The Affordable Care Act (ACA) made a number of changes to the Medicare program that were upheld by the Supreme Court ruling on the constitutionality of the law. Major consumer-focused provisions of the law are summarized below.

Provisions of the ACA Currently in Effect for Medicare:

Annual Out-of-Pocket Limits on Medicare Advantage plans – The ACA placed a maximum out-of-pocket limit on Medicare Advantage plans of $6,700. “Original Medicare,” Parts A and B, does not cap out of pocket costs for beneficiaries. But, the ACA placed a mandatory maximum limit of $6,700 on all out of pocket medical costs for Medicare Part C (Medicare Advantage) plans. This limit is referred to as the “Maximum Out of Pocket” or MOOP. (Source)

New dates for Medicare’s Annual Enrollment Period (AEP) – During AEP, Medicare beneficiaries have the option to review and change their Medicare Part D and/or Medicare Advantage health coverage prior to the coming plan year when new plan benefits go into effect. Prior to the passage of the ACA, Medicare’s AEP began on November 15 and ended on December 31. But, the ACA changed those dates for the 2012 plan year. The 2012 AEP began on October 15 and ended on December 7, 2011. These dates are currently in place for all AEP’s going forward.

Shrinking the “Donut Hole” –The ACA shrank Medicare’s prescription drug coverage gap over several years. The table below shows the discounts scheduled over the next eight years (http://www.medicare.gov/publications/pubs/pdf/11493.pdf).

• How does the donut hole work?: People on Medicare Part D who have a total of $2,840 in covered prescription drugs costs during a year would hit the “Coverage Gap,” or “Donut Hole.” Once in the donut hole, they have to pay all of their drug costs until they spend $4,550 out of their own pocket for prescription drugs. Once the $4,550 cap is reached, they hit Medicare Part D’s catastrophic limit, and Medicare began covering their drug costs again.

Five Star Ratings on Medicare Advantage Plans – To encourage Medicare Advantage plans to provide quality care, the ACA authorized Medicare to pay bonuses to Medicare Advantage plans, beginning in 2012, if they receive four or five stars on Medicare’s new five-star quality rating system. And, plans that received a 5 star rating would be able to enroll customers year-round; not just during Medicare’s annual enrollment period (AEP). (Source)

The rating system measures how well plans: help customers stay healthy; perform on numerous customer satisfaction measures; price and safely administer drugs; and provide Medicare.gov updated plan information.

Increased Part B and Part D Premiums for Wealthy – People with incomes above $85,000/individual and $170,000/couple pay more for Medicare Part B and Part D services (https://questions.medicare.gov/app/answers/detail/a_id/2306). Here is the breakdown.

Provisions of the ACA Not Yet in Effect for Medicare (http://www.kff.org/healthreform/upload/8061.pdf):

Changes in Plan Payments - Payments to Medicare Advantage plans were restructured so more is paid for managed care and less is paid for fee-for-service (FFS). New payment structures are phased-in over a 3 to 6 year period, depending on the region. Bonuses are given to plans that receive higher quality scores. And, Medicare Advantage plans must send rebates to the government if they have a medical loss ratio of less than 85%, beginning in 2014.

Creation of An Independent Payment Advisory Board (IPAB) – This 15-member group must make recommendations on how to reduce per capita rate of growth in Medicare spending, if spending exceeds a target growth rate. This begins April 2013 when Medicare’s Chief Actuary must forecast whether or not Medicare spending will exceed target rates. If reductions are necessary, the Board will submit recommendations on how to reduce Medicare spending by January 15, 2014.

Accountable Care Organizations –This provision allows providers to organize into Accountable Care Organizations (ACOs), which must agree to be accountable for the overall care of their Medicare beneficiaries and have adequate participation of primary care physicians, define processes to promote evidence-based medicine, report on quality and costs, and coordinate care. Those that form ACOs and voluntarily meet quality thresholds will share in the cost savings they achieve for the Medicare program. (Effective in 2013)

Reduce Payments for Insufficient Care – The ACA reduces Medicare payments to hospitals by specified percentages when patients are excessively readmitted for things that could or should have been prevented. (Effective October 1, 2012). Medicare payments are also reduced to hospitals when a patient acquires a condition while in the hospital. Fees are reduced by 1%. (Effective fiscal year 2015)

About Ross Blair

Ross Blair has applied more than 26 years of technology experience to develop PlanPrescriber.com, a website that makes it easier for seniors and their caregivers to select and enroll in the best Medicare products for their specific needs. In his role as CEO, he has worked closely with pharmacists, insurers, physicians, caregivers and seniors to identify the most critical and complex aspects of Medicare and create a system that delivers this information to consumers in a format that is easy to use and understand.

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