplementary medical insurance (part B) programs cover home health visits for persons who need skilled nursing care on an intermittent basis or physical therapy or speech therapy. Persons must also be homebound. The home health benefit is not subject to deductibles or copayments. When an individual is covered under parts A and B of the Medicare program, the individual will generally receive payment for home health services under part A of the program. In 1992, Medicare covered an average of 57 home health visits for persons who qualified for the benefit. Beginning in 1990, the Medicare home health benefit became again one of the fastest growing parts of the Medicare program. In 1990, reimbursements for home health increased by 49 percent, and in 1993, they increased by 36 percent. As table 10 indicates, home health payments are projected to increase significantly through at least 1996. Reimbursement to home health agencies is based on Medicare rules for reasonable cost reimbursement. However, home health agencies are required to use the cost per visit by type of service for apportioning costs. Under this method, the total allowable costs of all visits for each type of service (skilled nursing, home health aide, etc.) is divided by the total number of visits by type of service. These average cost per visit amounts are multiplied by the number of covered Medicare visits for each type of service. The products represent the cost Medicare will recognize by type of service, subject to home health agency cost limits. In 1986, Public Law 99-509 established the current methodology for determining home health care limits. These are set at 112 percent of the mean of the labor-related and nonlabor per unit costs for each type of service provided by freestanding home health agencies. The limits are then applied on an aggregate basis to all the visits made by the agency, with appropriate adjustments for the special costs of hospital- based agencies. As a result of OBRA 1993 cost limits applicable to home health services will not be updated for cost reporting periods beginning on or after July 1, 1994, and before July 1, 1996. In addition, additional payments for the administrative cost of hospital-based home health agencies will be eliminated for cost reporting periods beginning after fiscal year 1993. TABLE 5-10.--TOTAL MEDICARE HOME HEALTH BENEFIT PAYMENTS\1\ [In millions of dollars] ---------------------------------------------------------------------------------------------------------------- Reimbursements Change Average ------------------------------ from Visits per charge Fiscal year prior 1,000 per Part A Part B Total year enrollees\2\ visit\2\ ---------------------------------------------------------------------------------------------------------------- 1969.......................................... NA NA $69 ........ 232 $13 1970.......................................... NA NA 82 18.8 222 14 1971.......................................... NA NA 78 -4.9 164 16 1972.......................................... NA NA 82 5.1 168 17 1973.......................................... NA NA 89 8.5 189 18 1974.......................................... NA NA 147 65.2 211 21 1975.......................................... NA NA 208 41.5 271 24 1976.......................................... NA NA 331 59.1 347 27 1977.......................................... NA NA 429 29.6 419 29 1978.......................................... NA NA 529 23.3 464 32 1979.......................................... NA NA 628 18.7 515 34 1980.......................................... NA NA 756 20.4 577 36 1981.......................................... NA NA 889 17.6 713 40 1982.......................................... NA NA 1,167 31.3 1,024 44 1983.......................................... NA NA 1,480 26.8 1,227 47 1984.......................................... NA NA 1,744 17.8 1,344 50 1985.......................................... $1,908 $40 1,948 11.7 1,329 55 1986.......................................... 1,939 32 1,971 1.2 1,256 58 1987.......................................... 1,815 35 1,850 -6.1 1,153 61 1988.......................................... 2,010 46 2,056 11.1 1,144 64 1989.......................................... 2,251 56 2,307 12.2 1,313 64 1990.......................................... 3,352 75 3,427 48.5 1,889 64 1991.......................................... 4,995 62 5,057 47.6 2,219 69 1992.......................................... 6,986 75 7,061 39.6 3,717 59 1993.......................................... 9,529 101 9,630 36.4 4,660 61 1994.......................................... 12,533 121 12,654 31.4 5,702 63 1995.......................................... 15,074 140 15,214 20.2 6,446 65 1996.......................................... 17,217 162 17,379 14.2 6,898 68 1997.......................................... 19,127 188 19,315 11.1 7,045 72 1998.......................................... 20,518 217 20,735 7.4 7,108 76 1999.......................................... 21,932 250 22,182 7.0 7,166 79 ---------------------------------------------------------------------------------------------------------------- \1\Based on fiscal year 1995 President's budget assumptions. HCFA revises historical estimates slightly with the added data available each year. \2\Based on Part A alone. NA=Not available. Source: Health Care Financing Administration, Division of Budget. HOSPICE CARE Public Law 97-248 authorized Medicare part A coverage for hospice care services provided to individuals who are entitled to Medicare part A benefits and who are certified to be terminally ill. In 1986, the Congress in Public Law 99-272 made the hospice benefit a permanent part of the Medicare program effective April 7, 1986. On December 16, 1983, the Health Care Financing Administration (HCFA), published regulations to implement the hospice provisions of Public Law 97-248. Among other things, the regulations establish requirements for eligibility, covered benefits, services, reimbursement procedures, and the conditions a hospice must meet to be approved for participation in the Medicare program. Part A beneficiaries may elect to receive hospice care in lieu of most other Medicare benefits for up to two periods of 90 days each, a subsequent period of 30 days, and an additional extension period if elected. The statute provides that payment to hospice providers be equal to the costs which are reasonable and related to the cost of providing hospice care, or which are based on such other tests of reasonableness as the Secretary may prescribe, subject to a ``cap amount.'' The cap amount for a beneficiary for a year was established at $6,500, adjusted annually by the medical component of the CPI. The cap for the period November 1, 1992 through October 31, 1993 is $12,248. HCFA has implemented a prospective payment methodology for hospice care. Under this methodology, hospices are paid one of four predetermined rates for each day a Medicare beneficiary is under the care of the hospice. The rates vary according to the level of care furnished to the beneficiary. Total reimbursement to a hospice for care furnished to the Medicare beneficiary will vary by the length of the patient's period in the hospice program as well as by the characteristics of the services (intensity and site) furnished to the beneficiary. Four basic payment categories are used for reimbursing hospices. The payment rates are national rates which are adjusted by the Bureau of Labor Statistics wage index for an area. The published payment rates are: (a) Routine home care day.--Routine home care day is a day on which an individual who has elected to receive hospice care is at home and is not receiving continuous home care. The routine home care rate is paid for every day a patient is at home and under the care of the hospice regardless of the volume or intensity of the services provided on any given day as long as less than 8 hours of care are provided. Currently, this rate is $88.65. (b) Continuous home care day.--A continuous home care day is a day on which an individual who has elected to receive hospice care receives hospice care consisting predominantly of nursing care on a continuous basis at home. Home health aide or homemaker services or both may also be provided on a continuous basis. Continuous home care is furnished only during brief periods of crisis and only as necessary to maintain the terminally ill patient at home. Home care must be provided for a period of at least 8 hours before it would be considered to fall within the category of continuous home care. Payment for continuous home care will vary depending on the number of hours of continuous services provided. Currently this rate is $517.43 for 24 hours or $21.56 per hour. (c) Inpatient respite care day.--An inpatient respite care day is one on which the individual who has elected hospice care receives care in an approved facility on a short-term (not more than 5 days at a time) basis for the respite of his caretakers. Currently this rate is $91.70. (d) General inpatient care day.--A general inpatient care day is one on which an individual who has elected hospice care receives general inpatient care in an inpatient facility for pain control or acute or chronic symptom management which cannot be managed in other settings. Care may be provided in a hospital, skilled nursing facility or inpatient unit of a freestanding hospice. Currently this rate is $394.39. Public Law 101-239 required that the payment rates be increased by the hospital market basket percentage increase each fiscal year. As a result of OBRA 1993 the payment rates will be increased by the hospital market basket percentage increase minus 2.0 percentage points in fiscal year 1994, market basket minus 1.5 percentage points in fiscal years 1995 and 1996, and market basket minus 0.5 percentage points in fiscal year 1997. TABLE 5-11.--ESTIMATES OF HOSPICE PROGRAM DATA ---------------------------------------------------------------------------------------------------------------- Total Days per Cost per Cost per cost Admissions admission hospice admission (outlays day in millions) ---------------------------------------------------------------------------------------------------------------- Fiscal year: 1984................................................ 2,200 29 $62 $1,800 $4 1985................................................ 11,000 33 66 2,200 34 1986................................................ 28,012 37 66 2,442 68 1987................................................ 68,721 41 74 3,034 104 1988................................................ 84,770 44 74 3,256 137 1989................................................ 89,008 48 74 3,552 211 1990................................................ 105,209 60 85 5,100 318 1991................................................ 122,179 61 93 5,686 479 1992................................................ 131,041 62 97 6,033 808 1993................................................ 153,490 62 101 6,281 958 1994................................................ 171,589 64 104 8,885 1,138 1995................................................ 192,185 64 107 6,880 1,341 1996................................................ 217,123 64 111 7,090 1,538 1997................................................ 244,331 64 115 7,357 1,758 1998................................................ 271,484 64 120 7,669 1,997 1999................................................ 298,423 65 125 8,119 2,248 ---------------------------------------------------------------------------------------------------------------- Note: Fiscal year 1984 through fiscal year 1992 are actuals; fiscal year 1993 through fiscal year 1999 are estimates. Source: CBO estimates. SKILLED NURSING FACILITY Medicare's part A hospital insurance program covers 100 days of skilled nursing facility (SNF) care for persons who can demonstrate a need for daily skilled nursing care for a condition related to a prior hospitalization. The first 20 days of SNF care are paid in full by the program. Days 21 through 100 are subject to a copayment of $87 a day in 1994. In 1992 Medicare covered an average of 27.5 days of care for those persons who qualified for the benefit. In general, SNFs are reimbursed on the basis of reasonable costs subject to certain limits. For SNFs, limits are applied to the per diem routine service costs (nursing, room and board, administrative, and other overhead) of a facility. Capital- related and ancillary costs, such as physical therapy and drugs, are excluded from the cost limits. Separate limits are established for SNFs on the basis of whether they are freestanding or hospital-based facilities and whether they are located in urban or rural areas. Freestanding SNF cost limits are set at 112 percent of the average per diem labor-related and nonlabor costs. Hospital-based SNF cost limits are set at the limit for freestanding SNFs, plus 50 percent of the difference between the freestanding limit and 112 percent of the average per diem routine service costs of hospital-based SNFs. OBRA 1993 provides that the per-diem cost limits applied to payment for SNF services will not be changed for cost reporting periods beginning during fiscal years 1994 and 1995. Additional payments for excess overhead costs allocated to hospital-based facilities are eliminated, effective for cost reporting periods beginning on or after October 1, 1993. Public Law 99-272 established a prospective payment rate system for certain SNFs that elect such payment for cost reporting periods beginning on or after October 1, 1986. SNFs providing less than 1,500 days of care per year to Medicare patients in the preceding year would have the option of being paid a prospective payment rate set at 105 percent of the regional mean for all SNFs in the region. The rate is calculated separately for urban and rural areas and the prospective per diem rate also reflects wage differences between urban and rural areas within each region. These rates cannot exceed the per diem cost limit that would otherwise be applicable to that facility and cannot exceed its cost limit adjusted for capital costs. Proprietary skilled nursing facilities (SNFs) receive, in addition to payments for the costs of providing services, a return on equity payment, which provides the investors in the facility a return on their investment equivalent to what they would have earned if they had invested the same amount in specified government securities. SNFs are the only providers still receiving Medicare return on equity payments. OBRA 1993 eliminated Medicare payment to SNFs for return on equity, applicable to portions at cost reporting periods beginning on or after October 1, 1993. Several important changes occurred in the SNF program during 1988 and 1989. First, in April 1988, HCFA issued a new manual to the carriers that was designed to clarify the SNF eligibility requirements. Increases in monthly SNF outlays and anecdotal information strongly suggested that the manual clarifications increased eligibility. Before this manual was issued, monthly outlays for Medicare SNF's were approximately $60 million per month. By the end of 1988, they had risen to almost $100 million per month. Second, in June 1988 the Medicare Catastrophic Coverage Act of 1988 was enacted. The Medicare catastrophic legislation (1) removed the requirement that a Medicare beneficiary had to be in the hospital for at least 3 days prior to entering a SNF, (2) instituted a daily coinsurance payment in 1989 of $25.50 for the first 8 days (formerly no copayments were required for the first 20 days), (3) eliminated the coinsurance a beneficiary would have to pay after 8 days (formerly copayments of one-eighth of the hospital deductible of $70 in 1989 were required for days 21-100), and (4) changed the number of days that a person could receive the benefit from 100 days per spell of illness to 150 days per year. These changes were effective January 1, 1989. Monthly SNF spending rose rapidly from $97 million in January 1989 to $280 million in November 1989. Congress subsequently repealed all the legislative changes made in the SNF benefit when it repealed the Medicare Catastrophic Coverage Act. TABLE 5-12.--SKILLED NURSING FACILITY DATA ---------------------------------------------------------------------------------------------------------------- Number of Total covered Total interim Interim Fiscal year SNF days of care reimbursement reimbursement facilities (thousands) (thousands) per day ---------------------------------------------------------------------------------------------------------------- 1977................................................ 4,461 9,757.7 314,148 32 1978................................................ 4,982 9,231.1 317,472 34 1979................................................ 5,055 8,642.0 329,388 38 1980................................................ 5,155 8,701.0 358,508 41 1981................................................ 5,295 8,678.2 393,939 45 1982................................................ 5,510 8,696.2 425,251 49 1983................................................ 5,760 9,277.4 465,341 50 1984................................................ 6,183 9,546.9 489,722 51 1985................................................ 6,725 9,114.1 509,714 56 1986................................................ 7,065 8,175.6 515,444 63 1987................................................ 7,148 7,501.8 560,521 75 1988................................................ 7,379 11,152.5 857,142 77 1989................................................ 8,201 30,172.9 3,046,642 101 1990................................................ 8,937 23,986.5 1,966,545 82 1991................................................ 10,061 22,368.2 2,253,113 101 1991\1\............................................. 11,309 26,843.9 3,253,306 121 ---------------------------------------------------------------------------------------------------------------- \1\Data are considered preliminary. Source: Data derived from Medicare Decision Support System (MSS), Current Utilization Series Table 8, 09/30/93 Update. Table 5-12 shows the impact of the 1989 expansions: the number of participating facilities, covered days of care, and total reimbursement all increased in 1989. While covered days of care and reimbursements have declined since the repeal of the expansions, they have not returned to their pre-1989 levels. A report of the Office of the Inspector General, DHHS, points to the continued impact of the revised coverage guidelines; SNFs reluctance to abandon their decisions to participate or expand their certified beds after having invested resources to do so; and high demand for skilled nursing home care. DURABLE MEDICAL EQUIPMENT Current Medicare law does not provide an inclusive definition of durable medical equipment (DME). Section 1861(n) of the Social Security Act specifies that DME includes ``* * * iron lungs, oxygen tents, hospital beds, wheelchairs (including power-operated vehicles) * * * used in a patient's home, including an institution used as his home * * *'' DME also includes ``medical supplies (including catheters, catheter supplies, ostomy bags, and supplies related to ostomy care, but excluding drugs and biologicals)''.