The Patient Protection and Affordable Care Act (ACA) – has made a major contribution to improving the provision of elderly care throughout the country, largely through the extension and modification of Medicare. Among the many changes, improving the efficiency and effectiveness of Medicare has lowered the Medicare Part B monthly premiums. In 2013, the premium was lower than analysts forecasted – just $ 104.97; in 2014 it remained at $ 104.97.
That’s impressive in and of itself. But the ACA has done more than just keep the cost of Part B low; It also reduces costs and improves the effectiveness of Medicare Part C; the program for “Medicare Advantage”, which allows private insurance companies to supplement existing Medicare benefits at lower than normal costs.
Medicare Part C
For most seniors, Medicare Part C is the only viable alternative to Medicare Part A and B, which allows private insurance companies to accept Medicare money to pay part of the premiums for seniors. As the payments are shared between the government and the citizen, the citizen can afford an insurance package that he or she would not otherwise – which for most seniors “means an insurance package that actually covers most health care costs”.
Under the Act, Part C plans were always provided with at least the same coverage of Medicare Parts A and B, but in the past they have been the source of some of the most ingenious developments in the care of the elderly, including the concepts of case management and care coordination. Nearly 30% of all Medicare beneficiaries use Medicare Part C (no pun intended).
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How the ACA has improved a great system
The big “problem” with Medicare Part C was the discrepancy between the amount private insurance paid to a provider for a particular service through Part C and the amount that Parts A / B paid for the same service. Disbursements varied fairly widely, with some policies paying below the maximum, but most overpaid for the same service, which penalized “standard” Medicare beneficiaries in the eyes of the medical establishment.
For example, the ACA has enacted provisions that cover Part C payments to insurance companies within 5% of the “standard Medicare” payments on the basis of “normal and reasonable” fees for each service within the geographical area in which the service was provided. They also called for Medicare Part C plans to be sold on the same health care exchanges as traditional insurance, meaning that seniors are now able to compare Medicare Advantages plans side-by-side and see which ones are the most cost-effective and provide the best coverage.
The impact of this change has been that insurance companies benefit slightly less from each part of C participants they serve, partly because of disbursements per service and partly because of the price competition caused by barter transactions. However, they serve significantly more participants because more seniors are aware and are happy with the purchase of Part C when it appears on ACA health stations. The net effect is beneficial for the insurance companies: while profits per participant have fallen by about 10%, the number of participants has risen by 33%, so that the final result increases each year.