The Medicare Payment Advisory Council (MedPac) is made up of experts who study all the details of Medicare. Each year MedPac presents a report to Congress on Medicare that includes recommendations for changes to the program.

Here is information on hospitals and Medicare from the March 2012 MedPac report:

Inpatient admissions declined 1 % each year from 2004 to 2010 while hospital outpatient services increased 4 percent each year.

From 2009 to 2010, Medicare payments per beneficiary for inpatient and outpatient services in acute care hospitals grew by over 3 percent. As a result, 4,800 hospitals received $153 billion for roughly 10 million Medicare inpatient admissions and 166 million outpatient services.

Hospitals lost money on Medicare.

Overall aggregate Medicare profit margins improved from −7.1 percent in 2008 to −4.5 percent in 2010.  Although the average hospital lost money on their Medicare patients, MedPac found that efficient hospitals operated with a 4 percent profit margin in 2010.

The Commission recommends that the Congress increase payment rates for the inpatient and outpatient services in 2013 by 1 %.

Hospitals were overpaid by Medicare.

Hospitals’ documentation and coding changes led to over-payments in 2010, 2011, and 2012. Therefore, updates must be lowered to recover these over-payments (even though most hospitals lose money on their Medicare patients).

The March 2012 MedPac report can be found here:

http://www.medpac.gov/documents/Mar12_EntireReport.pdf

Here is an article by David Sayen, Medicare’s regional administrator for Arizona, California, Hawaii, and Nevada.

As a person with Medicare, you have certain rights and protections. And it’s worth knowing what they are.

You have rights whether you’re enrolled in Original Medicare – in which you can choose any doctor or hospital that accepts Medicare – or Medicare Advantage, in which you get care within a network of health care providers. Such networks are run by private companies approved by Medicare.

Your rights guarantee that you get the health services the law says you can get, protect you against unethical practices, and ensure the privacy of your personal and medical information. You have the right to be treated with dignity and respect at all times, and to be protected from discrimination.

You also have the right to get information in a way you understand from Medicare, your health care providers, and, under certain circumstances, Medicare contractors. This includes information about what Medicare covers, what it pays, how much you have to pay, and how to file a complaint or appeal. Moreover, you’re entitled to learn about your treatment choices in clear language that you can understand, and to participate in treatment decisions.

One very important right is to get emergency care when and where you need it — anywhere in the United States.

If you have Medicare Advantage, your plan materials describe how to get emergency care. You don’t need permission from your primary-care doctor (the doctor you see first for health problems) before you get emergency care. If you’re admitted to the hospital, you, a family member, or your primary-care doctor should contact your plan as soon as possible. If you get emergency care, you’ll have to pay your regular share of the cost, or co-payment. Then your plan will pay its share.

If your plan doesn’t pay its share, you have the right to appeal.

In fact, whenever a claim is filed for your care, you’ll get a notice from Medicare or your Medicare Advantage plan letting you know what will and won’t be covered. If you disagree with the decision, you have the right to appeal.

For more information on appeals, you can read our booklet “Medicare Appeals,” available at www.medicare.gov/Publications. Or call us, toll free, at 1-800-MEDICARE.

You can also file a complaint about services you got from a hospital or other provider. If you’re concerned about the quality of the care you’re getting, call the Quality Improvement Organization (QIO) in your state to file a complaint. A QIO is a group of doctors and other health care experts who check on and improve the care given to people with Medicare. You can get your QIO’s phone number at
www.medicare.gov/contacts or by calling 1-800-MEDICARE.

Many people with Original Medicare also enroll in Medicare prescription drug plans. Here, too, you have certain rights.

For example, if your pharmacist tells you that your drug plan won’t cover a drug you think should be covered, or it will cover the drug at a higher cost than you think you’re required to pay, you can request a coverage determination.

If the decision isn’t in your favor, you can appeal.

You can ask for an exception if you, your doctor, or your pharmacist believe you need a drug that isn’t on your drug plan’s list of covered medications, also known as a formulary.

You don’t need a lawyer to appeal in most cases, and filing an appeal is free. You won’t be penalized in any way for challenging a decision by Medicare or your health or drug plan. And many people who file appeals wind up with a favorable outcome.