\1\ In addition to items specified in the law, a wide variety of DME is covered under Medicare part B. --------------------------------------------------------------------------- \1\Section 1861(m)(5) of the Social Security Act. --------------------------------------------------------------------------- CURRENT REIMBURSEMENT FOR DURABLE MEDICAL EQUIPMENT Medicare pays for DME on the basis of a fee schedule enacted in the Omnibus Budget Reconciliation Act of 1987. Prior to OBRA 1987, reimbursement for DME was made on the basis of reasonable costs to hospital outpatient departments and other providers, such as skilled nursing facilities, and reasonable charges to other part B suppliers. The fee schedule became effective January 1, 1989. Under the fee schedule, reimbursement is of the lesser of 80 percent of the actual charge for the item or the fee schedule amount. Within the fee schedule, there are five categories of DME. Each category has separate reimbursement principles, although the principles for some categories are similar. The five categories are as follows: (1) inexpensive or other routinely purchased durable medical equipment, which is defined as equipment costing less than $150 or which is purchased at least 75 percent of the time; (2) items requiring frequent and substantial servicing; (3) customized items, which is defined as equipment constructed or modified substantially to meet the needs of an individual patient; (4) other items of durable medical equipment (frequently referred to as the ``capped rental'' category); and (5) oxygen and oxygen equipment. In addition to these five categories, prosthetics and orthotics were also included in the DME fee schedule prior to the enactment of the Omnibus Budget Reconciliation Act of 1990. Section 1861(s)(9) of the Social Security Act defines prosthetics and orthotics as ``leg, arm, back and neck braces, and artificial legs, arms and eyes.'' As with DME, this definition is not inclusive. OBRA 1990 established reimbursement principles for prosthetics and orthotics under a separate section of law. Although a new section of law was created for prosthetics and orthotics, the reimbursement principles established remained identical to those under the DME fee schedule, except that prosthetics and orthotics were exempted from the DME reimbursement changes made in OBRA 1990. (The following discussion of DME reimbursement principles includes prosthetics and orthotics.) Table 5-13 shows total Medicare allowed payment amounts for DME in calendar year 1992. TABLE 5-13.--ALLOWED AMOUNTS FOR SELECTED DURABLE MEDICAL EQUIPMENT (DME) CALENDAR YEAR 1991 AND 1992 [In millions of dollars] ------------------------------------------------------------------------ Allowed amounts Category --------------------- 1991 1992 ------------------------------------------------------------------------ Capped rental\1\.................................. $461 $468 Customized items\2\............................... 7 9 Oxygen\3\......................................... 739 1,093 Prosthetics/orthotics\4\.......................... 553 785 Inexpensive/routinely purchased\5\................ 137 181 Items requiring frequent maintenance\6\........... 144 181 Other\7\.......................................... 349 135 --------------------- Total....................................... 2,390 2,856 ------------------------------------------------------------------------ \1\Items of DME on a monthly rental basis not to exceed a period of continuous use of 15 months. \2\Items unsuitable for grouping together for profiling due to unique nature (custom fabrication, etc.). Payment based on individual adjudication. Amount is incomplete because it only represents HCPCS E1220. Other items are not coded in HCPCS. \3\Oxygen and oxygen equipment paid based on a monthly rate per beneficiary. Payment not made for purchased equipment except where installment payments continue. \4\These items include other prosthetic and orthotic devices (except for items included in the categories ``Customized Items'' and ``Items Requiring Frequent Maintenance,'' transcutaneous electrical nerve stimulators, parenteral/enteral nutritional supplies and equipment, and intraocular lenses). Devices in this category paid on lump sum purchase basis. \5\Inexpensive defined as equipment for which the purchase price does not exceed $150. Routinely Purchased defined as equipment that is acquired 75 percent of the time by purchase. \6\Paid on a rental basis until medical necessity ends. \7\This category includes medical and surgical supplies, additional ostomy supplies, enteral formulae and enteral medical supplies, orthotic devices, and vision services which were reported using procedure codes (e.g., temporary codes and local codes) not included on the list of codes for categories 1-6 (above) provided by the Health Care Financing Administration (HCFA), Bureau of Policy Development. Source: Health Care Financing Administration (HCFA), Bureau of Data Management and Strategy. Data from the part B Medicare Annual Data System. Codes for the categories above provided by HCFA, Bureau of Policy Development, OSDM, DPPS. CHART 5-1. MEDICARE REIMBURSEMENT FOR DURABLE MEDICAL EQUIPMENT -------------------------------------------------------------------------------------------------------------------------------------------------------- Items requiring Inexpensive or frequent and Other items of DME Prosthetics and Oxygen and oxygen routinely purchased substantial Customized items (capped rental) orthotics equipment DME servicing -------------------------------------------------------------------------------------------------------------------------------------------------------- Examples of items... Commode chairs, Ventilators, Customized Hospital beds, Artificial limbs, Liquid and gaseous electric heat pads, internal positive wheelchairs adapted infusion pumps, ostomy supplies. and various types IV poles, bed pressure breathing specifically for an walkers, of oxygen rails, vaporizers, (IPPB) machines, individual. wheelchairs equipment. blood glucose ventilators, (including power- monitors, pacemaker excluding driven chairs). monitors, seat lift ventilators that chairs. are either continous airway pressure devices or intermittent assist devices with continuous airway pressure devices. Fee schedule basis.. Average charge for Average reasonable Determined by the Average of purchase Average reasonable Average reasonable purchase or rental. charge. carrier on an prices on assigned charge for purchase. charge for individual basis. claims, reduced by purchase. the percentage by which averge charges is lower than average purchase prices. National floors and Floor = 85% of Floor = 85% of No.................. Floor = 85% of Floor = 85% of Floor = 85% of the ceilings. median of local median of local median of local average of national median of all local payment amounts; payment amounts; payment amounts; purchase prices; monthly payment ceiling = 100% of ceiling = 100% of ceiling = 100% of ceiling = 125% of rates; ceiling = same. Effective: same. Effective: same. Effective: same. Effective: 100% of same. 1994. 1994. 1994. 1992. Subsequent Effective 1994. year: limits are 90% and 120%. 1993 update......... CPI-U............... CPI-U............... Not applicable...... CPI-U............... CPI-U............... CPI-U 1994 update......... 0................... 0................... Not applicable...... 0................... 0................... 0 Other provisions.... .................... Reasonable lifetime. .................... Reasonable lifetime; .................... .................... limit on rental payments = 120% of purchase price. Base period......... July 1, 1986 to June July 1, 1986 to June Not applicable...... Base period for July 1, 1986 to June Jan. 1, 1986 to Dec. 30, 1987, updated 30, 1987, updated purchase prices-- 30, 1987. 30, 1986, reduced by the CPI-U to by the CPI-U to July 1, 1986 to by 5%, and updated Dec. 1987. Dec. 1987. Dec. 30, 1986, by the CPI-U to updated by the CPI- Dec. 1987. U to Dec. 1987. Base period for reasonable charges-- Apr. 1, 1988--Dec. 31, 1988. Rent or purchase.... Rental or purchase.. Rental only......... Purchase only....... Rental with option Purchase only....... Not applicable-- to purchase in monthly payment first month for amount made. power-driven chairs; for other items, option to purchase is offered in the 10th continuous rental month. Regional or national Phased-in national Phased-in national Not applicable...... Phased-in national Phased-in regional Phased-in national limits. limits, beginning limits, beginning limits, beginning limits beginning in limits beginning in in 1991 and fully in 1991 and fully in 1991 and fully 1992 and fully 1991 and fully implemented in 1993. implemented in 1993. implemented in 1993. implemented in implemented in 1994. Effective 1993. January 1, 1994 national limits would apply to ostomy supplies, trachestomy supplies and urologicals. -------------------------------------------------------------------------------------------------------------------------------------------------------- Medicare law specifies detailed reimbursement principles for DME.\2\ Chart 5-1 gives examples of each category of equipment, shows the key components of the fee schedule, and describes how these components affect each category of equipment. The following discussion provides more explanation about these components. --------------------------------------------------------------------------- \2\The DME fee schedule is contained in section 1834(a) of the Social Security Act; reimbursement principles for prosthetics and orthotics are specified in section 1834(h). --------------------------------------------------------------------------- Fee schedule basis The basis for determining the fee schedule is established in law for each type of equipment. For items requiring frequent and substantial servicing, prosthetics and orthotics, and oxygen and oxygen equipment, the average Medicare reasonable charge is the basis from which fee schedules payments are calculated. Under reasonable charge reimbursement, payment is set at the lowest of the actual charge, the customary charge, the prevailing charge in the locality, or the inflation indexed charge (IIC) for that item. For customized items, carriers are permitted to determine the appropriate payment amount without regard to average or reasonable charges. The fee schedule basis for ``capped rental'' equipment is more complicated than for other categories. Originally, the basis for determining fee schedule payments for capped rental equipment was the average of submitted purchase prices on assigned claims during the base period.\3\ OBRA 1990 altered this provision by setting the basis equal to the average of the purchase prices submitted for assigned claims submitted during the base time period, increased by the update factor, minus the percentage by which the average of the reasonable charges for submitted claims is lower than the average of purchase prices submitted for items during the last 9 months of 1988. --------------------------------------------------------------------------- \3\In the case of assigned claims, the supplier agrees to accept 80 percent of the Medicare fee schedule payment as payment in full. The beneficiary is liable for 20 percent coinsurance, but not for any amount by which the supplier's charge exceeds the fee schedule amount. --------------------------------------------------------------------------- Implementation of this provision was originally slated for January 1, 1991, but was delayed until June 1991 because of questions about the validity of claims data. Payment limits were implemented retroactively to May 1, 1991. This provision was included in OBRA 1990 because of Congressional concerns that the fee schedule basis for capped rental items was too high and thus resulted in excessive Medicare payments for these items. Base time period Current law specifies the time period used to calculate the basis of the fee schedule for each category of equipment. The most common base period is from July 1, 1986 to June 30, 1987, updated by the Consumer Price Index for Urban consumers (CPI-U) to December 1987. Rental or purchase Some categories of DME may only be rented, some may only be purchased, and some may be either rented or purchased. Inexpensive or routinely purchased DME may be rented or purchased. Items requiring frequent and substantial servicing must be rented because they need regular maintenance to function properly and avoid risk to beneficiaries' health. Customized items may only be purchased because they are specifically fitted for an individual and cannot be used by anyone else. Since oxygen is a consumable item, it cannot be rented. Medicare does not reimburse for purchase of oxygen equipment; rental for equipment is included in the monthly payment for oxygen. Other items of DME are rented with an option to purchase at different times, depending on the equipment. For power-driven wheelchairs, beneficiaries are given the option to purchase in the first month of rental. If beneficiaries exercise the option to purchase power-driven wheelchairs, payment for purchase is made on a lump-sum basis. For other items in this category, beneficiaries are given the option to purchase in the tenth month of continuous rental. If beneficiaries opt to purchase, title is transferred to them after the thirteenth month of continuous rental.\4\ For all items in this category of DME, reimbursement for rental is limited to 15 continuous months. --------------------------------------------------------------------------- \4\The same cycle of payments for maintenance and servicing applies to both rented and purchased equipment in this category. --------------------------------------------------------------------------- Regional or national limits on payment Beginning in 1993, most categories of DME are subject to national limits on payments. The national limits replace regional limits enacted in OBRA 1987. Customized items and prosthetics and orthotics are generally not subject to these limits. Customized items are not subject to any payment limits, while prosthetics and orthotics are subject to regional payment limits, beginning in 1992, and fully implemented in 1994. OBRA 1993, however, imposed national limits on ostomy supplies, tracheostomy supplies and urologicals effective January 1, 1994. Payment floors and ceilings The national limits on payments contain upper and lower limits (referred to as ceilings and floors) on payments. The ceiling was originally equal to 100 percent of the weighted average of local payment amounts and the floor is equal to 85 percent of the weighted average of local payment amounts. These limits took effect in 1991. OBRA 1993 changed the basis for the ceilings and floor to median effective January 1, 1994. The floors and ceilings applied to the regional payment limits for prosthetics and orthotics vary somewhat from those used for national payment limits. The limits did not take effect until 1992. In 1992, the floor for prosthetics and orthotics was the same--85 percent of the weighted average of the local payment amount, but the ceiling is higher--125 percent of the weighted average. In addition, the limits differ in 1993 and subsequent years, when they are set at 90 and 120 percent of the weighted average of local payment amounts. Update to the fee schedule The 1994 fee schedule update for most categories of DME was the CPI-U or 3.0 percent. The update is applied to fee schedule payments set during the base period, rather than to more current charge data. The 1993 payment update for prosthetics and orthotics was the CPI-U or 3.0 percent. As a result of OBRA 1993 prosthetics and orthotics will not receive an update in 1994 and 1995. One piece of prosthetic and orthotic equipment, a transcutaneous electrical nerve stimulator (TENS), was subject to a 15-percent reduction in fee schedule payments from April 1, 1990, through December 30, 1990. TENS devices were subjected to an additional 15 percent reduction in 1991. OBRA 1993 reduced payment by an additional 30 percent effective January 1, 1994. Other provisions Useful lifetime for rental items.--As enacted in OBRA 1987, payment for categories of equipment that could only be rented was made on a monthly basis. In the case of items requiring frequent and substantial servicing, monthly rental payments continued as long as the equipment was needed. In the case of capped rental items, monthly payments were made for 15 months, after which one payment was made every subsequent 6 months for maintenance and servicing of the item. In both cases, no provision was made for replacement of the item. OBRA 1990 permitted the Secretary to establish a useful lifetime for these types of equipment, and to establish a new cycle of monthly payments for capped rental items. A useful lifetime of 5 years was established, unless the Secretary determines that 5 years is not appropriate for an individual item. In that case, the Secretary is to establish an alternative reasonable lifetime. When the reasonable lifetime has been reached, or the carrier determines that an item is lost or irreparably damaged, the item is replaced. Limitation on payment amounts for capped rental items.-- Prior to OBRA 1990, monthly payments for capped rental items were made for a 15-month period, with total payments for an item limited to 150 percent of the purchase price. Each monthly payment was equal to 10 percent of the purchase price. OBRA 1990 limited monthly rental payments for these items to 120 percent of the purchase price, with monthly payments equal to 10 percent of the purchase price for the first 3 months, and 7.5 percent of the purchase price for the next 12 months. ADMINISTRATION OF THE FEE SCHEDULE Consolidation of administration On June 18, 1992, the Health Care Financing Administration (HCFA) published a final rule regarding DME claims payments. The rule establishes four regional carriers to process all claims for DME and prosthetics and orthotics. HCFA argues that, as a result of this consolidation, greater efficiency in claims processing will be achieved, and variance in coverage policy and utilization parameters will be greatly reduced. In addition, the rule also requires that the responsibility for processing claims for beneficiaries residing within each regional area would be allocated to the regional carrier for that area. This change will eliminate the ability of suppliers to engage in ``carrier shopping,'' that is, filing claims in those carrier areas that have higher payment rates. Consolidation of claims processing for DME and prosthetics and orthotics was phased in beginning October 1, 1993 and is scheduled to be completed by July 1, 1994. The process will be on a state-by-state basis with the larger States being incorporated into the system during the final stages. The rule also proposes minimum standards that suppliers must meet before obtaining a Medicare billing number. A supplier must receive and fill orders from its own inventory or inventory in other companies with which it has contracted to fill such orders. In addition, a supplier must be responsible for delivering Medicare covered items to beneficiaries, honoring any warranties, answering any questions or complaints the beneficiaries might have, maintaining and repairing rental items and accepting returns of substandard or unsuitable items from beneficiaries. Overused items OBRA 1990 required the Secretary to develop a list of DME items frequently subject to unnecessary utilization; the list must include seat-lift mechanisms; transcutaneous electrical nerve stimulators (TENS); and motorized scooters. Carriers are directed to determine, in advance, whether payment will be made for items on the Secretary's list. Thus, DME suppliers must obtain carriers' approval before providing items on the list to Medicare beneficiaries. Certificates of medical necessity All DME must be prescribed by a physician in order to be reimbursed by Medicare. Instead of a physician's prescription, carriers may require completion of a certificate of medical necessity (CMN) to document that an item is reasonable and medically necessary. OBRA 1990 prohibited DME suppliers from distributing completed or partially completed CMNs and established penalties for suppliers who knowingly and willfully distribute forms in violation of the prohibition. The purpose of this provision was to prohibit DME suppliers from directly marketing DME items to