Each New Year brings changes to the American health care system, not all of which help health care consumers.  2010 is no exception. This year, in an attempt to mitigate potential harm, Congress attached provisions to the Department of Defense Appropriations Act of 2010 (DoD Act), Pub. Law 111-118 (Dec.19, 2009), that extend, at least temporarily, some existing laws affecting Medicare beneficiaries, low-income individuals, and unemployed workers.  Unfortunately, Congress did not address every beneficiary protection that expires on December 31, 2009.

 

Good News

 

Medicare Payment to Doctors

 

The DoD Act freezes Medicare payments to doctors at 2009 levels through February 28, 2010, thereby avoiding the 21% payment decrease that was scheduled to go into effect on January 1, 2010.  Beneficiary advocates were concerned that such a drastic reduction in reimbursement would cause many doctors to stop treating patients with Medicare. 

 

The freeze in payment reduction gives Congress additional time to consider a permanent change to the physician payment formula. The House of Representatives passed such legislation, H.R. 3961, on November 19, 2009.  The Senate has not yet considered a bill to permanently revise how Medicare calculates doctor reimbursement.

 

The Centers for Medicare & Medicaid Services (CMS) had previously told its contractors to hold all claims for doctor services provided during the first 10 business days of the New Year until January 15, 2010.  The hold was to allow the contractors time to adjust to the new reduced payment schedule.  CMS will continue the hold to ensure that claims are paid correctly at the 2009 rate.  Contractors generally have 14 days in which to pay claims that are submitted electronically and that have no missing or incomplete information.

 

Poverty Guidelines

 

The Department of Health and Human Services issues new poverty guidelines at the beginning of each year.[1]  The federal poverty level (FPL) affects eligibility for many public benefits, including health benefits for older people and people with disabilities.  For example, eligibility for full Medicaid, for Medicare Savings Programs, and for the Part D low-income subsidy is based on having income at or below a certain percentage of FPL.

 

Advocates for people with limited incomes were concerned that the current economic condition in the United States would result in a reduction of the 2010 FPL. This could potentially cause some individuals who are currently receiving public benefits to no longer meet the eligibility criteria.  Fortunately, the DoD Act keeps the 2009 FPL guidelines in effect through February 28, 2010.

 

Premium Assistance for COBRA Beneficiaries

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for assistance of 65% of the cost of the premium for COBRA health care continuation insurance for eligible individuals. ARRA premium assistance lasts for a period of up to nine months. An eligible individual is someone who became eligible for COBRA as a result of an involuntary termination of employment that occurred between September 1, 2008, and December 31, 2009. Thus, the premium assistance program was scheduled to expire for people who lost their employment on or after January 1, 2010.

 

The DoD Act extends the COBRA premium assistance program in two ways.  First, it extends until February 28, 2010, the time period during which an involuntary termination must occur in order for an individual to be eligible for premium assistance. People who experience an involuntary loss of employment between January 1 and February 28, 2010, and who are otherwise eligible for COBRA, will be able to take advantage of the premium assistance program.

 

Second, it extends the length of time someone is eligible for premium assistance from nine to fifteen months.  The additional six months of premium assistance is available to everyone who is eligible for the COBRA premium reduction.  According to a Fact Sheet prepared by the Department of Labor:

 

…[I]ndividuals who had reached the end of the reduced premium period before the legislation extended it to 15 months will have an extension of their grace period to pay the reduced premium. To continue their coverage they must pay the 35% of premium costs by February 17, 2010, or, if later, 30 days after notice of the extension is provided by their plan administrator.

Individuals who lost their subsidy and paid the full 100 percent premium in December 2009 should contact their plan administrator or employer sponsoring the plan to discuss a credit for future months of coverage or a reimbursement of the overpayment.[2]

 

Beneficiary Protections that Start in 2010

 

Several important beneficiary protections that were enacted in the Medicare Improvement for Patients and Providers Act of 2008 go into effect on January 1, 2010.  These include:

• The three Medicare Savings Programs (MSPs) - Qualified Medicare Beneficiary (QMB), Specified Low Income Medicare Beneficiary (SLMB) and Qualified Individual (QI) - will use the Part D low-income subsidy (LIS) asset amount, indexed each year according to the Consumer Price Index.
   

• The Social Security Administration will take steps to eliminate barriers to enrollment in MSP and LIS by:

  • Providing LIS applicants with information about LIS, MSP and where to get help;

  • Transmitting, with the consent of the applicant, data received from the LIS application to the appropriate state for its consideration of the applicant's eligibility for a Medicare Savings Program.
     

• States are prohibited from recovering, from the estate of a deceased Medicaid recipient, the value of Medicare cost-sharing paid under a Medicare Savings Program.
   

• Non-financial support provided to an applicant will no longer count as income and the cash surrender value of a life insurance policy will no longer count as a resource when determining LIS eligibility. Note, however, that they still count in determining MSP eligibility, though the state may choose to amend its eligibility requirements to eliminate their consideration.
   

• Medicare will pay 55%, instead of 50%, of the approved amount for outpatient psychiatric services.

Not So Good News

 

Medicare Outpatient Therapy Services

 

As explained in a previous Alert,[3] Medicare limits the annual amount of coverage available for beneficiaries receiving outpatient therapy services ($1860 in 2010).  Two distinct caps were placed on therapy services: one for physical therapy and speech-language pathology combined and the other for occupational therapy.   To compensate somewhat for these coverage limits, Congress passed an "Exceptions Process" through which the provider or the beneficiary may seek coverage in excess of the annual cap.

 

The Exceptions Process is set to expire on December 31, 2009. It was not extended by the DoD Act or by other legislation.  The health care reform bills that passed the House of Representatives and the Senate both would extend the Exceptions Process.  If health care reform legislation passes in 2010, it is likely that the Therapy Caps Exceptions Process would be continued. Otherwise, beneficiaries who require outpatient therapy services will be covered only to the extent that the services do not exceed the payment cap.

 

CMS issued a bulletin to providers to advise them of the expiration of the Exceptions Process.  The bulletin advises providers that, to the extent possible, they may want to hold onto claims for therapy services provided on or after January 1, 2010 and not submit them to Medicare until it becomes clearer whether legislation will be enacted that will extend the Exception Process.[4]

 

Conclusion

 

2010 will bring definite coverage improvements to some people - those seeking eligibility for the Part D low-income subsidy and for one of the Medicare Savings Programs, and those who require outpatient mental health services.  Further, people who rely on public benefit programs with eligibility tied to the federal poverty level have been given a short reprieve from a possible loss of benefits, as have people who lose their job and must rely on COBRA.  It remains to be seen what action Congress will take to ensure that doctors are paid sufficiently under Medicare, and that therapy caps can be lifted, so that access to services is not compromised by inadequate reimbursement.