This is a brief overview of your Medicare rights. For more details, read our booklet, “Medicare Rights and Protections,” at http://www.medicare.gov/Publications/Pubs/pdf/11534.pdf.

David Sayen is Medicare’s regional administrator for Arizona, California, Hawaii, and Nevada. You can always get answers to your Medicare questions by calling 1-800-MEDICARE (1-800-633-4227).

When I wrote about Lipitor generic costs recently, I got some interesting emails. One was from Marian in Phoenix who questioned why she couldn’t get the generic through her Part D plan. Another was from an organization called Pharmacists United for Truth and Transparency (PUTT).

I had a long talk with Dave Marley, the president of PUTT, and he told me some very interesting things about how Part D and employer drug plans work – and how they don’t always work to the benefit of Medicare beneficiaries or people with employer coverage.

PUTT has over 900 members, most of whom are owners of independent pharmacies. According to their website, PUTT is “an independent watchdog organization dedicated to exposing the role Pharmacy Benefit Managers (PBMs) play in driving up prescription drug costs for consumers and employers.”

Pharmacy Benefits Managers (PBM)

PBMs are companies that manage pharmacy benefits for employers and insurance companies. Mr. Marley says PBMs worked with  Pfizer to keep Lipitor sales flowing even though the generic would have saved employers and  insurance companies millions of dollars.

From November 2011 to June 2012, Pfizer paid rebates to PBMs and Medicare Part D plans for each Lipitor prescription filled.  In some part D plans, the co-pay for Lipitor was reduced to the generic co-pay of $8 to $10. However, up until June 1^st, most plans I looked at on Medicare.gov were still charging the $40-$45 brand co-pay.

Some seniors like Marian, who wrote me about her Cigna plan, paid a $15 generic co-pay and were provided with Lipitor. But while Marian got a good deal up front, the $150 retail cost for Lipitor went into her Part D account and put her closer to the donut hole.

Mr. Marley, the president of PUTT, said, “Pfizer says, they reduced costs for Lipitor users – but nobody’s price was reduced. Lipitor’s price actually went up due to the rebate scam”. He added, “Because Medicare turned over Part D to for-profit insurance companies, seniors are at the mercy of those companies without proper oversight.   Oversight of Part D is atrocious.”

How is Part D paid for?

Part D is mostly paid for by Medicare, at a cost of more than $60 billion a year. 75% of this money is spent on brand drugs, even though most people take generics. Brand drugs are often ten times more expensive than generics. Part D plans are paid between $2,000 and $2,300 per year per person enrolled with them.

Part D plans also get “risk adjustments”, or higher payments for people who have high drug costs. If a person enrolled in a Part D plan takes no drugs, the plan still gets paid. So it’s a no-lose situation for insurance companies that run Part D plans.

Mr. Marley pointed out that Part D plans, in addition to payments from Medicare, get rebate money from Pfizer and other drug companies. Those rebates discourage Part D plans from switching to generics. According to Mr. Marley, “Rebates are a fools gold in the absence of price controls. Drug companies figured rebates cost $20 billion, so they just raised the prices by $20 billion to cover their costs”.

The New York Times wrote about efforts by Pfizer Inc to keep making money from Lipitor as the generic, Atorvastatin, came to market. Here are some excerpts from the  November 29, 2011 article:

Some deals require pharmacies to reject prescriptions for low-cost generics, starting Thursday, and substitute a discounted name-brand Lipitor. Some deals have blocked generic makers from mail-order services that account for an estimated 40 percent of all Lipitor prescriptions.

….The memo, from CVS/Caremark, a pharmacy benefit management company, and dated Monday, notified pharmacies that the generic form of Lipitor would not be covered for 29 prescription drug plans it managed for Medicare Part D. Instead, any prescription claims for generic atorvastatin will be rejected with a notice saying: “Brand Lipitor will pay at generic co-pay.”

The company’s memo did not disclose the financial terms.

….The government may receive the rebates that drug manufacturers pay to benefit managers and insurers if they are fully disclosed and characterized as rebates, not fees, according to a March report by the Office of the Inspector General for the Department of Health and Human Services. But benefit managers’ records may not be accessible or auditable, it added.