Medicare beneficiaries by providing them with completed CMNs for them to submit to their physicians. Requiring physicians to complete CMNs will also encourage them to take a more active role in considering their patients' needs for DME, while simultaneously reducing DME suppliers' ability to influence DME acquisition. This provision was to be implemented January 1, 1991, but was not implemented until December 1991 because of administrative difficulties. Inherent reasonableness The Secretary is permitted to increase or decrease Medicare payments in cases where the payment amount is ``*9*9* grossly excessive or grossly deficient and not inherently reasonable.'' The Secretary's authority to make these payment adjustments is generally referred to as inherent reasonableness authority. In order to make a payment adjustment, the Secretary must demonstrate that the payment meets several criteria of inherent reasonableness specified by law. In addition, the Secretary must publish a notice in the Federal Register outlining his proposal to reduce or increase payment amounts, the proposed methodology for adjusting the payment amount, and the potential impact of the payment adjustment. The Secretary is also required to provide a 60-day public comment period and to publish a final determination in the Federal Register. The final determination must include an explanation of the factors and data the Secretary took into consideration in making the determination. According to HCFA, the Secretary rarely uses inherent reasonableness authority because the requirements are too stringent and the notice requirements too burdensome to permit easy imposition of inherent reasonableness adjustments. Moreover, the Secretary was prohibited, by law, from making inherent reasonableness adjustments to the DME fee schedule prior to January 1, 1991. MEDICARE PAYMENTS FOR SERVICES IN HOSPITAL OUTPATIENT DEPARTMENTS Medicare outpatient hospital services are reimbursed under Medicare part B. Services provided in outpatient hospital settings and included in expenditure data for this service setting are: emergency room services, clinic, laboratory, radiology, pharmacy, physical therapy, ambulance, operating room services, end stage renal disease services, durable medical equipment, and other services such as computer axial tomography and blood. Services rendered by physicians in outpatient hospital settings are not included in these expenditure data. Prior to 1983, hospital outpatient services, excluding physicians' services, were paid for on a reasonable cost basis. Some services, such as emergency services, are still reimbursed on a reasonable cost basis. However, Congress has enacted a number of provisions that have altered the ways hospital outpatient departments are paid for their services and placed limits on others. For example, outpatient dialysis services are paid on the basis of a fixed composite rate; clinical laboratory services are paid on the basis of a fee schedule; x- ray services are subject to a limit on payments; and ambulatory surgical facility fees for surgeries performed in hospital outpatient departments are based on a weighted average of the hospital's costs and the prevailing fee that would be paid to a free-standing ambulatory surgical facility in the area. Payments for services delivered in outpatient hospitals were $9.7 billion in calendar year 1992. Payments to outpatient hospitals constituted approximately 20 percent of all Medicare part B payments in 1992 and about 8 percent of total Medicare payments (parts A and B). Table 5-14 provides information on the number of part B enrollees, covered charges, aggregate reimbursements and reimbursements per enrollee for hospital outpatient services from 1974 to 1992. Table 5-15 shows the percent distribution of Medicare hospital outpatient charges, by type of service for 1992. TABLE 5-14.--MEDICARE HOSPITAL OUTPATIENT CHARGES AND REIMBURSEMENT BY TYPE OF ENROLLMENT AND YEAR SERVICE INCURRED: SELECTED YEARS 1974-92 ---------------------------------------------------------------------------------------------------------------- Number of Program payments SMI\1\ Covered ----------------------------------- Type of enrollment and year of service enrollees charges in in thousands Amount in Per Percent of thousands thousands enrollee charges ---------------------------------------------------------------------------------------------------------------- All beneficiaries: 1974............................................ 23,166,570 $535,296 $323,383 $14 60.4 1976............................................ 24,614,402 974,708 630,323 26 64.7 1978............................................ 26,074,085 1,384,067 923,658 35 66.7 1980............................................ 27,399,658 2,076,396 1,441,986 52 69.4 1982............................................ 28,412,282 3,164,530 2,203,260 78 69.6 1984............................................ 29,415,397 5,129,210 3,387,146 115 66.0 1986............................................ 30,589,728 8,115,976 4,881,605 160 60.1 1987............................................ 31,169,960 9,623,763 5,600,094 180 58.2 1988............................................ 31,617,082 11,833,919 6,371,704 201 53.8 1989............................................ 32,098,770 14,195,252 7,160,586 223 50.4 1990............................................ 32,635,800 18,346,471 8,171,088 250 44.5 1991............................................ 33,239,840 22,016,673 8,612,320 259 39.1 1992............................................ 33,956,460 26,209,063 9,703,004 286 37.0 ----------------------------------------------------------- Average annual rate of growth ----------------------------------------------------------- 1974-89......................................... 2.2 24.4 22.9 20.3 -1.9 1974-84......................................... 2.4 25.4 26.5 23.4 0.9 1984-92......................................... 1.8 22.6 14.1 12.1 -7.0 Aged: 1974............................................ 21,421,545 394,680 220,742 10 55.9 1976............................................ 22,445,911 704,569 432,971 19 61.5 1978............................................ 23,530,893 1,005,467 648,249 28 64.5 1980............................................ 24,680,432 1,517,183 1,030,896 42 69.9 1982............................................ 25,706,792 2,402,462 1,645,064 64 68.5 1984............................................ 26,764,150 4,122,859 2,679,571 100 65.0 1986............................................ 27,862,737 6,529,273 3,809,992 137 58.4 1987............................................ 28,382,203 7,859,038 4,436,787 156 56.5 1988............................................ 28,780,154 9,790,273 5,098,546 177 52.1 1989............................................ 29,216,027 11,855,127 5,767,589 197 48.6 1990............................................ 29,691,180 15,384,510 6,563,454 221 42.7 1991............................................ 30,183,480 18,460,835 6,842,329 227 37.1 1992............................................ 30,722,080 21,856,012 7,593,513 247 34.7 ----------------------------------------------------------- Average annual rate of growth ----------------------------------------------------------- 1974-89......................................... 2.1 25.5 24.3 22.0 -0.9 1974-84......................................... 2.3 26.4 28.4 25.9 1.5 1984-92......................................... 1.7 23.2 13.9 12.0 -7.5 Disabled: 1974............................................ 1,745,019 140,617 102,641 57 70.8 1976............................................ 2,168,467 270,139 197,352 91 73.1 1978............................................ 2,543,162 378,600 275,409 108 72.7 1980............................................ 2,719,226 559,213 411,090 152 73.5 1982............................................ 2,705,490 762,068 558,195 206 73.2 1984............................................ 2,651,247 1,006,351 707,575 267 70.3 1986............................................ 2,726,991 1,586,703 1,071,613 393 67.5 1987............................................ 2,787,757 1,764,726 1,163,307 417 65.9 1988............................................ 2,836,928 2,043,646 1,273,158 449 62.3 1989............................................ 2,882,743 2,340,124 1,392,897 483 59.5 1990............................................ 2,944,620 2,961,961 1,607,634 546 54.0 1991............................................ 3,056,360 3,555,838 1,769,991 579 49.8 1992............................................ 3,234,380 4,353,051 2,109,491 695 48.5 ----------------------------------------------------------- Average annual rate of growth ----------------------------------------------------------- 1974-89......................................... 3.4 20.6 19.0 15.3 -1.2 1974-84......................................... 4.3 21.8 21.3 16.7 -0.1 1984-92......................................... 2.5 20.1 14.6 12.7 -4.5 ---------------------------------------------------------------------------------------------------------------- \1\1974 is the first full year of coverage for disabled beneficiaries under Medicare. Source: Health Care Financing Administration, Bureau of Data Management and Strategy: Data from the Medicare Decision Support System; Data developed by the Office of Research and Demonstrations. TABLE 5-15.--PERCENT DISTRIBUTION OF HOSPITAL OUTPATIENT CHARGES UNDER MEDICARE, BY TYPE OF SERVICE, 1992 ------------------------------------------------------------------------ Percent of charges ------------------------------------------------------------------------ Radiology.................................................. 19.2 Laboratory................................................. 9.7 Operating room............................................. 12.6 End stage renal disease.................................... 9.3 Pharmacy................................................... 6.8 Emergency room............................................. 3.5 Clinic..................................................... 1.9 Physical therapy........................................... 4.0 Medical supplies........................................... 9.9 All other\1\............................................... 23.0 ------------------------------------------------------------------------ \1\Includes computerized axial tomography, durable medical equipment, blood, etc. Source: Health Care Financing Administration, Bureau of Data Management and Strategy: Data from the Medicare Decision Support System. From 1984 to 1992, hospital outpatient reimbursements grew 14.6 percent a year. Recent legislative changes Capital.--OBRA 1989 reduced payments for capital costs for outpatient services paid on a reasonable cost basis or a blend of reasonable costs and charges by 15 percent for portions of cost-reporting periods beginning in fiscal year 1990. This reduction also applied to capital related to services reimbursed on a blended amount; these services include radiology, diagnostic procedures and outpatient surgery. However, in the case of blends or limits based on blends, the reduction applied only to the cost portion of the blended amount. Outpatient capital costs of sole community hospitals were exempt from this reduction. OBRA 1990 reduced reimbursement for capital costs for outpatient hospital services and the cost portion of outpatient hospital services paid on the basis of a blended amount for payments attributable to portions of cost-reporting periods occurring during fiscal year 1991 by 15 percent. These payments will be reduced by 10 percent for portions of cost-reporting periods occurring during fiscal years 1992, 1993, 1994, and 1995. Sole community hospitals and rural primary care hospitals are exempt from these reductions. OBRA 1993 extended the 10 percent reduction through fiscal year 1998. Services paid on a cost-related basis.--OBRA 1990 also reduced payment for services paid on a cost-related basis, other than capital costs, by 5.8 percent of the recognized costs for payments attributable to cost-reporting periods occurring during fiscal years 1991, 1992, 1993, 1994, and 1995. The reduction is also applied to cost portions of blended payment limits for ambulatory surgery and radiology services. Sole community hospitals and rural primary care hospitals are exempt from the reduction. OBRA 1993 extended the 5.8 percent reduction through fiscal year 1998. Prospective payment proposal.--OBRA 1990 also directed the Secretary to develop a proposal to replace the current payment system for hospital outpatient services with a prospective payment system. The Secretary is to consider the following factors in developing the proposal: (1) the need to provide for appropriate limits on increases in Medicare expenditures; (2) the need to adjust prospectively determined rates to account for changes in a hospital's outpatient case mix; (3) providing hospitals with incentives to control the costs of providing outpatient services; (4) the feasibility and appropriateness of including payment for outpatient services not currently paid on a cost-related basis under Medicare (including clinical diagnostic laboratory tests and dialysis services) in the system; (5) the need to increase payments to hospitals that treat a disproportionate share of low-income patients; teaching hospitals; and hospitals located in geographic areas with high wages and wage-related costs; (6) the feasibility and appropriateness of bundling services into larger units, such as episodes or visits, in establishing the basic unit for making payments under the system; and (7) the feasibility and appropriateness of varying payments on the basis of whether services are provided in a freestanding or hospital-based facility. The law also required the Administrator of Health Care Financing Administration to submit research findings regarding prospective payments for hospital outpatient services to specified committees of Congress by January 1, 1991. The Secretary was directed to submit his proposal to Congress by September 1, 1991. As of January 1994, that report had not been submitted to Congress. The Prospective Payment Assessment Commission (ProPAC) was to submit its analysis and comments on the proposal by March 1, 1992. ProPAC recommended implementation of a prospective payment system for all providers of outpatient services, including hospitals, physicians' office-based services, and freestanding ambulatory surgical centers. The Commission also recommended adjusting the payment rate to reflect justifiable cost differences such as wages and case mix. Eye and eye and ear specialty hospitals.--OBRA 1990 also changed the reimbursement blend for ambulatory surgery services provided in eye, and eye and ear specialty hospitals meeting specified conditions. Prior to OBRA 1990, payment for these services was based on a blend that consists of 75 percent of the hospital's costs and 25 percent of the applicable freestanding ambulatory surgical center rate. However, the blend was scheduled to change to 50/50 for cost-reporting periods beginning after fiscal year 1990. OBRA 1990 extended use of the 75/25 blend to services provided in cost-reporting years beginning before January 1, 1995. UTILIZATION AND QUALITY CONTROL PEER REVIEW PROGRAM The Medicare utilization and quality control peer review organization program was established by Congress under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA, P.L. 97- 35). Building on the former professional standards review organizations, the new peer review organizations (PROs) were charged by the 1982 law with reviewing services furnished to Medicare beneficiaries to determine if the services met professionally recognized standards of care and were medically necessary and delivered in the most appropriate setting. Major changes were made to the PRO program by the Social Security Act Amendments of 1983 (P.L. 98-21) and subsequent budget reconciliation acts. Most PRO review is focused on inpatient hospital care. However, there is limited PRO review of ambulatory surgery, postacute care, and services received from Medicare HMOs. There are currently 53 PRO areas, incorporating the 50 States, Puerto Rico, and the territories. Organizations eligible to become PROs include physician-sponsored and physician-access organizations. In limited circumstances, Medicare fiscal intermediaries may also be eligible. Physician- sponsored organizations are composed of a substantial number of licensed physicians practicing in the PRO review area (e.g., a medical society); physician access organizations are those which have available to them sufficient numbers of licensed physicians so that adequate review of medical services can be assured. Such organizations obtain PRO contracts from the Secretary of HHS, through a competitive proposal process. Each organization's proposal is evaluated by HCFA for technical merit using specific criteria that are quantitatively valued. Priority is given to physician-sponsored organizations in the evaluation process. By October 1993, all 53 PROs were operating under the fourth round of contracts (also referred to as the ``fourth scope of work''). In general, each PRO has a medical director and a staff of nurse reviewers (usually registered nurses), data technicians, and other support staff. In addition, each PRO has a board of directors, comprised of physicians and, generally, representatives from the State medical society, hospital association, and State medical specialty societies. OBRA 1986 (P.L. 99-509) requires each board to have a consumer representative. Because the board is usually consulted before a case is referred by the PRO to the HHS inspector general for sanction, it assumes a major role in the PRO review process. Each PRO also has physician advisors who are consulted on cases in which there is a question regarding the nurse reviewer's referral. Only physician advisors can make initial determinations about services furnished or proposed to be furnished by another physician. PROs are paid by Medicare on a cost basis for their review work. Spending for the PROs in fiscal year 1993 totaled $214 million; in 1994, spending is expected to be $325 million. (Spending varies considerably from year to year depending on where the PROs are in their contract cycles. HCFA projections for fiscal year 1995 are $218 million.) Funds for the PRO program are apportioned each year from the Medicare HI and SMI trust funds in an amount that is supposed to be sufficient to finance PRO program requirements. This is the same manner as transfers are made for payment of Medicare services provided directly to beneficiaries. HCFA is bound by law to follow the apportionments in the running of the PRO program; as such, the apportionments determine contract specifications and serve as a device to control spending. The PRO review process combines both utilization and quality review. In conducting utilization review, the PRO checks that the services provided to a Medicare patient were necessary, reasonable, and appropriate to the setting in which they are provided. Although some utilization review is done on a prospective basis, the bulk of the reviews are done retrospectively, i.e., after the hospitalization has occurred. When a PRO determines that the services provided were unnecessary or inappropriate (or both), it issues a payment denial notice. The provider(s), physician(s), and the patient are given an opportunity to request reconsideration of the determination. In general, the PRO checks for indications of poor quality of care as it is conducting utilization review. If a PRO reviewer detects a possible problem, then further inquiry is made into the case. If it is determined that the care was of poor quality, the PRO must take steps to correct the problem. Specific sanctions are required if the PRO determines that the care was grossly substandard or if the PRO has found that the provider or the physician has a pattern of substandard care. In addition, under section 9403 of COBRA (P.L. 99-272), as amended by P.L. 101-239, authority exists for the PROs to deny payments for substandard quality of care but this provision has not been implemented. Each of the contracts between HHS and the PROs must contain certain similar elements outlined in a document known as the Scope of Work. Under the third and previous scopes of work, PRO review was centered on case-by-case examinations of individual medical records, selected primarily on a sample basis, basically using local clinical criteria. This approach to medical review has been criticized by the Institute of Medicine and others as being costly, confrontational, and ineffective. The fourth scope of work incorporates a new review strategy called the Health Care Quality Improvement Initiative. PROs are required to use explicit, more nationally uniform criteria to examine patterns of care and outcomes using detailed clinical information on providers and patients. Instead of focusing on unusual deficiencies in care, the PROs are instructed to focus on persistent differences between actual indications of care and outcomes from those patterns of care and outcomes considered achievable. HCFA believes that this approach will encourage a continual improvement of medical practice in a way that will be viewed by physicians and providers as educational and not adversarial. CBO BASELINE MEDICARE PROJECTIONS The supplementary medical insurance (SMI) baseline is constructed following the Medicare volume performance standard (the standard) guidelines established in OBRA 1989 and amended in OBRA 1990 and OBRA 1993. The standard is a prospectively set target for growth in physicians' services. Actual growth is then compared to the standard and physicians' fees are adjusted to reflect the difference between the standard and actual growth. For example, the 1990 standard was set at 9.1 percent for all physicians' services. The actual growth in 1990 expenditures for physicians' services was 10.0 percent. Therefore, the 1992 Medicare Economic Index (MEI) was reduced by the difference (0.9 percent) subject to a maximum reduction of 2 percentage points. For years after 1991, a default process was established to set a standard in the absence of congressional action. A standard was calculated for all physicians' services and for surgical and nonsurgical services separately. Surgical services are defined as surgical services performed by surgical specialists. Nonsurgical services are all other physicians' services including independent laboratory services. If the default becomes the standard, then the update for each category of physicians' services would be adjusted by the difference between growth in expenditures and the standard for each category. The default standard is the product of (1) the increase in fees for physician services, (2) the increase in average enrollment (or non-HMO enrollees), (3) the average annual increase in the volume and intensity of services for the past 5 years, (4) the percentage increase or decrease caused by legislation or regulation, and (5) 1 minus the standard factor stated in the law. The standard factor is 1.5 percentage points in 1992 and 2 percentage points in 1993. The 1992 standard was 6.5 percent for surgical services, 11.2 percent for nonsurgical services, and 10 percent for all physician services. The 1993 standard was 8.4 percent for surgical services, 10.8 percent for nonsurgical services and 10 percent for all services. OBRA 1993 increased the performance standard factor to 3.5 percentage points in fiscal year 1994 and 4 percentage points thereafter. It also created a new primary care category. The fiscal year 1994 standard is 8.6 percent for surgical services, 10.5 percent for primary care services, 9.2 percent for other nonsurgical services, and 9.3 percent for all physicians services. TABLE 5-16.--CBO PROJECTIONS FOR MEDICARE PROGRAM COMPONENTS BASELINE [Outlays by fiscal year, in billions of dollars] ---------------------------------------------------------------------------------------------------------------- 1993 1994 1995 1996 1997 1998 1999 ---------------------------------------------------------------------------------------------------------------- Medicare Part A: Hospital Insurance (HI) Total HI outlays.......................... $91.6 $102.0 $111.8 $120.8 $131.4 $143.1 $156.9 Annual growth rate...................... ........ 11.3 9.6 8.1 8.8 8.9 9.7 Hospitals................................. 74.8 81.0 87.9 94.3 102.2 111.3 122.4 Annual growth rate...................... ........ 8.3 8.5 7.3 8.4 8.9 10.0 PPS hospitals......................... 64.8 69.2 74.5 78.5 83.8 90.1 98.1 Non-PPS hospitals/units............... 10.1 11.9 13.4 15.8 18.4 21.2 24.3 Hospice................................... 1.0 1.1 1.3 1.5 1.8 2.1 2.4 Annual growth rate...................... ........ 18.5 16.0 16.4 16.8 15.9 16.4 Home health............................... 9.5 11.7 13.6 15.3 17.0 18.6 20.3 Annual growth rate...................... ........ 23.6 16.5 12.3 11.2 9.5 8.7 Skilled nursing facilities................ 5.3 6.6 7.4 8.1 8.8 9.5 10.1 Annual growth rate...................... ........ 24.4 12.4 9.0 8.5 7.6 7.2 Other part A (PROs)....................... 0.2 0.3 0.2 0.2 0.2 0.2 0.2 Annual growth rate...................... ........ 50.0 -33.3 0.0 0.0 0.0 0.0 Administration (subject to appropriation). 0.9 1.2 1.3 1.3 1.4 1.4 1.5 Annual growth rate...................... ........ 38.8 5.3 4.8 4.6 4.4 4.3 General part A information Indirect teaching payments................ 3.3 3.6 3.9 4.1 4.5 4.8 5.3 Direct medical education payments......... 1.7 1.7 1.8 1.9 2.0 2.2 2.3 Disproportionate share payments........... 3.0 3.3 3.5 3.8 4.1 4.4 4.8 Inpatient capital payments................ 7.7 8.5 9.4 10.3 11.2 12.3 13.4 HI trust fund income...................... 97.1 106.6 118.6 125.9 131.7 138.1 143.8 HI trust fund surplus..................... 5.5 4.6 6.8 5.1 0.3 -5.0 -13.1 HI trust fund balance (EOY)............... 126.1 130.7 137.5 142.5 142.8 137.8 124.7 Other part A information HI deductible (in CY dollars)............. $676 $696 $720 $748 $784 $824 $868 Part A FY enrollment (millions)........... 35.5 36.1 36.8 37.4 38.0 38.5 39.0 PPS market basket increase FY%............ 4.1 4.3 4.7 4.6 4.3 4.2 4.2 PPS update factor (average)............... 2.7 2.0 2.6 2.6 3.8 4.2 4.2 Monthly premium (in CY dollars)........... $221 $245 $262 $276 $295 $317 $340 Premium receipts (FT billions)............ $0.5 $0.6 $0.7 $0.8 $0.8 $0.9 $1.0 Medicare Part B: Supplementary Medical Insurance (SMI) Total SMI outlays......................... 54.3 60.9 68.7 77.5 87.5 98.2 110.1 Annual growth rate...................... ........ 12.2 12.9 12.8 12.9 12.2 12.1 Physicians................................ 28.5 30.2 33.4 36.8 40.6 44.3 47.8 Annual growth rate...................... ........ 6.2 10.7 10.2 10.3 8.9 8.1 DME and P & O suppliers............... 2.2 2.4 2.7 3.0 3.3 3.7 4.0 Annual growth rate...................... ........ 9.9 11.1 10.7 10.9 9.7 9.0 Laboratories\1\........................... 4.2 4.7 5.3 6.0 6.7 7.5 8.4 Annual growth rate...................... ........ 11.7 12.7 12.4 12.5 12.1 11.9 Outpatient hospital....................... 9.6 11.0 12.7 14.8 17.2 19.8 23.1 Annual growth rate...................... ........ 14.4 15.5 16.3 15.8 15.6 16.6 Other part B.............................. 7.9 10.8 12.6 14.9 17.7 20.8 24.5 Annual growth rate...................... ........ 37.4 16.7 18.3 18.4 17.7 17.9 Administration (subject to appropriation). 1.8 1.7 1.9 2.0 2.0 2.1 2.2 Annual growth rate...................... ........ -10.2 12.6 4.9 4.6 4.3 4.3 Other part B information SMI deductible (in dollars)............... $100 $100 $100 $100 $100 $100 $100 MEI update (calendar year)................ 2.2 2.3 2.9 2.8 2.7 2.6 2.5 Physician update (calendar year)\2\....... 1.4 9.3 5.2 3.2 1.4 -2.4 -2.5 Laboratory update (calendar year)......... 3.0 0.0 0.0 3.0 3.0 3.1 3.1 DME update (calendar year)................ 3.1 2.7 2.9 2.9 3.1 3.1 3.1 Premium information Monthly premium (in dollars).............. $36.60 $41.10 $46.10 $43.30 $51.00 $57.10 $58.90 Premium receipts (in billions)............ 14.7 16.8 19.2 19.0 21.5 24.7 27.8 FY enrollment (in millions)............... 34.3 34.9 35.6 36.2 36.7 37.2 37.6 Total medicare disbursements.............. 145.9 162.8 180.5 198.3 218.9 241.3 267.1 Total function 570--Medicare (disbursements net of premiums........... 130.7 145.5 160.6 178.5 196.6 215.7 238.3 ---------------------------------------------------------------------------------------------------------------- \1\Laboratory spending reflects services provided in physician offices, outpatient hospital departments and independent laboratories. In previous years the CBO fact sheet has shown spending for independent laboratories only. \2\Based on the current volume performance standard, we assume an upward adjustment to the MEI in fiscal years 1995 and 1996, and a downward adjustment to the MEI in fiscal years 1997, 1998 and 1999. Source: Congressional Budget Office. MEDICARE AS SECONDARY PAYER Under current law, Medicare is a secondary payer under specified circumstances when beneficiaries are covered by other third-party payers. Medicare is secondary payer to workers' compensation, automobile, medical, no-fault, and liability insurance. Medicare is also secondary payer to certain employer health plans covering aged and disabled beneficiaries and for end stage renal disease (ESRD) beneficiaries during the first 18 months of a beneficiary's entitlement to Medicare on the basis of ESRD. Table 5-17 shows savings attributable to these Medicare secondary payer provisions. In fiscal year 1985, combined Medicare part A and part B savings were $750 million. By fiscal year 1993, the total savings equaled $2.9 billion. TABLE 5-17.--MEDICARE SAVINGS ATTRIBUTABLE TO SECONDARY PAYER PROVISIONS, BY TYPE OF CIRCUMSTANCE [In millions of dollars, by fiscal year] ---------------------------------------------------------------------------------------------------------------- Workers Working compensation aged ESRD Automobile Disability Total ---------------------------------------------------------------------------------------------------------------- 1988: Part A.............................. $110.1 $786.7 $88.4 $149.6 $275.5 $1,410.3 Part B.............................. 18.1 313.8 20.2 22.3 93.5 467.9 ----------------------------------------------------------------------- Total............................. 128.2 1,100.5 108.6 171.9 369.0 1,878.2 ======================================================================= 1989: Part A.............................. 99.4 867.7 75.0 179.6 399.3 1,621.0 Part B.............................. 27.5 337.1 25.1 28.2 137.0 554.9 ----------------------------------------------------------------------- Total............................. 126.9 1,204.8 100.1 207.8 536.3 2,175.9 ======================================================================= 1990: Part A.............................. 120.9 981.6 144.1 220.1 498.4 1,965.1 Part B.............................. 21.6 325.8 21.5 26.4 123.2 518.5 ----------------------------------------------------------------------- Total............................. 142.5 1,307.4 165.6 246.5 621.6 2,483.6 ======================================================================= 1991: Part A.............................. 107.4 932.7 144.9 235.6 526.6 1,947.2 Part B.............................. 21.2 417.5 40.2 26.6 186.2 691.7 ----------------------------------------------------------------------- Total............................. 128.6 1,350.2 185.1 262.2 712.8 2,638.9 ======================================================================= 1992: Part A.............................. 118.9 1,044.9 140.8 233.9 600.9 2,139.4 Part B.............................. 17.3 398.3 37.4 34.5 182.9 670.4 ----------------------------------------------------------------------- Total............................. 136.2 1,443.2 178.2 268.4 783.8 2,809.8 ======================================================================= 1993: Part A.............................. 100.4 1,073.1 133.6 239.6 657.8 2,204.5 Part B.............................. 11.3 392.2 32.8 28.9 192.3 657.5 ----------------------------------------------------------------------- Total............................. 111.7 1,465.3 166.4 268.5 850.1 2,862.0 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration. FINANCING Background The Medicare part A Hospital Insurance Trust Fund (HI) finances inpatient hospital, skilled nursing facility, home health and other institutional services. The part B Supplementary Medical Insurance Trust Fund (SMI) finances principally physician and hospital outpatient services. The Hospital Insurance Trust Fund is financed primarily through Social Security payroll tax contributions paid by employers, employees and the self-employed. The payroll tax rate for HI for calendar year 1994 is 1.45 percent on all earnings in covered employment. (The OASDI earnings base for 1994 is $60,600.) An equal contribution rate is paid by the employer. Table 5-18 shows the contribution rates and maximum taxable earnings for both HI and the old-age, survivors and disability insurance (OASDI) programs. TABLE 5-18.--CURRENT LAW SOCIAL SECURITY PAYROLL TAX RATES FOR EMPLOYERS AND EMPLOYEES EACH AND TAXABLE EARNINGS BASES ------------------------------------------------------------------------ Employee and employer rates, each (percent) HI ----------------------------- taxable Maximum Calendar year OASDI OASDHl earnings HI tax combined Hl combined base ------------------------------------------------------------------------ 1977................. 4.95 0.90 5.85 $16,500 $148.50 1978................. 5.05 1.10 6.05 17,700 194.70 1979................. 5.08 1.05 6.13 22,900 240.45 1980................. 5.08 1.05 6.13 25,900 271.95 1981................. 5.35 1.30 6.65 29,700 386.10 1982................. 5.40 1.30 6.70 32,400 421.20 1983................. 5.40 1.30 6.70 35,700 464.10 1984................. 5.70 1.30 7.00 37,800 491.40 1985................. 5.70 1.35 7.05 39,600 534.60 1986................. 5.70 1.45 7.15 42,000 609.00 1987................. 5.70 1.45 7.15 43,800 635.10 1988................. 6.06 1.45 7.51 45,000 652.50 1989................. 6.06 1.45 7.51 48,000 696.00 1990................. 6.20 1.45 7.65 51,300 743.85 1991................. 6.20 1.45 7.65 \1\125,00 0 1,812.50 1992................. 6.20 1.45 7.65 130,200 1,887.90 1993................. 6.20 1.45 7.65 135,000 1,957.50 1994................. 6.20 1.45 7.65 \2\none no limit 1995................. 6.20 1.45 7.65 none no limit 1996................. 6.20 1.45 7.65 none no limit ------------------------------------------------------------------------ \1\The Omnibus Budget Reconciliation Act of 1990 created a separate taxable earnings base for HI. Prior to 1991, the OASDI and HI bases were the same. \2\The Omnibus Budget Reconciliation Act of 1993 eliminated the taxable earnings base for HI for 1994 and later. As table 5-19 demonstrates, the bulk of the financing for HI is derived from payroll taxes. In 1993, $400 million was transferred from the railroad retirement fund. This is the estimated amount that would have been in the fund if railroad employment had always been covered under the Social Security Act. HI benefits are provided to certain uninsured persons who became 72 before 1968. Such payments are made initially from the HI Trust Fund, with reimbursement from the general fund of the Treasury for the costs, including administrative expenses, of the payments. $367 million in 1993 and $506 million in 1994 was transferred to HI on this basis. Certain persons not eligible for HI protection either on an insured basis or on the uninsured basis described in the previous paragraph may obtain protection by enrolling in the program and paying a monthly premium ($225 or $184 in 1994) as explained on Table 5-4. This accounts for an estimated $779 million of financing in fiscal year 1994. Sections 217(g) and 229(b) of the Social Security Act, prior to modification by the Social Security Amendments of 1983, authorized annual reimbursement from the general fund of the Treasury to the HI Trust Fund for costs arising from the granting of deemed wage credits for military service prior to 1957, according to quinquennial determinations made by the Secretary of Health and Human Services. These sections, as modified by the Social Security Amendments of 1983, provided for a lump sum transfer in 1983 for costs arising from such wage credits. In addition, the lump sum transfer included combined employer-employee HI taxes on the noncontributory wage credits for military service after 1965 and before 1984. After 1983, HI taxes on military wage credits are credited to the fund on July 1 of each year. The Social Security Amendments of 1983 also provided for (1) quinquennial adjustments to the lump sum amount transferred in 1983 for costs arising from pre-1957 deemed wage credits and (2) adjustments as deemed necessary to any previously transferred amounts representing HI taxes on noncontributory wage credits. In 1993, this accounts for $81 million of income to the HI trust fund. The remaining $10,679 million in 1993 of receipts consisted almost entirely of interest on the investments of the trust fund. TABLE 5-19.--INCOME TO THE HOSPITAL INSURANCE AND SUPPLEMENTARY MEDICAL INSURANCE TRUST FUNDS FOR SELECTED FISCAL YEARS, 1970-99 [In millions of dollars] -------------------------------------------------------------------------------------------------------------------------------------------------------- Fiscal year\1\ Percent --------------------------------------------------------------------------------------------------------------- of total 1995 1970 1975 1980 1985 1990 1991 1992 1993 1994\2\ 1995\2\ 1999\2\ financing -------------------------------------------------------------------------------------------------------------------------------------------------------- Hospital insurance: Payroll taxes............. 4,785 11,291 23,244 46,490 70,655 74,655 80,978 83,147 92,106 101,472 127,184 57.7 Transfers from railroad retirement account....... 64 132 244 371 367 352 374 400 401 406 396 0.2 Reimbursement for uninsured persons........ 617 481 697 766 413 605 621 367 506 462 174 0.3 Premiums from voluntary enrollment\3\............ 0 6 17 38 113 367 484 622 779 864 1,271 0.5 Payments for military wage credits.................. 11 48 141 86 107 \4\-1,011 86 81 80 68 64 0.0 Transfer from SMI Trust Fund\5\.................. ...... ....... ....... ....... ........... ........... ........ 1,805 0 0 0 0.0 Tax on Social Security Benefits................. ...... ....... ....... ....... ........... ........... ........ ........ 1,638 4,193 5,285 2.4 Interest on investment and other income............. 137 609 1,072 3,182 7,908 8,969 10,133 10,679 10,718 10,762 8,403 6.1 ------------------------------------------------------------------------------------------------------------------------- Total\6\................ 5,614 12,568 25,415 50,933 79,563 83,938 92,677 97,101 106,228 118,227 142,777 67.2 ========================================================================================================================= Supplementary medical insurance: Premiums\7\............... 936 1,887 2,928 5,524 \8\11,494 11,807 12,748 14,683 16,802 19,192 24,101 10.0 General revenues.......... 928 2,330 6,932 17,898 33,210 34,730 38,684 44,227 38,148 36,955 78,173 21.0 Transfer to HI Trustfund\5\............. ...... ....... ....... ....... ........... ........... ........ -1,805 0 0 0 0 Interest and other income..... 12 105 415 1,155 \8\1,434 1,629 1,717 1,889 1,966 1,539 815 0.9 ------------------------------------------------------------------------------------------------------------------------- Total\6\................ 1,876 4,322 10,275 24,577 \8\46,138 48,166 53,149 58,994 57,686 57,686 103,689 32.8 ========================================================================================================================= Grand total............. 7,490 18,890 35,690 75,510 \8\125,701 132,104 145,826 156,095 163,144 175,913 245,866 100.0 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Fiscal years 1970 and 1975, consist of the 12 months ending on June 30 of each year. \2\Administration projections under current law using fiscal year 1995 budget assumptions. \3\Medicaid payment of Medicare premiums is required on behalf of certain underpoverty persons on Medicaid, and over 65 years of age but not eligible for Medicare, effective January 1, 1989 according to the Medicare Catastrophic Coverage Act of 1988. \4\Includes the lump sum general revenue adjustment of $1,100 million as provided for by section 151 of Public Law 98-21. \5\Part B premiums paid into SMI Trust Fund for Medicare Catastrophic benefits; P.L. 102-394 required these funds to be transferred to the HI Trust Fund. \6\Totals do not necessarily equal sums of rounded components. \7\Includes SMI catastrophic premiums and supplemental catastrophic premium refund in fiscal year 1990. \8\Includes the impact of the Medicare Catastrophic Coverage Act of 1988 (Public Law 100-360). Source: 1994 Annual Reports of the Board of Trustees of the Federal Hospital Insurance and Supplementary Medical Insurance Trust Funds for 1970-94; current law using fiscal year 1995 budget assumptions for 1994-99. Part B, which is voluntary, is financed from premiums paid by the aged, disabled and chronic renal disease enrollees and from the general revenues. The premium rate is derived annually based upon the projected costs of the program for the coming year. Under prior law, the premium rate was changed on July 1 of each year. The Social Security Amendments of 1983 (Public Law 98-21) moved the premium increase date to January 1 of each year to coincide with the changed date for the annual Social Security cash benefit cost-of-living (COLA) increase. Ordinarily, the premium rate is the lower of: (1) an amount sufficient to cover one-half of the costs of the program for the aged or (2) the current premium amount increased by the percentage by which cash benefits were increased under the COLA provisions of the Social Security program. Premium income, which originally financed half of the costs of part B, declined--as a result of this formula--to less than 25 percent of total program income. The Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97-248), temporarily suspended the COLA limitation for 2 years--calendar years 1984 and 1985. During this period, enrollee premiums were allowed to increase to amounts necessary to produce premium income equal to 25 percent of program costs for elderly enrollees. The Deficit Reduction Act of 1984 (Public Law 98-369) extended the TEFRA provision through calendar years 1986 and 1987. The 1987 reconciliation bill (Public Law 100-203) extended the provision through 1989 and the 1989 reconciliation bill extended the provision through 1990. The Omnibus Reconciliation Act of 1990 set the premium rates in law for each of the years 1991-95. The revenue generated by these premium amounts were estimated to be sufficient to pay approximately 25 percent of program costs for these years. The flat premium for 1994 is $41.10 per month. OBRA 1993 again set the premium equal to 25 percent of program costs, without specifying the dollar amount, for 1996-98. FINANCIAL STATUS OF THE TRUST FUNDS The Hospital Insurance Trust Fund balances are dependent upon the income to the HI Trust Fund primarily through payroll taxes exceeding the outlays for Medicare benefits and administrative costs. Outlays are affected by increases in inpatient hospital expenditures which have been rising at a faster rate than the income to the HI Trust Fund. Table 5-20 shows the annual percentage increase in Medicare outlays from fiscal year 1967 to fiscal year 1993 and the Congressional Budget Office (CBO) and HCFA projections from 1994 to 1999. TABLE 5-20.--MEDICARE OUTLAYS, FISCAL YEARS 1967-99 ---------------------------------------------------------------------------------------------------------------- Part A\1\ Part B Total -------------------------------------------------------------- Percent Percent Percent Dollars increase Dollars increase Dollars increase (in (over (in (over (in (over millions) prior millions) prior millions) prior year) year) year) ---------------------------------------------------------------------------------------------------------------- 1967............................................. 2,597 ........ 799 ........ 3,396 ........ 1968............................................. 3,815 46.9 1,532 91.7 5,347 57.4 1969............................................. 4,758 24.7 1,840 20.1 6,598 23.4 1970............................................. 4,953 4.1 2,196 19.3 7,149 8.4 1971............................................. 5,592 12.9 2,283 4.0 7,875 10.2 1972............................................. 6,276 12.2 2,544 11.4 8,820 12.0 1973............................................. 6,842 9.0 2,637 3.7 9,479 7.5 1974............................................. 8,065 17.9 3,283 24.5 11,348 19.7 1975............................................. 10,612 31.6 4,170 27.0 14,782 30.3 1976\1\.......................................... 12,579 18.5 5,200 24.7 17,779 20.3 1977............................................. 15,207 20.9 6,342 22.0 21,549 21.2 1978............................................. 17,862 17.5 7,356 16.0 25,218 17.0 1979............................................. 20,343 13.9 8,814 19.8 29,157 15.6 1980............................................. 24,288 19.4 10,737 21.8 35,025 20.1 1981............................................. 29,260 20.5 13,228 23.2 42,488 21.3 1982............................................. 34,864 19.2 15,560 17.6 50,424 18.7 1983............................................. 38,624 10.8 18,311 17.7 56,935 12.9 1984............................................. 42,108 9.0 20,372 11.3 62,480 9.7 1985............................................. 48,654 15.5 22,730 11.6 71,384 14.3 1986............................................. 49,685 2.1 26,218 15.3 75,903 6.3 1987............................................. 50,803 2.3 30,837 17.6 81,640 7.6 1988............................................. 52,730 3.8 34,947 13.3 87,677 7.4 1989\2\.......................................... 58,238 10.4 38,317 9.6 96,555 10.1 1990\2\.......................................... 66,687 14.5 43,022 12.3 109,709 13.6 1991............................................. 69,642 4.4 47,024 9.3 116,666 6.3 1992............................................. 81,971 17.7 50,285 6.9 132,256 13.4 1993............................................. 91,604 11.8 54,254 7.9 145,858 10.3 CBO projections\3\ 1994............................................. 101,901 11.2 60,879 12.2 162,780 11.6 1995............................................. 111,474 9.4 65,699 12.8 180,173 10.7 1996............................................. 120,382 8.0 77,522 12.8 197,904 9.8 1997............................................. 131,007 8.8 87,534 12.9 218,541 10.4 1998............................................. 142,810 9.0 98,205 12.2 241,015 10.3 1999............................................. 166,971 ........ ......... ........ ......... ........ HCFA projections\3\ 1994............................................. 102,892 12.3 58,490 7.8 161,382 10.6 1995............................................. 112,258 9.1 66,144 13.1 178,402 10.5 1996............................................. 123,359 9.9 73,665 11.4 197,024 10.4 1997............................................. 135,197 9.6 81,825 11.1 217,022 10.2 1998............................................. 147,664 9.2 90,981 11.2 238,645 10.0 1999............................................. 161,540 9.4 101,552 11.6 263,092 10.2 ---------------------------------------------------------------------------------------------------------------- \1\In the transition quarter from July to October 1976 (when the beginning of the Federal fiscal year was changed), outlays were $4,805 million. These outlays do not appear in the table. \2\Includes Catastrophic outlays beginning in fiscal year 1989. There are no catastrophic outlays after fiscal year 1990. \3\Projections under current law. Source: 1993 Annual Report of the Board of Trustees: HI Trust Fund and SMI Trust Fund, HCFA Office of the Actuary. For 1991 through 1999, HCFA Division of Budget and CBO. Supplementary medical insurance Because the Supplementary Medical Insurance (SMI) Trust Fund is financed through beneficiary premiums and the general revenues, it does not face the prospect of depletion as does the HI Trust Fund. However, the rapidly rising cost of health care is placing a heavy burden on the SMI Trust Fund--causing beneficiary premiums to rise and increasing the Federal deficit. HI trust fund income, outlays, and balance Table 5-21 shows the projections of the Congressional Budget Office and the administration for the HI Trust Funds with respect to income, outlays and balances for the years 1993 through 1999. TABLE 5-21.--PROJECTIONS FOR THE HOSPITAL INSURANCE TRUST FUND, FISCAL YEARS 1993-99 TOTAL OUTLAYS, INCOME, AND END-OF-YEAR BALANCES, UNDER CBO AND ADMINISTRATION BASELINE ASSUMPTIONS, PRESENT LAW [By fiscal year, in billions of dollars] ---------------------------------------------------------------------------------------------------------------- 1993\1\ 1994 1995 1996 1997 1998 1999 ---------------------------------------------------------------------------------------------------------------- Total outlays................................... 91.2 102.0 111.8 120.8 131.4 143.1 156.8 Income.......................................... 92.1 101.6 118.5 125.9 131.7 138.1 143.8 Net additions................................... 5.5 4.5 6.5 5.1 .3 5.0 (13.1) End-of-year balance............................. 127.4 130.7 137.5 142.8 142.8 137.8 124.7 Beginning-of-year balance, as percent of outlays 132 124 117 114 108 100 88 ---------------------------------------------------------------------------------------------------------------- \1\Actuals. Note: Components may not add to totals due to rounding. Source: Congressional Budget Office, and HCFA Division of Budget. Sensitivity of HI Trust Funds balances to different outlay growth assumptions Table 5-22 presents alternative projections of Hospital Insurance (HI) Trust Fund outlay growth through 2009. All of these projections assume the economic projections underlying the baseline path. The alternatives all are arranged in the table from least to most growth. Hospital outlays are projected to grow by 1 or 2 percent less and 1 or 2 percent more than the baseline in each year. These changes could be due to variations in hospital rate increases, admission patterns, intensity or change in case mix, or technology changes. The percentage refers to entire hospital outlays and not just those outlays covered by the prospective payment system. Income to the trust fund is the same (except for interest which varies by size of trust fund balance) in each projection. Under the least growth alternative, expenditures are $143 billion in fiscal year 1998 compared to $149 billion in the baseline projection. Trust fund balances are $34 billion greater in this alternative. TABLE 5-22.--ALTERNATIVE PROJECTIONS OF HOSPITAL INSURANCE OUTLAY GROWTH AND YEAR-END BALANCES [By fiscal year, in billions of dollars] ---------------------------------------------------------------------------------------------------------------- 1993\1\ 1994 1995 1996 1997 1998 1999 2000 ---------------------------------------------------------------------------------------------------------------- 2 percent lower HI outlay growth: Outlays............. $91.5 $100.1 $107.8 $114.3 $122.1 $130.4 $140.5 $150 End-of-year balance\2\......... 125.1 132.5 143.6 155.8 155.7 175.5 183.1 188 1 percent lower HI outlay growth: Outlays............. 91.6 101.1 109.7 117.5 126.7 138.6 148.5 150 End-of-year balance\2\......... 126.1 131.5 140.5 149.2 154.9 157.4 154.4 147 Baseline: Outlays............. 91.5 102.0 111.8 120.8 131.4 143.1 156.9 170 Income.............. 87.1 106.5 115.6 125.8 131.7 138.1 143.8 150 Yearly surplus...... 5.5 4.6 6.8 5.1 0.3 (5.0) (13.1) (21) End-of-year balance\2\......... 126.1 130.7 137.5 142.5 142.8 137.8 124.7 104 1 percent higher HI outlay growth: Outlays............. 81.5 102.9 113.8 124.1 136.3 149.7 185.7 181 End-of-year balance\2\......... 134.3 135.7 130.3 117.7 94.1 50 2 percent higher HI outlay growth: Outlays............. 91.5 103.8 115.8 127.5 141.3 156.6 174.9 193 End-of-year balance\2\......... 125.1 128.8 131.2 128.9 118.0 97.2 62.6 14 ---------------------------------------------------------------------------------------------------------------- 2001 2002 2003 2004 2005 2006 2007 ---------------------------------------------------------------------------------------------------------------- 2 percent HI outlay growth: Outlays........................ 159 170 181 193 206 220 235 End-of-year balance\2\......... 191 191 187 179 165 145 118 1 percent HI outlay growth: Outlays........................ 171 184 198 214 230 248 268 End-of-year balance\2\......... 134 115 88 52 4 (56) (129) Baseline: Outlays........................ 184 200 218 235 267 280 305 Income......................... 155 160 165 170 174 177 181 Yearly surplus................. (29) (40) (52) (87) (83) (102) (123) End-of-year balance\2\......... 75 35 (18) (84) (170) (275) (403) 1 percent higher HI outlay growth: Outlays........................ 198 217 238 251 287 315 345 End-of-year balance\2\......... 13 (49) (128) (228) (352) (504) (688) 2 percent higher HI outlay growth: Outlays........................ 213 235 251 289 320 354 393 End-of-year balance\2\......... (52) (137) (245) (380) (549) (755) (1,004) ---------------------------------------------------------------------------------------------------------------- 2008 2009 2010 2011 2012 2013 2014 2015 ---------------------------------------------------------------------------------------------------------------- 2 percent lower HI outlay growth: Outlays............. 252 270 289 311 336 363 393 424 End-of-year balance\2\......... 83 37 (20) (91) (179) (287) (416) (575) 1 percent lower HI outlay growth: Outlays............. 289 313 339 358 401 437 477 520 End-of-year balance\2\......... (218) (324) (451) (602) (782) (995) (1,248) (1,544) Baseline: Outlays............. 332 363 397 434 478 526 579 637 Income.............. 185 188 191 195 198 201 204 208 Yearly surplus...... (148) (175) (205) (240) (280) (325) (375) (431) End-of-year balance\2\......... (557) (744) (965) (1,228) (1,542) (1,912) (2,347) (2,855) 1 percent higher HI outlay growth: Outlays............. 381 420 463 512 568 631 End-of-year balance\2\......... (910) (1,175) (1,490) (1,863) (2,305) (2,826) (3,439) (4,155) 2 percent higher HI outlay growth: Outlays............. 437 486 540 602 675 758 847 950 End-of-year balance\2\......... (1,304) (1,662) (2,089) (2,595) (3,186) (3,905) (4,740) (5,719) ---------------------------------------------------------------------------------------------------------------- \1\Actuals. \2\Projections for fiscal years 1994 through 1999 assume economic and technical assumptions used in CBO baseline. Projections for fiscal years 1999-2015 are made by using the average of the growth rates for outlays and revenues in the last 2 years of CBO's baseline estimate. Outlay growth rates were further adjusted for changes in projected part A enrollment. Note: Totals may not add due to rounding. Source: Congressional Budget Office. TABLE 5-23.--ACTUARIAL BALANCES OF THE HOSPITAL INSURANCE PROGRAM, UNDER ALTERNATIVE SETS OF ASSUMPTIONS [In percent] ------------------------------------------------------------------------ Alternative ----------------------------- I II III ------------------------------------------------------------------------ Projection periods 1993-2017: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\2\............... 3.99 5.01 6.36 Actuarial balance\3\.................. -1.09 -2.11 -3.46 1993-2042: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\2\............... 4.52 6.84 10.81 Actuarial balance\3\.................. -1.62 -3.94 -7.91 1993-2067: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\2\............... 4.94 8.01 13.51 Actuarial balance\3\.................. -2.04 -5.11 -10.61 25-year subperiods 1993-2017: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\4\............... 3.99 4.94 6.18 Actuarial balance\3\.................. -1.09 -2.04 -3.28 2018-2042: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\4\............... 5.15 9.04 16.08 Actuarial balance\3\.................. -2.25 -6.14 -13.18 2043-2067: Summarized tax rate\1\................ 2.90 2.90 2.90 Summarized cost rate\4\............... 6.08 11.48 21.96 Actuarial balance\3\.................. -3.18 -8.58 -19.06 ------------------------------------------------------------------------ \1\As scheduled under present law. \2\Expenditures for benefit payments and administrative costs for insured beneficiaries, on an incurred basis, expressed as a percentage of taxable payroll, computed on the present value, including the cost of attaining a trust fund balance at the end of the period equal to 100 percent of the following year's estimated expenditures, and including an offset to cost due to the beginning trust fund balance. \3\Difference between the summarized tax rate (as scheduled under present law) and the summarized cost rate. \4\Expenditures for benefit payments and administrative costs for insured beneficiaries, on an incurred basis, expressed as a percentage of taxable payroll, computed on the present-value basis. Includes neither the trust fund balance at the beginning of the period nor the cost of attaining a non-zero trust fund balance at the end of the period. Source: Table 1.D.3 in the 1993 Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund. Long-range estimates Long-range estimates for the next 75 years (1993-2067) are shown in table 5-23 for the HI program under all three alternative assumptions shown in the 1993 HI Trustees' report. As in the case of the OASDI program, annual expenditures are expressed as a percentage of taxable earnings. The income rate is simply the combined scheduled HI tax rate for employees and employers. The average deficit over the next 25-year period is 2.11 percent of taxable earnings under alternative II assumptions. Over the next 75 years, is 5.11 percent of taxable earnings, that is, the cost rate is more than 175 percent higher than the tax rate now scheduled in the law for the future. In other words, the tax rate would have to be increased by 175 percent or program costs would have to be reduced by nearly 65 percent to restore actuarial solvency. MEDICARE HISTORICAL DATA Tables 5-24 through 5-38 present detailed historical data on the Medicare program. Tables 5-24 through 5-26 present detailed enrollment data. Table 5-27 describes the percentage of Medicare enrollees participating in a State buy-in agreement. Tables 5-28 and 5-29 show the distribution of Medicare payments by type of coverage and type of service. Tables 5-30 and 5-31 show the number of persons served and average reimbursement amounts per person and per enrollee. Tables 5-32-36 present the use of inpatient hospital services, skilled nursing facility services, home health agency services and beneficiaries under the ESRD program. Table 5-37 presents Medicare utilization and reimbursement by State and table 5-38 shows the number of Medicare enrollees in prepaid health plans. TABLE 5-24.--NUMBER OF MEDICARE ENROLLEES, BY TYPE OF COVERAGE AND TYPE OF ENTITLEMENT, FOR SELECTED YEARS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Number of Medicare enrollees as of July 1 (in thousands) Average annual percent -------------------------------------------------------------------------------------------------------------------------------- rate of growth Type of entitlement and coverage ----------------------- 1968 1975 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1968- 1975- 1984- 75 84 92 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Total: HI\1\ and/or SMI\2\............... 19,821 24,959 28,478 29,010 29,494 30,026 30,456 31,083 31,750 32,411 32,980 33,579 34,203 34,870 35,579 3.3 1.9 2.0 Total HI.......................... 19,770 24,640 28,067 28,590 29,069 29,587 29,996 30,589 31,216 31,853 32,413 33,040 33,719 34,429 35,153 3.2 1.9 2.0 HI only........................... 1,016 1,054 1,079 1,069 1,082 1,052 1,040 1,094 1,160 1,241 1,363 1,481 1,574 1,633 1,645 0.5 0.3 5.9 Total SMI......................... 18,805 23,905 27,400 27,941 28,412 8,975 29,416 29,989 30,590 31,170 31,617 32,099 32,629 33,237 33,933 3.5 1.9 1.8 SMI only.......................... 51 318 411 420 425 439 460 493 534 558 567 539 484 441 425 29.9 3.3 -1.0 Aged: HI and/or SMI..................... 19,821 22,790 25,515 26,011 26,540 27,109 27,571 28,176 28,791 29,380 29,879 30,409 30,948 31,485 32,010 2.0 1.7 1.9 Total HI.......................... 19,770 22,472 25,104 25,591 26,115 26,670 27,112 27,683 28,257 28,822 29,312 29,869 30,464 31,043 31,584 1.8 1.7 1.9 HI only........................... 1,016 845 835 829 833 816 807 865 928 996 1,098 1,192 1,263 1,300 1,297 -2.6 -0.2 6.1 Total SMI......................... 18,805 21,945 24,680 25,182 25,707 26,292 26,765 27,311 27,863 28,382 28,780 29,216 29,686 30,185 30,712 2.2 1.8 1.7 SMI only.......................... 51 318 411 420 425 439 459 493 534 558 557 539 484 441 425 29.9 3.3 -1.0 All disabled: HI and/or SMI..................... (\4\) 2,168 2,963 2,999 2,954 2,918 2,884 2,907 2,959 3,031 3,102 3,171 3,255 3,385 3,568 N/A 3/5 2.7 Total HI.......................... (\4\) 2,168 2,963 2,999 2,954 2,918 2,884 2,907 2,959 3,031 3,101 3,171 3,255 3,385 3,568 N/A 3.5 2.7 HI only........................... (\4\) 209 244 239 249 235 233 229 232 243 265 288 311 333 348 N/A 2.0 5.1 Total SMI......................... (\4\) 1,959 2,719 2,759 2,705 2,682 2,651 2,678 2,727 2,788 2,837 2,883 2,943 3,052 3,220 N/A 3.7 2.5 SMI only\3\....................... End stage renal disease only: HI and/or SMI.................... . (\4\) 13 28 27 27 28 30 31 39 47 53 58 65 69 72 N/A 8.5 11.6 Total HI.......................... (\4\) 13 28 27 27 28 30 31 39 47 53 58 65 69 69 N/A 8.5 11.6 HI only........................... (\4\) 1 1 1 2 2 2 2 3 3 4 5 6 6 7 N/A 8.0 17.0 Total SMI......................... (\4\) 12 27 26 26 26 28 29 36 44 49 54 59 62 65 N/A 9.0 11.1 SMI only \3\...................... ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\Hospital insurance. \2\Supplementary medical insurance. \3\Disabled and ESRD only must have HI to be eligible for SMI coverage. \4\Medicare disability entitlement began in 1973. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, ``Annual Program Statistics'' and unpublished data. TABLE 5-25.--GROWTH IN NUMBER OF AGED MEDICARE ENROLLEES, BY SEX AND AGE, FOR SELECTED YEARS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Number of enrollees (in thousands) Average annual percent Enrollees ----------------------------------------------------------------------------------------------------------------------- growth rate as percent --------------------------- Total aged of total Sex and age population aged 1968\1\ 1975\1\ 1980 1981 1982 1984 1986 1987 1988 1989 1990 1991 1992 1968-75 1975-82 1982-92 1992\1\ population 1992 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ All persons........... 19,496 22,548 25,515 26,011 26,540 27,571 28,791 29,380 29,879 30,409 30,948 31,485 32,011 2.1 2.4 1.9 32,285 99.2 65-69............. 6,551 7,642 8,459 8,570 8,652 8,784 9,163 9,358 9,469 9,659 9,695 9,690 9,692 2.2 1.8 1.1 9,977 97.1 70-74............. 5,458 5,950 6,756 6,888 7,022 7,300 7,564 7,647 7,752 7,775 7,951 8,163 8,373 1.2 2.4 1.8 8,483 98.7 75-79............. 3,935 4,313 4,809 4,931 5,064 5,327 5,573 5,692 5,792 5,931 6,058 6,175 6,261 1.3 2.3 2.1 6,415 97.6 80-84............. 2,249 2,793 3,081 3,112 3,185 3,382 3,559 3,659 3,764 3,856 3,957 4,085 4,166 3.1 1.9 2.7 4,150 100.4 85 and over....... 1,303 1,850 2,410 2,510 2,617 2,778 2,932 3,024 3,102 3,187 3,286 3,393 3,519 5.1 5.1 3.0 3,259 108.0 Males................. 8,177 9,201 10,268 10,454 10,653 11,044 11,525 11,762 11,967 12,187 12,416 12,650 12,886 1.7 2.1 1.9 13,045 98.8 65-69............. 2,944 3,420 3,788 3,843 3,881 3,942 4,109 4,196 4,245 4,331 4,352 4,358 4,374 2.2 1.8 1.2 4,475 97.7 70-74............. 2,322 2,504 2,841 2,898 2,958 3,088 3,214 3,255 3,308 3,323 3,406 3,505 3,604 1.1 2.4 2.0 3,651 98.7 75-79............. 1,596 1,669 1,854 1,903 1,956 2,061 2,160 2,211 2,257 2,321 2,382 2,441 2,485 0.6 2.3 2.4 2,553 97.3 80-84............. 864 1,005 1,062 1,068 1,093 1,161 1,221 1,257 1,296 1,330 1,369 1,411 1,454 2.2 1.2 2.9 1,457 99.8 85 and over....... 450 604 722 741 764 793 822 843 861 881 906 934 968 4.3 3.4 2.4 909 106.5 Females............... 11,319 13,347 15,247 15,557 15,887 16,526 17,266 17,619 17,912 18,222 18,532 18,835 19,125 2.4 2.5 1.9 19,240 99.4 65-69............. 3,606 4,222 4,671 4,727 4,771 4,842 5,054 5,162 5,224 5,328 5,343 5,332 5,317 2.3 1.8 1.1 5,503 96.6 70-74............. 3,136 3,446 3,914 3,990 4,064 4,212 4,350 4,393 4,444 4,452 4,545 4,657 4,769 1.4 2.4 1.6 4,833 98.7 75-79............. 2,338 2,644 2,954 3,028 3,108 3,266 3,414 3,481 3,534 3,610 3,676 3,734 3,776 1.8 2.3 2.0 3,862 97.8 80-84............. 1,386 1,788 2,019 2,043 2,092 2,222 2,339 2,402 2,468 2,526 2,588 2,653 2,713 3.7 2.3 2.6 2,693 100.7 85 and over....... 853 1,248 1,689 1,769 1,853 1,985 2,110 2,181 2,241 2,306 2,380 2,459 2,551 5.6 5.8 3.2 2,349 108.6 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\Total aged population data reflect U.S. residents. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, unpublished data; and U.S. Department of Commerce, Bureau of the Census. TABLE 5-26.--GROWTH IN NUMBER OF DISABLED MEDICARE ENROLLEES WITH HI COVERAGE, BY TYPE OF ENTITLEMENT AND AGE, FOR SELECTED YEARS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Number of enrollees Average annual percent growth -------------------------------------------------------------------------------------------------------------- rate Type of entitlement and age -------------------------------- 1975 1980 1981 1982 1984 1988 1989 1990 1991 1992 1975-82 1982-88 1982-92 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ All disabled persons............................. 2,058,424 2,425,231 2,998,949 2,415,646 2,884,410 3,101,482 3,170,917 3,254,983 3,385,439 3,568,625 2.3 4.3 4.0 Under age 35................................. 238,070 193,392 383,503 195,918 388,240 471,129 478,422 483,262 494,285 512,495 -2.7 15.7 10.1 35 to 44..................................... 251,142 258,374 385,139 268,948 422,207 572,408 609,974 654,953 711,364 762,759 1.0 13.4 11.0 45 to 54..................................... 508,345 572,823 654,700 532,020 584,214 670,131 705,616 741,193 790,435 874,797 .7 3.9 5.1 55 to 64..................................... 1,060,967 1,400,642 1,575,607 1,418,762 1,489,749 1,397,814 1,376,905 1,375,575 1,389,355 1,419,574 4.2 -0.2 -0.0 All disabled workers............................. 1,638,662 2,396,897 2,439,446 2,388,299 2,309,866 2,456,135 2,510,319 2,579,097 2,693,502 2,856,517 5.5 0.5 1.8 Under age 35................................. 100,439 184,619 195,000 187,514 193,094 249,291 253,918 257,760 268,392 286,466 9.3 4.9 4.3 35 to 44..................................... 164,439 253,186 269,765 264,036 290,395 414,749 445,291 482,071 530,417 576,549 7.0 7.8 8.1 45 to 54..................................... 426,451 565,846 558,519 525,384 485,378 552,442 581,969 612,692 657,358 731,713 3.0 0.8 3.4 55 to 64..................................... 947,333 1,393,246 1,416,162 1,411,365 1,340,999 1,239,653 1,229,141 1,226,574 1,237,335 1,216,769 5.9 -2.1 -1.1 Adults disabled as children...................... 324,864 409,072 427,513 439,293 459,620 519,009 531,445 542,416 553,388 566,336 4.4 2.8 2.6 Under age 35................................. 153,708 173,689 180,167 181,752 186,003 207,331 209,017 208,901 208,536 208,710 2.4 2.2 1.4 35 to 44..................................... 84,508 105,092 110,617 117,056 126,252 146,460 152,197 158,725 165,569 170,363 4.8 3.8 3.8 45 to 54..................................... 71,484 80,381 83,135 84,332 87,380 99,444 103,777 107,092 110,279 117,333 2.4 2.8 3.4 55 to 64..................................... 45,164 49,910 53,594 56,153 59,985 65,774 66,454 67,698 69,004 69,930 3.2 2.7 2.2 Widows and widowers.............................. 83,771 110,785 105,091 99,269 85,227 73,101 70,688 68,793 69,753 74,157 2.5 -5.0 -2.9 Under age 35................................. 1 0 ......... 0 ......... ......... ......... ......... ......... ......... ......... ......... ......... 35 to 44..................................... ......... 1 1 1 ......... ......... ......... ......... ......... ......... ......... ......... -100.0 45 to 54..................................... 7,445 7,576 6,523 5,806 4,608 5,685 5,658 5,615 6,112 7,399 -3.5 -.4 2.5 55 to 64..................................... 76,325 103,208 98,567 93,462 80,618 67,416 65,030 63,178 63,641 66,758 2.9 -5.3 -3.3 End-stage renal disease only..................... 11,127 28,334 26,899 27,347 29,697 53,237 58,465 64,677 68,796 71,615 13.7 11.7 10.1 Under age 35................................. 3,729 8,773 8,336 8,404 9,143 14,507 10,368 16,601 17,357 17,299 12.3 9.5 7.5 35 to 44..................................... 2,187 5,188 4,756 4,912 5,559 11,199 12,486 14,157 15,378 15,847 12.3 14.7 12.4 45 to 54..................................... 2,966 6,977 6,523 6,636 6,848 12,560 14,212 15,794 16,686 18,352 12.2 11.2 10.7 55 to 64..................................... 2,245 7,396 7,284 7,397 8,147 14,971 16,280 18,125 19,375 20,117 18.6 12.5 10.5 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Source: Health Care Financing Administration, Bureau of Data Management and Strategy, unpublished data. TABLE 5-27.--MEDICARE ENROLLMENT: NUMBER AND PERCENTAGE OF INDIVIDUALS ENROLLED IN SUPPLEMENTARY MEDICAL INSURANCE (SMI) UNDER BUY-IN AGREEMENTS, BY TYPE OF BENEFICIARY AND BY YEAR OR 1992 AREA OF RESIDENCE ---------------------------------------------------------------------------------------------------------------- All persons Aged Disabled -------------------------------------------------------------- Year or area of residence\1\ Percent Percent Percent Number in of SMI Number in of SMI Number in of SMI thousands enrolled thousands enrolled thousands enrolled ---------------------------------------------------------------------------------------------------------------- Year: 1968......................................... 1,648 8.8 1,648 8.8 NA NA 1975......................................... 2,846 12.0 2,483 11.4 363 18.7 1980......................................... 2,954 10.9 2,449 10.0 504 18.9 1981......................................... 3,257 11.7 2,659 10.6 598 21.7 1982......................................... 2,791 9.8 2,288 8.9 503 18.6 1983......................................... 2,654 9.3 2,177 8.4 477 18.1 1984......................................... 2,601 8.9 2,127 8.0 474 18.2 1985......................................... 2,670 9.0 2,164 8.0 505 19.2 1986......................................... 2,776 9.2 2,222 8.0 554 20.9 1987......................................... 2,985 9.6 2,337 8.2 648 23.2 1988......................................... 3,033 9.6 2,341 8.1 691 24.4 1989......................................... 3,351 10.4 2,549 8.7 802 27.8 1990......................................... 3,604 11.0 2,714 9.1 890 30.2 1991......................................... 3,766 10.4 2,817 8.7 949 27.8 1992......................................... 4,055 11.4 2,972 9.3 1,083 30.3 Area of residence\1\ All areas........................................ 4,055 11.4 2,972 9.3 1,083 30.3 United States.................................... 4,053 11.6 2,970 9.5 1,083 31.3 Alabama.......................................... 108 17.8 84 16.0 24 29.3 Alaska........................................... 6 21.4 4 16.7 2 50.0 Arizona.......................................... 35 6.5 25 5.1 10 20.0 Arkansas......................................... 73 18.1 57 16.2 16 30.2 California....................................... 697 20.4 527 17.0 170 53.0 Colorado......................................... 41 10.7 29 8.5 12 30.0 Connecticut...................................... 30 6.2 18 4.0 12 32.4 Delaware......................................... 5 5.4 3 3.6 2 22.2 District of Columbia............................. 13 16.7 10 14.1 3 42.9 Florida.......................................... 222 9.0 175 7.7 47 25.8 Georgia.......................................... 142 18.4 109 16.4 33 31.1 Hawaii........................................... 14 10.3 11 8.7 3 33.3 Idaho............................................ 10 7.2 7 5.5 3 25.0 Illinois......................................... 111 7.0 75 5.2 36 25.2 Indiana.......................................... 68 8.6 47 6.7 21 25.3 Iowa............................................. 45 9.7 31 7.2 14 37.8 Kansas........................................... 32 8.6 23 6.7 9 31.0 Kentucky......................................... 84 15.2 60 12.8 24 28.9 Louisiana........................................ 98 17.8 74 15.6 24 30.8 Maine............................................ 25 13.2 17 10.1 8 38.1 Maryland......................................... 54 9.5 40 7.7 14 28.6 Massachusetts.................................... 98 10.9 68 8.4 30 36.1 Michigan......................................... 102 8.0 64 5.6 38 27.0 Minnesota........................................ 46 7.6 30 5.4 16 32.7 Mississippi...................................... 95 25.1 75 23.5 20 34.5 Missouri......................................... 62 7.7 42 5.8 20 24.4 Montana.......................................... 10 8.1 6 5.5 4 30.8 Nebraska......................................... 14 5.8 8 3.6 6 33.3 Nevada........................................... 11 6.8 8 5.5 3 20.0 New Hampshire.................................... 5 3.4 3 2.3 2 15.4 New Jersey....................................... 105 9.3 78 7.5 27 29.3 New Mexico....................................... 26 13.5 20 11.8 6 27.3 New York......................................... 275 10.8 197 8.5 78 31.7 North Carolina................................... 139 14.7 107 12.9 32 27.4 North Dakota..................................... 5 5.0 3 3.2 2 25.0 Ohio............................................. 131 8.2 96 6.7 35 21.1 Oklahoma......................................... 55 11.8 43 10.8 12 27.3 Oregon........................................... 34 7.6 24 5.9 10 26.3 Pennsylvania..................................... 140 7.0 93 5.0 47 28.5 Rhode Island..................................... 12 7.4 8 5.4 4 26.7 South Carolina................................... 89 19.0 67 16.6 22 34.4 South Dakota..................................... 10 8.8 7 6.7 3 33.3 Tennessee........................................ 127 17.6 93 14.8 34 36.2 Texas............................................ 265 13.8 212 12.2 53 29.3 Utah............................................. 12 7.0 7 4.5 5 33.3 Vermont.......................................... 9 11.7 6 8.6 3 37.5 Virginia......................................... 89 11.7 66 9.8 23 27.4 Washington....................................... 61 9.5 41 7.0 20 33.9 West Virginia.................................... 33 10.4 23 8.5 10 21.3 Wisconsin........................................ 71 9.7 44 6.6 27 39.7 Wyoming.......................................... 4 7.3 3 6.0 1 20.0 Puerto Rico\2\................................... 0 0.0 0 0.0 0 0.0 Guam and Virgin Islands\3\....................... 1 11.8 1 12.5 0 6.3 ---------------------------------------------------------------------------------------------------------------- \1\State of residence is not necessarily State that bought coverage. \2\No State buy-in agreement. \3\Data for these areas combined to prevent disclosure of confidential information. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, ``HCFA Statistics'' and unpublished data. TABLE 5-28.--DISTRIBUTION OF MEDICARE BENEFIT PAYMENTS, BY TYPE OF COVERAGE AND TYPE OF SERVICE, AND BY YEAR OR TYPE OF ENROLLEE -------------------------------------------------------------------------------------------------------------------------------------------------------- Amount and distribution of payments for all enrollees, calendar year-- ----------------------------------------------------------------------------------------------------------------------------- Type of coverage and type 1975 1980 1981 1982 1983 1984 1985 of service ----------------------------------------------------------------------------------------------------------------------------- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent -------------------------------------------------------------------------------------------------------------------------------------------------------- Total payments (millions)......... 15,588 100.0 35,686 100.0 43,442 100.0 51,086 100.0 57,443 100.0 62,870 100.0 70,391 100.0 ============================================================================================================================= Hospital insurance........ 11,315 72.6 25,051 70.2 30,329 69.8 35,631 69.7 39,337 68.5 43,209 68.7 47,444 67.4 ----------------------------------------------------------------------------------------------------------------------------- Inpatient............. 10,877 69.8 24,116 67.6 29,161 67.1 33,947 66.5 37,252 64.9 40,878 65.0 44,940 63.8 Skilled nursing facility............. 254 1.6 395 1.1 410 0.9 484 0.9 543 0.9 543 0.9 548 0.8 Home health agency.... 104 0.7 540 1.5 758 1.7 1,200 2.3 1,542 2.7 1,779 2.8 1,913 2.7 Hospice............... 0 0 0 0 0 0 0 0 0 0 8 0.0 43 0.1 ============================================================================================================================= Supplementary medical insurance................ 4,273 27.4 10,635 29.8 13,113 30.2 15,455 30.3 18,106 31.5 19,661 31.3 22,947 32.6 ----------------------------------------------------------------------------------------------------------------------------- Physicians'........... 3,416 21.9 8,187 22.9 10,086 23.2 11,893 23.3 14,062 24.5 15,434 24.5 17,312 24.6 Outpatient hospital... 643 4.1 1,897 5.3 2,406 5.5 2,994 5.9 3,385 5.9 3,452 5.5 4,319 6.1 Home health agency.... 95 0.6 234 0.7 193 0.4 54 0.1 25 0.0 30 0.0 38 0.1 Group practice plan... 80 0.5 203 0.6 274 0.6 335 0.7 410 0.7 464 0.7 720 1.0 Independent laboratory 39 0.3 114 0.3 154 0.4 179 0.4 224 0.4 281 0.4 558 0.8 -------------------------------------------------------------------------------------------------------------------------------------------------------- Amount and distribution of payments for all enrollees -------------------------------------------------------------------------------------------------------------------------------- Type of coverage and 1986 1987 1988 1989 1990 1991 1992 type of service -------------------------------------------------------------------------------------------------------------------------------- Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent -------------------------------------------------------------------------------------------------------------------------------------------------------- Total payments (millions)...... 75,844 100.0 80,162 100.0 86,317 100.0 98,097 100.0 108,518 81.6 118,653 100.0 132,951 100.0 ================================================================================================================================ Hospital insurance..... 49,605 65.4 49,342 61.6 52,347 60.6 59,803 61.0 66,050 49.7 71,317 60.1 83,691 62.9 Inpatient.......... 47,008 62.0 46,905 58.5 49,265 57.1 54,227 55.3 59,383 44.7 62,640 52.8 71,000 53.4 Skilled nursing facility.......... 575 0.8 635 0.8 848 1.0 2,879 2.9 2,620 2.0 2,632 2.2 4,051 3.0 Home health agency. 1,945 2.6 1,690 2.1 2,078 2.4 2,465 2.5 3,689 2.8 5,484 4.6 7,760 5.8 Hospice............ 77 0.1 112 0.1 156 0.2 238 0.2 358 0.3 561 0.5 880 0.7 ================================================================================================================================ Supplementary medical insurance............. 26,239 34.6 30,820 38.4 33,970 39.4 38,294 39.0 42,468 31.9 47,336 39.9 49,260 37.1 -------------------------------------------------------------------------------------------------------------------------------- Physicians'........ 19,213 25.3 22,618 28.2 24,372 28.2 27,056 27.6 29,609 22.3 32,313 27.2 32,394 24.4 Outpatient hospital 5,157 6.8 5,916 7.4 6,549 7.6 7,676 7.8 8,482 6.4 9,783 8.2 10,990 8.3 Home health agency. 31 0.0 40 0.0 47 0.1 60 0.1 74 0.1 65 0.1 71 0.1 Group practice plan 1,113 1.5 1,361 1.7 2,019 2.3 2,308 2.4 2,827 2.1 3,531 3.0 3,933 3.0 Independent laboratory........ 725 1.0 885 1.1 983 1.1 1,194 1.2 1,476 1.1 1,644 1.4 1,872 1.4 -------------------------------------------------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, Bureau of Data Management and Strategy and Office of the Actuary, unpublished data. TABLE 5-29.--DISTRIBUTION OF MEDICARE BENEFIT PAYMENTS, BY TYPE OF COVERAGE AND TYPE OF SERVICE, AND BY TYPE OF ENROLLEE, 1992 ---------------------------------------------------------------------------------------------------------------- Calendar year 1992 payments by type of enrollee -------------------------------------------------------------------------------- All enrollees Aged Disabled -------------------------------------------------------------------------------- Amount (in Percentage Amount (in Percentage Amount (in Percentage millions) distribution millions) distribution millions) distribution ---------------------------------------------------------------------------------------------------------------- Total payments (millions) 132,951 100.0 117,532 100.0 15,419 100.0 -------------------------------------------------------------------------------- Hospital insurance............. 83,691 62.9 74,325 63.2 9,366 60.7 Inpatient.................. 71,000 53.4 62,338 53.0 8,662 56.2 Skilled nursing facility... 4,051 3.0 3,907 3.3 144 0.9 Home health agency......... 7,760 5.8 7,244 6.2 516 3.3 Hospice.................... 880 0.7 836 0.7 44 0.3 Supplementary medical insurance 49,260 37.1 43,207 36.8 6,053 39.3 Physicians'................ 32,394 24.4 29,169 24.8 3,225 20.9 Outpatient hospital........ 10,990 8.3 8,740 7.4 2,250 14.6 Home health agency......... 71 0.1 71 0.1 0 0.0 Group practice plan........ 3,933 3.0 3,541 3.0 392 2.5 Independent laboratory..... 1,872 1.4 1,686 1.4 186 1.2 ---------------------------------------------------------------------------------------------------------------- Source: Health Care Financing Administration, Bureau of Data Management and Strategy and Office of the Actuary, unpublished data. TABLE 5-30.--PERSONS SERVED AND REIMBURSEMENTS FOR AGED MEDICARE ENROLLEES, BY TYPE OF COVERAGE AND BY YEAR OR 1992 DEMOGRAPHIC CHARACTERISTICS -------------------------------------------------------------------------------------------------------------------------------------------------------- Hospital insurance and/or Hospital insurance Supplementary medical insurance supplementary medical insurance ----------------------------------------------------------------- --------------------------------- Reimbursements Reimbursements Reimbursements Persons ---------------------- Persons --------------------- Year, period, or 1992 characteristic Persons ---------------------- served served served Per per 1,000 Per Per per 1,000 Per Per per 1,000 person Per enrollees person enrollee enrollees person enrollee enrollees served enrollee served served -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1968............................................. 397.8 $670.08 $266.56 204.0 $934.42 $190.67 394.8 $203.94 $80.51 1975............................................. 527.9 1,054.63 556.78 220.9 1,855.38 409.78 536.0 295.91 158.60 1980............................................. 637.7 1,790.51 1,141.84 240.0 3,378.53 810.77 652.3 545.42 355.77 1981............................................. 655.0 2,024.49 1,325.97 243.4 3,877.39 943.84 669.5 613.13 410.47 1982............................................. 641.4 2,439.38 1,564.65 250.7 4,461.53 1,118.69 653.8 732.53 478.92 1983............................................. 660.2 2,610.80 1,723.69 250.9 4,803.71 1,205.13 672.2 825.26 554.77 1984............................................. 685.7 NA NA 239.6 NA NA 698.9 NA NA 1985............................................. 722.1 2,762.06 1,994.59 218.8 6,167.28 1,349.60 739.1 933.25 689.79 1986............................................. 731.7 2,870.05 2,099.93 213.0 6,528.36 1,390.28 750.8 1,012.17 759.95 1987............................................. 754.1 3,025.22 2,281.19 209.8 6,902.60 1,448.33 775.9 1,147.95 890.64 1988............................................. 767.8 3,177.60 2,439.87 207.5 7,514.76 1,559.23 792.5 1,192.41 944.96 1989............................................. 784.9 3,444.86 2,703.90 206.1 8,196.19 1,688.96 812.8 1,338.10 1,087.56 1990............................................. 801.6 3,578.43 2,868.57 209.0 8,519.97 1,780.60 831.6 1,398.86 1,163.29 1991............................................. 800.1 3,905.65 3,124.82 211.8 9,348.53 1,980.26 830.0 1,473.27 1,222.80 1992............................................. 794.4 4,193.90 3,331.60 213.0 10,126.3 2,157.2 823.4 1,522.9 1,254.0 Annual percentage change in period: 1968 to 1975..................................... 4.1 6.7 11.1 1.1 10.3 11.5 4.5 5.5 10.2 1975 to 1985..................................... 3.2 10.1 13.6 -0.1 12.8 12.7 3.3 12.2 15.8 1985 to 1992..................................... 2.8 11.0 14.1 -1.9 14.7 12.5 3.0 13.9 17.3 Age: 65 and 66 years.................................. 747.9 $2,850.26 $2,131.65 132.5 $9,778.39 $1,295.25 811.0 $1,147.25 $930.46 67 and 68 years.................................. 709.7 3,414.87 2,423.50 143.0 10,319.07 1,475.46 753.1 1,367.88 1,030.12 69 and 70 years.................................. 743.2 3,599.13 2,674.74 159.9 10,241.04 1,637.48 775.5 1,431.25 1,109.94 71 and 72 years.................................. 758.9 3,910.35 2,967.44 176.0 10,507.15 1,848.89 780.7 1,513.47 1,181.60 73 and 74 years.................................. 799.5 4,144.01 3,312.95 198.0 10,485.84 2,076.62 813.9 1,587.84 1,292.42 75 to 79 years................................... 831.0 4,635.29 3,851.76 235.6 10,550.66 2,485.48 842.7 1,694.16 1,427.75 80 to 84 years................................... 860.3 4,966.50 4,272.89 288.9 9,969.93 2,880.67 871.6 1,683.09 1,467.05 85 years and over................................ 882.4 5,337.27 4,709.47 357.0 9,424.71 3,364.45 921.2 1,582.57 1,457.79 Sex: Male............................................. 754.3 4,677.45 3,527.97 215.6 10,669.68 2,300.06 790.1 1,669.79 1,319.38 Female........................................... 821.5 3,894.72 3,199.36 211.3 9,750.52 2,060.40 845.3 1,432.36 1,210.78 Race: White............................................ 803.0 4,124.04 3,311.48 213.7 9,965.58 2,129.90 829.5 1,500.23 1,244.39 All other........................................ 732.5 4,877.32 3,572.67 211.8 11,457.45 2,426.51 775.7 1,747.96 1,355.95 Census region: Northeast........................................ 830.2 4,525.56 3,757.30 218.5 11,224.99 2,452.61 859.2 1,622.32 1,393.85 North Central.................................... 824.9 3,873.28 3,195.13 218.7 9,503.69 2,078.32 843.7 1,378.56 1,163.12 South............................................ 826.7 4,235.65 3,501.53 234.0 9,670.71 2,262.99 846.6 1,533.64 1,298.44 West............................................. 697.8 4,251.20 2,966.66 170.4 11,177.96 1,904.55 715.9 1,606.35 1,149.92 -------------------------------------------------------------------------------------------------------------------------------------------------------- Note.--Data for 1992 are considered preliminary. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, ``Annual Medicare Program Statistics.'' TABLE 5-31.--PERSONS SERVED AND REIMBURSEMENTS FOR DISABLED ENROLLEES, BY TYPE OF COVERAGE AND BY YEAR OR 1992 DEMOGRAPHIC CHARACTERISTICS -------------------------------------------------------------------------------------------------------------------------------------------------------- Hospital insurance and/or Hospital insurance Supplementary medical insurance supplementary medical insurance ------------------------------------------------------------------ --------------------------------- Reimbursements Reimbursements Reimbursements Persons ----------------------- Persons --------------------- Year, period, or 1992 characteristic Persons ---------------------- served served served Per per 1,000 Per person Per per 1,000 Per Per per 1,000 person Per enrollees served enrollee enrollees person enrollee enrollees served enrollee served -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1968............................................ NA NA NA NA NA NA NA NA NA 1975............................................ 449.5 $1,548.09 $695.83 219.2 $2,076.58 $455.20 471.4 $564.95 $266.32 1980............................................ 594.1 2,544.04 1,511.34 245.7 3,798.09 933.16 633.8 994.18 630.06 1981............................................ 615.2 2,880.99 1,772.39 251.4 4,400.27 1,106.16 655.9 1,103.92 724.04 1982............................................ 608.9 3,431.26 2,089.35 256.9 5,109.65 1,312.85 650.5 1,303.37 847.90 1983............................................ 628.8 3,658.08 2,300.24 257.7 5,549.82 1,430.30 670.1 1,412.07 946.23 1984............................................ 639.5 NA NA 242.6 NA NA 683.5 NA NA 1985............................................ 668.8 3,855.22 2,578.24 227.9 7,223.96 1,646.25 715.5 1,414.04 1,011.70 1986............................................ 681.0 4,032.05 2,745.64 226.3 7,622.94 1,724.99 729.0 1,518.86 1,107.32 1987............................................ 695.7 3,993.70 2,778.14 219.4 7,610.01 1,669.66 747.8 1,611.42 1,205.10 1988............................................ 703.7 4,114.84 2,895.52 209.3 8,372.64 1,752.76 760.0 1,643.77 1,249.35 1989............................................ 721.3 4,530.89 3,268.36 208.0 9,481.76 1,971.89 785.0 1,816.65 1,426.08 1990............................................ 734.3 4,702.65 3,452.97 208.9 9,846.77 2,056.60 803.5 1,921.76 1,544.18 1991............................................ 728.5 5,069.61 3,693.15 208.7 10,634.43 2,218.91 799.0 2,046.50 1,635.16 1992............................................ 729.3 5,351.81 3,903.33 208.9 11,278.42 2,355.73 799.4 2,145.26 1,714.91 Annual percentage change in period: 1968 to 1975.................................... NA NA NA NA NA NA NA NA NA 1975 to 1985.................................... 4.05 9.55 13.99 0.39 13.28 13.72 4.26 9.61 14.28 1985 to 1992.................................... 1.24 4.80 6.10 -1.24 6.57 5.25 1.60 6.14 7.83 Age: Under 35 years.................................. 706.9 $5,425.42 $3,835.41 199.1 $11,566.96 $2,303.03 766.9 $2,190.43 $1,679.83 35 to 44 years.................................. 688.7 5,099.80 3,512.47 185.7 11,181.41 2,075.86 760.1 2,108.41 1,602.53 45 to 54 years.................................. 703.5 5,316.64 3,740.06 196.3 11,241.57 2,206.84 777.8 2,202.85 1,713.36 55 to 59 years.................................. 732.0 5,560.89 4,070.48 216.5 11,392.43 2,466.48 803.8 2,215.65 1,780.94 60 to 64 years.................................. 805.9 5,407.53 4,358.09 244.1 11,160.37 2,723.92 874.3 2,051.32 1,793.54 Sex: Male............................................ 682.6 5,304.28 3,620.77 196.6 11,423.79 2,245.59 751.4 2,040.09 1,532.94 Female.......................................... 805.1 5,417.11 4,361.16 228.8 11,076.07 2,534.18 875.9 2,289.19 2,005.20 Race: White........................................... 727.8 4,900.77 3,566.59 202.1 10,868.66 2,196.28 800.0 1,903.04 1,522.51 All other....................................... 735.3 6,702.86 4,928.56 230.0 12,353.36 2,840.81 799.5 2,872.19 2,296.19 Census region: Northeast....................................... 755.8 5,775.08 4,364.60 210.4 12,699.79 2,672.11 831.5 2,267.46 1,885.46 North Central................................... 737.0 4,947.12 3,646.04 207.6 10,818.63 2,245.69 805.6 1,920.02 1,546.76 South........................................... 756.4 5,286.27 3,998.42 229.9 10,547.60 2,424.58 805.8 2,100.26 1,692.44 West............................................ 694.1 5,842.26 4,055.22 182.3 12,933.15 2,357.77 751.9 2,468.12 1,855.80 -------------------------------------------------------------------------------------------------------------------------------------------------------- NA--Not available. Note.--Data for 1992 are considered preliminary. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, ``Annual Medicare Program Statistics.'' TABLE 5-32.--USE OF INPATIENT HOSPITAL SERVICES BY MEDICARE ENROLLEES, BY TYPE OF ENROLLEE AND TYPE OF HOSPITAL: CALENDAR YEAR 1991\1\ ---------------------------------------------------------------------------------------------------------------- Bills\2\ Covered days of care Reimbursements in dollars ---------------------------------------------------------------------------------- Type of enrollee and type of Amount hospital Number in Per Number in Per Per 1,000 in Per bill Per thousands enrollees thousands bill enrollees millions enrollee ---------------------------------------------------------------------------------------------------------------- All enrollees: All hospitals.............. 11,426 328 95,569 8.4 2,741 62,122 5,437 1,782 Short-stay............... 10,917 313 90,381 8.3 2,592 60,255 5,519 1,728 Long-stay................ 509 15 5,188 10.2 149 1,867 3,665 54 Psychiatric............ 287 8 2,660 9.3 76 726 2,529 21 All other.............. 222 6 2,527 11.4 72 1,141 5,130 33 Aged: All hospitals.............. 9,982 317 83,786 8.4 2,661 54,981 5,508 1,746 Short-stay............... 9,679 307 80,450 8.3 2,555 53,644 5,543 1,704 Long-stay................ 304 10 3,337 11.0 106 1,337 4,401 42 Psychiatric............ 104 3 1,041 10.0 33 310 2,981 10 All other.............. 200 6 2,295 11.5 73 1,027 5,140 33 Disabled: All hospitals.............. 1,444 426 11,783 8.2 3,480 7,140 4,945 2,109 Short-stay............... 1,238 366 9,931 8.0 2,933 6,610 5,338 1,953 Long-stay................ 206 61 1,852 9.0 547 530 2,578 157 Psychiatric............ 183 54 1,619 8.8 478 416 2,272 123 All other.............. 23 7 232 10.2 68 114 5,047 34 ---------------------------------------------------------------------------------------------------------------- \1\Preliminary data. Detail may not add due to rounding. \2\Discharges not available by type of hospital. Note.--Only services rendered by inpatient hospitals are included. Source: Health Care Financing Administration, Bureau of Management and Strategy, unpublished data. TABLE 5-33.--USE OF SHORT-STAY HOSPITAL SERVICES BY AGED MEDICARE ENROLLEES, BY FISCAL YEAR OR 1991 DEMOGRAPHIC CHARACTERISTICS -------------------------------------------------------------------------------------------------------------------------------------------------------- Discharges Total days of care Total charges Aged hospital --------------------------------------------------------- Total ------------------------------ Calendar year, period, or 1991 insurance charges Per characteristic enrollees (in Number (in Per 1,000 Number (in Per Per 1,000 (in Per covered Per thousands)\1\ thousands) enrollees thousands) discharge enrollees millions) discharge day of enrollee care -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1975............................... 22,472 7,285 324 81,592 11.2 3,631 11,853 1,627 145 527 1980............................... 25,104 9,051 361 96,772 10.7 3,855 28,114 3,106 291 1,120 1982............................... 26,115 9,817 376 100,431 10.0 3,846 40,875 4,164 407 1,565 1984............................... 27,112 9,705 358 86,062 8.9 3,174 46,964 4,839 546 1,732 1985............................... 27,683 8,918 322 76,926 8.6 2,779 47,371 5,312 616 1,711 1986............................... 28,257 8,917 316 77,240 8.7 2,733 52,623 5,901 681 1,862 1987............................... 28,822 9,000 312 79,804 8.9 2,769 60,900 6,767 763 2,113 1988............................... 29,312 9,146 312 80,938 8.8 2,761 69,920 7,645 864 2,385 1989............................... 29,869 9,026 302 79,784 8.8 2,671 78,204 8,664 980 2,618 1990............................... 30,948 9,351 302 82,179 8.8 2,655 102,544 10,966 1,248 3,313 1991............................... 31,043 9,645 311 82,743 8.6 2,665 118,882 12,326 1,437 3,830 Annual percentage change in period: 1975-82.......................... 2.2 4.4 2.1 3.0 -1.6 0.8 19.3 14.4 15.9 16.8 1982-91.......................... 1.9 -0.2 -2.1 -2.1 -1.7 -4.0 12.6 12.8 15.0 10.5 Age: 65-69 years...................... 9,571 NA NA NA NA NA NA NA NA NA 70-74 years...................... 8,050 NA NA NA NA NA NA NA NA NA 75-79 years...................... 6,078 NA NA NA NA NA NA NA NA NA 80-84 years...................... 3,990 NA NA NA NA NA NA NA NA NA 85 years or over................. 3,354 NA NA NA NA NA NA NA NA NA Sex: Male............................... 12,523 NA NA NA NA NA NA NA NA NA Female............................. 18,520 NA NA NA NA NA NA NA NA NA Race:\2\ White.............................. 26,948 NA NA NA NA NA NA NA NA NA All other.......................... 3,066 NA NA NA NA NA NA NA NA NA Census region: Northeast.......................... 6,793 NA NA NA NA NA NA NA NA NA North central...................... 7,688 NA NA NA NA NA NA NA NA NA South.............................. 10,388 NA NA NA NA NA NA NA NA NA West............................... 5,555 NA NA NA NA NA NA NA NA NA -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\As of July 1. \2\Excludes unknown race. Source: Health Care Financing Administration, Bureau of Data Management and Strategy. TABLE 5-34.--USE OF SKILLED NURSING FACILITY SERVICES AND PERCENTAGE CHANGE, BY TYPE OF MEDICARE ENROLLEE, AND CALENDAR YEAR OR PERIOD, OR 1991 DEMOGRAPHIC CHARACTERISTIC -------------------------------------------------------------------------------------------------------------------------------------------------------- Persons served Covered days of care Reimbursements Type of enrollee and HI aged enrollees -------------------------------------------------------------------------------------------- year, period, or 1991 Number of SNF in Per Amounts Per characteristic facilities\1\ thousands\2\\3\ Number in Per 1,000 Number in person Per in person Per Per day thousands enrollees thousands served enrollee millions served enrollee -------------------------------------------------------------------------------------------------------------------------------------------------------- Aged -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1969\3\............. 4,786 20,014 394 19.7 17,520 45 0.9 $311 $790 $16 $18 1975................ 3,932 22,472 260 11.5 8,585 33 0.4 233 896 10 27 1981................ 5,295 25,591 243 9.5 8,373 34 0.3 361 1,486 14 43 1982................ 5,510 26,115 244 9.3 8,549 35 0.3 388 1,591 15 45 1983................ 5,760 26,670 257 9.6 9,007 35 0.3 413 1,612 16 46 1984................ 6,183 27,112 290 10.7 9,309 32 0.3 458 1,581 17 49 1985................ 6,725 27,683 304 11.0 8,615 28 0.3 464 1,525 17 54 1986................ 7,065 28,257 294 10.4 7,867 27 0.3 474 1,613 17 60 1987................ 7,148 28,822 283 9.8 7,139 25 0.2 524 1,853 18 73 1988................ 7,683 29,312 371 12.7 10,681 29 0.4 811 2,184 28 76 1989................ 8,688 29,869 613 20.5 28,522 47 1.0 2,806 4,580 94 98 1990................ 9,008 30,464 615 20.2 22,873 37 0.8 1,886 3,068 62 82 1991................ 9,674 31,043 648 20.9 21,415 33 0.7 2,151 3,321 69 100 Annual percentage change in period: 1969 to 1975........ -3.2 1.9 -6.7 -8.5 -11.2 -4.8 -12.9 -4.7 2.1 -6.6 7.3 1975 to 1981........ 5.1 2.2 -1.1 -3.2 -0.4 0.7 -2.5 7.6 8.8 5.3 8.1 1981 to 1986........ 5.9 2.0 3.9 1.8 -1.2 -4.9 -3.2 5.6 1.6 3.5 6.9 1986 to 1991........ 6.5 1.9 17.1 15.0 22.2 4.3 19.9 35.3 15.5 32.8 10.8 Age: 65 to 69 years...... .............. 9,571 51 5.3 NA NA NA 172 3,367 18 NA 70 to 74 years...... .............. 8,050 87 10.8 NA NA NA 298 3,420 37 NA 75 to 79 years...... .............. 6,078 129 21.2 NA NA NA 438 3,407 72 NA 80 to 84 years...... .............. 3,990 153 38.4 NA NA NA 508 3,312 127 NA 85 years or over.... .............. 3,354 227 67.8 NA NA NA 734 3,230 219 NA Sex: Male................ .............. 12,523 209 16.7 NA NA NA 682 3,006 54 NA Female.............. .............. 12,523 209 16.7 NA NA NA 147 3,096 12 NA Race:\4\ White............... .............. 26,948 582 21.6 NA NA NA 1,917 3,025 71 NA All other........... .............. 3,067 48 15.8 NA NA NA 177 3,536 58 NA Census region: Northeast........... 1,954 6,793 116 17.0 4,839 42 0.7 373 3,227 55 77 North Central....... 2,569 7,688 210 27.3 6,599 31 0.9 613 2,918 80 93 South............... 2,479 10,388 178 17.2 5,940 33 0.6 566 3,173 54 95 -------------------------------------------------------------------------------------------------------------------------------------------------------- Disabled -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1975................ 3,932 2,168 8 3.9 289 34 0.1 9 1,049 4 30 1980................ 5,155 2,963 9 2.9 319 38 0.1 13 1,571 5 42 1982................ 5,510 2,954 8 2.6 296 38 0.1 14 1,762 5 46 1983................ 5,760 2,918 8 2.7 305 38 0.1 15 1,856 5 48 1984................ 6,183 2,884 9 3.1 314 35 0.1 15 1,675 5 47 1985................ 6,725 2,907 10 3.5 305 30 0.1 17 1,681 6 57 1986................ 7,065 2,959 10 3.5 295 29 0.1 19 1,872 6 65 1987................ 7,148 3,031 10 3.3 272 27 0.1 21 2,154 7 79 1988................ 7,683 3,101 13 4.2 401 31 0.1 33 2,529 11 81 1989................ 8,688 3,171 23 7.4 1,437 61 0.5 143 6,107 45 100 1990................ 9,008 3,255 23 7.1 1,022 44 0.3 85 3,696 26 83 1991................ 9,674 3,385 23 6.7 825 36 0.2 87 3,846 26 106 Annual percentage change in period: 1975-80............. 5.6 6.4 0.3 -5.8 2.0 1.7 -4.2 8.7 8.4 2.1 6.6 1980-85............. 5.5 -0.4 3.9 4.3 -0.9 -4.6 -0.5 5.3 1.4 5.7 6.3 1985-91............. 6.2 2.6 14.0 11.2 18.1 3.5 15.1 30.9 14.8 27.6 10.9 Age: Under 35 years...... .............. 494 1 2.7 NA NA NA 6 4,590 12 NA 35 to 44 years...... .............. 711 3 3.9 NA NA NA 12 4,467 17 NA 45 to 54 years...... .............. 790 5 6.0 NA NA NA 19 3,929 24 NA 55 to 59 years...... .............. 568 5 8.1 NA NA NA 18 3,853 31 NA 60 to 64 years...... .............. 821 9 11.2 NA NA NA 32 3,507 39 NA Sex: Male................ .............. 2,111 12 5.9 NA NA NA 48 3,868 23 NA Female.............. .............. 1,274 10 8.4 NA NA NA 39 3,818 30 NA Race:\4\ White............... .............. 2,547 18 6.9 NA NA NA 65 3,711 26 NA All other........... .............. 773 5 6.0 NA NA NA 20 4,361 26 NA Census region: Northeast........... 1,954 647 3 5.4 149 48 0.2 11 3,618 17 76 North Central....... 2,569 797 7 9.3 252 37 0.3 23 3,400 29 93 South............... 2,479 1,266 7 5.6 239 36 0.2 24 3,614 19 101 West................ 1,997 565 6 10.0 182 31 0.3 28 4,764 50 154 -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Number serving either aged or disabled Medicare enrollees, as of January 1991. \2\As of July 1. \3\Regions exclude residence unknown and territories. \4\Excludes unknown race. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, unpublished data. TABLE 5-35.--VISITS, CHARGES, AND REIMBURSEMENTS FOR HOME HEALTH AGENCY SERVICES AND PERCENTAGE CHANGES BY CALENDAR YEAR OR PERIOD, OR DEMOGRAPHIC CHARACTERISTICS -------------------------------------------------------------------------------------------------------------------------------------------------------- Visits Charges\1\ Reimbursements ---------------------------------------------------------------------------------------------------------------- Amount Amount (in millions) Average Calendar year, period, or 1992 Number Total in Amount ------------------------------ annual Total Total characteristic\2\ in Per 1,000 amount millions per percentage per per millions enrollees in for visit HI SMI Total change in visit enrollee millions visits total -------------------------------------------------------------------------------------------------------------------------------------------------------- Year: 1969............................... 9 424 $88 NA NA $52 $26 $78 .......... $9 $4 1975............................... 11 431 226 211 20 152 63 215 18.4 20 9 1980............................... 23 792 775 739 33 490 176 666 25.4 30 23 1983............................... 38 1,253 1,689 1,627 43 1,405 22 1,427 28.9 38 48 1984............................... 41 1,358 2,026 1,912 46 1,677 27 1,704 19.4 41 56 1985............................... 40 1,303 2,152 1,979 49 1,766 31 1,797 5.4 44 58 1986............................... 39 1,229 2,214 2,125 54 1,781 36 1,817 1.1 47 57 1987............................... 37 1,138 2,236 2,127 58 1,774 39 1,813 -0.2 49 56 1988............................... 38 1,156 2,472 2,358 62 1,916 44 1,960 8.1 51 59 1989............................... 47 1,404 3,233 3,106 66 2,368 57 2,426 23.8 51 72 1990............................... 70 2,045 5,007 4,841 69 3,626 69 3,695 52.3 53 108 1991............................... 99 2,852 7,348 5,342 71 5,281 61 5,342 44.6 54 153 1992............................... 134 3,759 10,377 10,034 75 7,367 80 7,477 39.4 56 209 Annual percentage change in period: 1969 to 1975....................... 4.0 0.3 17.1 NA NA 19.7 15.8 18.4 .......... 13.9 14.2 1975 to 1983....................... 16.9 14.3 28.6 29.1 10.0 32.1 -12.4 26.7 .......... 8.4 23.8 1983 to 1992....................... 15.1 13.0 22.3 22.4 6.4 20.2 15.5 20.2 3.5 4.4 17.9 Type of enrollee: Aged............................... 118 3,676 9,132 8,830 ........ 6,483 71 6,553 .......... 56 205 Disabled........................... 16 4,497 1,245 1,204 ........ 884 9 894 .......... 56 251 Sex: Male............................... NA NA NA NA NA NA NA NA NA NA NA Female............................. NA NA NA NA NA NA NA NA NA NA NA Race:\2\ White.............................. NA NA NA NA NA NA NA NA NA NA NA All other.......................... NA NA NA NA NA NA NA NA NA NA NA -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Excludes durable medical equipment and supplies, except for drugs and biologicals, furnished by home health agencies. \2\Data for 1992 as of September 1993. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, unpublished data. TABLE 5-36.--SELECTED UTILIZATION AND REIMBURSEMENT DATA FOR END-STAGE RENAL DISEASE, AND KIDNEY TRANSPLANT PROGRAMS FOR SELECTED CALENDAR YEARS -------------------------------------------------------------------------------------------------------------------------------------------------------- Program and key program variables 1975 1983 1984 1985 1986 1987 1988 1989 1990 1991 -------------------------------------------------------------------------------------------------------------------------------------------------------- End stage renal disease program:\1\ Beneficiaries: Number.......................................... 12,702 27,847 29,397 30,876 38,970 47,222 53,247 58,409 64,692 68,807 Percentage change\2\............................ ........ 1.8 5.6 5.0 26.2 21.2 12.8 9.8 10.6 6.4 Expenditures: Total (in millions)............................. $361 $1,898 $2,381 $2,680 $3,108 $3,441 $3,851 $4,528 $5,262 $6,154 Percentage change\2\............................ ........ 23.1 25.4 12.6 16.0 10.7 11.9 17.6 16.2 17.0 Expenditures per beneficiary: Amount (in dollars)\3\.......................... $16,185 $21,228 $22,245 $23,479 $24,957 $25,501 $25,852 $27,726 $29,480 $31,899 Percentage change\2\............................ ........ 3.4 4.8 5.5 6.3 2.2 1.4 8.4 6.3 8.2 New beneficiaries during year: Number.......................................... 6,763 6,738 7,532 9,372 14,696 15,570 17,416 19,340 19,913 20,140 Percentage change\2\............................ ........ 0.0 11.8 24.4 56.8 5.9 11.9 11.0 3.0 1.1 Kidney transplant program:\4\ Total transplants: Number of patients\5\........................... 3,730 6,112 6,968 7,695 8,976 8,967 8,932 8,899 9,796 10,026 Percentage change\2\............................ ........ 14.1 14.0 10.4 16.6 -0.1 -0.4 -0.4 10.1 2.4 Kidney transplanted from living donors:\6\ Number.......................................... NA 1,784 1,704 1,876 1,887 1,907 1,816 1,893 2,091 2,382 Percentage of total transplants................. ........ 31.9 27.0 26.5 22.9 23.0 -4.8 4.2 21.3 13.9 Number of beneficiaries losing entitlement because of 3-year limitation............................. NA NA NA NA NA NA NA NA NA NA -------------------------------------------------------------------------------------------------------------------------------------------------------- \1\Persons entitled solely because of end stage renal disease. \2\For intervals of more than one year, rate shown is average annual rate of change. \3\Not adjusted for PPS pass-throughs. \4\Transplants in Medicare-certified U.S. hospitals. \5\Transplant count includes non-Medicare patients. \6\Includes transplants to non-Medicare patients. NA--Not available. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, and OACT. TABLE 5-37.--MEDICARE UTILIZATION AND REIMBURSEMENT: NUMBER OF AGED PERSONS SERVED UNDER HOSPITAL INSURANCE AND/OR SUPPLEMENTARY MEDICAL INSURANCE PER 1,000 ENROLLED, AMOUNT REIMBURSED PER PERSON SERVED, AND PERCENTAGE CHANGE, BY CENSUS DIVISION AND STATE, FOR SELECTED CALENDAR YEARS ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Persons served per 1,000 enrolled Reimbursement per person served --------------------------------------------------------------------------------------------------------------------------------------------------------------- Annual percent change Annual percent change 1992\3\ ------------------------------------ 1992\3\ ----------------------------------- 1967 1985 1990 1991 1967-92 1985-90 1990-91 1991-92 1967 1985 1990 1991 1967-91 1985-90 1990-91 1991-92 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Total, all areas\1\............. 366.5 722.1 801.6 800.1 794.4 3.1 2.1 -0.2 -0.7 $592 $2,762 $3,578 $3,906 $4,194 8.2 5.3 9.2 7.4 United States\2\................ 370.9 731.2 810.5 808.8 802,7 3.1 2.1 -0.2 -0.8 593 2,772 3,592 3,921 4,212 8.2 5.3 9.2 7.4 New England..................... 380.4 767.4 829.0 831.3 830.9 3.2 1.6 0.3 0.0 680 2,708 3,573 4,074 4,364 7.7 5.7 14.0 7.1 Maine....................... 330.1 756.1 868.8 871.3 872.8 4.0 2.8 0.5 0.2 586 2,369 2,744 3,068 3,292 7.1 3.0 11.8 7.3 New Hampshire............... 391.6 739.7 810.5 812.5 829.4 3.0 1.8 0.2 2.1 467 2,374 2,974 3,240 3,511 8.4 4.6 8.9 8.4 Vermont..................... 411.7 742.8 841.0 853.0 843.9 2.9 2.5 1.4 -1.1 515 1,990 2,569 3,017 3.154 7.6 6.0 13.5 4.5 Massachusetts............... 394.2 766.5 813.6 813.5 809.0 2.9 1.2 0.0 -0.6 708 2,971 4,029 4,541 4,896 8.1 6.3 12.7 7.8 Rhode Island................ 375.4 829.6 853.6 844.8 836.4 3.3 0.6 -1.0 -1.0 625 2,619 3,236 3,756 4,315 7.8 4.3 16.1 14.9 Connecticut................. 390.9 764.1 838.1 846.0 851.4 3.2 1.9 0.9 0.6 711 2,570 3,511 4,151 4,310 7.6 6.4 18.2 3.8 Middle Atlantic................. 388.1 768.2 834.7 831.7 830.0 3.1 1.7 -0.4 -0.2 578 2,771 3,933 4,249 4,581 8.7 7.3 8.0 7.8 New York.................... 406.9 765.7 830.4 823.3 809.2 2.8 1.6 -0.9 -1.7 610 2,533 4,119 4,382 4,596 8.6 10.2 6.4 4.9 New Jersey.................. 399.0 759.8 826.7 827.3 836.4 3.0 1.7 0.1 1.1 526 2,650 3,483 3,958 4,551 8.8 5.6 13.6 15.0 Pennsylvania................ 365.0 776.4 844.7 844.8 852.5 3.5 1.7 0.0 0.9 533 3,147 3,948 4,245 4,579 9.0 4.6 7.5 7.9 East North Central.............. 350.2 725.9 834.4 837.0 833.8 3.5 2.8 0.3 -0.4 614 2,906 3,595 3,817 4.042 7.9 4.3 6.2 5.9 Ohio........................ 353.6 718.4 846.3 846.3 846.7 3.6 3.3 0.0 0.0 585 2,792 3,824 3,977 4.053 8.3 6.5 4.0 1.9 Indiana..................... 343.7 672.2 837.0 836.3 820.1 3.5 4.5 -0.1 -1.9 545 2,510 3,234 3,443 3,927 8.0 5.2 6.5 14.1 Illinois.................... 339.2 693.4 788.1 792.9 792.1 3.5 2.6 0.6 -0.1 703 3,313 3,760 4,078 4,332 7.6 2.6 8.5 6.2 Michigan.................... 379.5 804.3 871.4 872.9 881.3 3.4 1.6 0.2 1.0 532 2,991 3,749 3,973 4,117 8.7 4.6 6.0 3.6 Wisconsin................... 354.7 736.9 843.2 851.4 828.9 3.5 2.7 1.0 -2.6 639 2,527 2,877 3,066 3,404 6.8 2.6 6.6 11.0 West North Central.............. 363.2 693.4 979.7 797.1 805.5 3.2 2.8 -0.1 1.1 558 2,627 3,108 3,620 3,494 7.6 3.4 4.9 7.2 Minnesota................... 389.0 624.8 682.5 694.9 711.3 2.4 1.8 1.8 2.4 601 2,447 3,101 3,235 3,308 7.3 4.9 4.3 2.3 Iowa........................ 365.9 715.3 850.6 847.2 853.0 3.4 3.5 -0.4 0.7 505 2,282 2,753 2,914 3,161 7.6 3.8 5.8 8.5 Missouri.................... 364.8 712.0 816.6 813.4 821.1 3.3 2.8 -0.4 0.9 544 3,118 3,514 3,624 3,986 8.2 2.4 3.1 10.0 North Dakota................ 441.2 730.7 853.4 839.1 850.3 2.7 3.2 -1.7 1.3 492 2,466 2,949 3,089 3,358 8.0 3.6 4.7 8.7 South Dakota................ 358.0 694.2 815.1 812.1 815.9 3.3 3.3 -0.4 0.5 514 2,281 2,714 2,894 3,037 7.5 3.5 6.6 4.9 Nebraska.................... 352.5 634.2 808.8 799.4 810.2 3.4 5.0 -1.2 1.4 540 2,449 2,719 2,935 2,942 7.3 2.1 7.9 0.2 Kansas...................... 365.3 765.4 850.0 848.0 848.3 3.4 2.1 -0.2 0.0 540 2,553 3,144 3,346 3,679 7.9 4.3 6.4 10.0 South Atlantic.................. 350.5 740.4 827.7 825.0 825.8 3.5 2.3 -0.3 0.1 554 2,531 3,438 3,837 4,203 8.4 6.3 11.6 9.5 Delaware.................... 368.2 770.9 843.6 840.3 870.7 3.5 1.8 -0.4 3.6 552 2,612 3,526 3,430 3,910 7.9 6.2 -2.7 14.0 Maryland.................... 349.4 757.6 838.3 836.4 845.2 3.6 2.0 -0.2 1.1 564 2,975 4,190 4,563 5,113 9.1 7.1 8.9 12.1 District of Columbia........ 452.8 739.4 772.7 771.4 762.6 2.1 0.9 -0.2 1.1 570 3,774 5,019 5,476 6,035 9.9 5.9 9.1 10.2 Virginia.................... 317.3 729.7 848.5 857.2 844.8 4.0 3.1 1.0 -1.4 516 1,976 3,127 3,438 3,590 8.2 9.6 9.9 4.4 West Virginia............... 342.2 692.0 828.6 834.7 844.4 3.7 3.7 0.7 1.2 489 2,575 3,197 3,601 3,907 8.7 4.4 12.6 8.5 North Carolina.............. 324.0 727.9 852.3 862.8 858.9 4.0 3.2 1.2 -0.5 515 1,982 2,799 3,172 3,428 7.9 7.1 13.3 8.1 South Carolina.............. 296.2 680.6 832.2 834.1 845.5 4.3 4.1 0.2 1.4 523 2,340 2,689 3,049 3,288 7.6 2.8 13.4 7.88 Georgia..................... 320.2 743.5 843.8 840.6 849.8 4.0 2.6 -0.4 1.1 474 2,479 3,456 3,987 4,466 9.3 6.9 15.4 12.0 Florida..................... 420.9 759.1 805.8 793.1 791.4 2.6 1.2 -1.6 -0.2 588 2,773 3,709 4,148 4,566 8.5 6.0 11.8 10.1 East South Central.............. 332.1 698.1 846.9 853.8 843.2 3.8 3.9 0.8 -1.2 489 2,570 3,413 3,831 4,249 9.0 5.8 12.2 10.9 Kentucky.................... 365.9 671.9 837.3 834.7 837.2 3.4 4.5 -0.3 0.3 458 2,395 3,424 3,657 3,923 9.0 7.4 6.8 7.3 Tennessee................... 354.8 678.7 853.4 859.9 836.6 3.5 4.7 0.8 -2.7 502 2,816 3,402 3,911 4,425 8.9 3.9 15.0 13.1 Alabama..................... 322.7 743.8 848.9 854.6 858.6 4.0 2.7 0.7 0.5 490 2,502 3,596 3,958 4,420 9.1 7.5 10.1 11.7 Mississippi................. 283.2 699.9 845.1 868.6 840.0 4.4 3.8 2.8 -3.3 471 2,480 3,122 3,717 4,098 9.0 4.7 19.1 10.3 West South Central.............. 374.8 687.4 825.0 829.6 817.6 3.2 3.7 0.6 -1.4 504 2,811 3,624 3,955 4,291 9.0 5.2 9.1 8.5 Arkansas.................... 319.3 715.4 862.9 870.3 841.3 4.0 3.8 0.9 -3.3 466 2,550 3,155 3,640 3,821 8.9 4.3 15.4 5.0 Louisiana................... 343.4 653.5 821.1 832.4 828.0 3.6 4.7 1.4 -0.5 446 3,167 4,368 4,683 4,977 10.3 6.6 7.2 6.3 Oklahoma.................... 416.1 677.8 878.3 887.6 828.0 2.8 5.3 1.1 -6.7 486 2,482 3,127 3,467 3,933 8.5 4.7 10.9 13.4 Texas....................... 393.7 693.2 805.1 806.4 807.4 2.9 3.0 0.2 0.1 522 2,860 3,652 3,951 4,288 8.8 5.0 8.2 8.5 Mountain........................ 417.1 716.6 772.7 770.5 740.3 2.3 1.5 -0.3 -3.9 560 2,637 3,992 3,471 3,720 7.9 4.5 5.4 7.2 Montana..................... 416.5 679.7 823.5 842.8 805.8 2.7 3.9 2.3 -4.4 505 2,348 3,000 3,201 3,295 8.0 5.0 6.7 2.9 Idaho....................... 408.8 714.5 862.5 875.9 830.4 2.9 3.8 1.6 -5.2 467 2,384 2,556 2,723 3,213 7.6 1.4 6.5 18.0 Wyoming..................... 395.0 681.7 782.7 764.3 786.7 2.8 2.8 -2.4 2.9 432 2,804 3,182 2,999 3,267 8.4 2.6 -5.8 8.9 Colorado.................... 475.4 704.0 740.8 753.3 723.9 1.7 1.0 1.7 -3.9 578 2,521 3,223 3,496 3,907 7.8 5.0 8.5 11.8 New Mexico.................. 377.6 689.8 736.4 732.8 731.0 2.7 1.3 -0.5 -0.2 513 2,462 3,154 3,156 3,258 7.9 5.1 0.1 3.2 Arizona..................... 431.7 758.1 774.3 760.2 704.3 2.0 0.4 -1.8 -7.4 612 2,896 3,692 3,876 4,008 8.0 5.0 5.0 3.4 Utah........................ 346.0 713.1 808.2 799.5 799.4 3.4 2.5 -1.1 0.0 580 2,225 2,799 3,128 3,350 7.3 4.7 11.8 7.1 Nevada...................... 414.9 688.9 721.2 711.2 703.7 2.1 0.9 -1.4 -1.1 532 3,243 3,903 4,006 4,376 8.8 3.8 2.6 9.2 Pacific......................... 468.9 739.7 713.8 699.2 681.9 1.5 -0.7 -2.0 -2.5 630 6,153 3,853 4,305 4,467 8.3 -8.9 11.7 3.8 Washington.................. 433.0 731.1 760.8 758.5 755.9 2.3 0.8 -0.3 -0.3 507 2,522 3,218 3,576 3,790 8.5 5.0 11.1 6.0 Oregon...................... 392.6 716.2 707.8 694.6 680.0 2.2 -0.2 -1.9 -2.1 583 2,459 2,833 3,051 3,360 7.1 2.9 7.7 10.1 California.................. 490.7 745.7 710.3 692.7 671.8 1.3 -1.0 -2.5 -3.0 653 3,379 4,138 4,661 4,794 8.5 4.1 12.6 2.9 Alaska...................... 307.2 678.4 759.0 781.6 784.3 3.8 2.3 3.0 0.3 376 3,554 4,007 4,325 4,303 10.7 2.4 7.9 -0.5 Hawaii...................... 407.4 709.3 589.9 583.9 574.9 1.4 -3.6 -1.0 -1.5 572 2,334 3,095 3,100 3,480 7.3 5.8 0.2 12.3 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ \1\Consists of United States, Puerto Rico, Virgin Islands, and other outlying areas. \2\Consists of 50 States, District of Columbia, and residence unknown. \3\Preliminary data. Source: Health Care Financing Administration, Bureau of Data Management and Strategy, ``Annual Medicare Program Statistics,'' and unpublished data. TABLE 5-38.--MEDICARE: SUMMARY OF RISK AND COST CONTRACTS BY CATEGORY DATA AS OF JANUARY 1, 1994 ------------------------------------------------------------------------ Number of Number of Current contract summary contracts Percent enrollees ------------------------------------------------------------------------ TEFRA risk contracts: Model: IPA............................. 74 69 916,482 Group........................... 20 19 339,631 Staff........................... 14 12 588,645 Ownership: Profit.......................... 67 62 1,296,877 Non-profit...................... 41 38 547,881 TEFRA cost contracts:\1\ Model: IPA............................. 16 62 123,332 Group........................... 3 12 12,073 Staff........................... 7 26 24,971 Ownership: Profit.......................... 8 31 35,610 Non-profit...................... 18 69 124,766 Percent of total medicare beneficiaries. ......... ....... 5.6 ------------------------------------------------------------------------ \1\Does not include cost enrollees remaining in risk plans. Note.--Data as of January 1994. IPA is the Individual Practice Association. Source: Health Care Financing Administration.