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Medicare vs Medicaid Running head: MEDICARE VS MEDICAID Comprehensive revenue analysis: Medicare vs. Medicaid Completed by: YOUR NAME University of Outline Medicare vs Medicaid 1. Abstract 2. Introduction (Medicare and Medicaid analysis) 3. Alternative ways of protecting hospitals’ revenue streams 4. Prospective Payment System (PPS) 5. Medicare Fee Schedule (MFS) 6. Conclusion 7. References Medicare vs Medicaid Abstract This paper provides the views on how hospitals could cope with the task of sustaining revenues in the light of the insufficient Medicare and Medicaid costs. We first analyze the Medicare-Medicaid related issues. Then we move on to the analysis of the most relevant structures and methods that can enable hospitals gain necessary funds even with increasing number of Medicare and Medicaid’s patients. Finally, the conclusion is drawn to summarize the discussed points and to provide thoughts for future research. Medicare vs Medicaid Introduction The Medicare-Medicaid legislation, or more technically Titles 18 and 19 of the Social Security Amendments of 1965, was regarded as one of the most significant achievements of the Kennedy-Johnson administrations (Marmor, 1992). It was passed after President Kennedy's assassination and the 1964 elections, by a heavily Democratic Congress that saw its mission, in part, as that of redeeming pledges to the American people and a dead president. In recognition of the occasion, President Johnson flew to Independence, Missouri, to sign the legislation in the presence of Harry S. Truman who, as president in 1950, had suffered a humiliating defeat in an earlier attempt to enact a program for national health insurance. One reason for the congratulatory mood was that Medicare-Medicaid was, for then, a large achievement, substantially greater than even its principal supporters had expected. It was passed after a series of defeats in the Kennedy Administration and despite the formidable opposition of the American Medical Association. Moreover, it included not one major initiative, but three. The Medicare-Medicaid legislation began with an Administration-backed King-Anderson bill that would extend the social security benefit to cover hospital and nursing home costs. Excluded was medical and surgical coverage Medicare vs Medicaid or medical care for the poor, not entitled to social security benefits. But two alternative proposals were in competition with King-Anderson. One was the AMA-sponsored "Eldercare," an expanded version of the Kerr-Mills program, which was a grant-in-aid scheme that provided medical assistance for the aged poor. The other was the Byrnes proposal, similar to the Federal employees program, for a contributory plan covering medical and surgical benefits (Marmor, 1992). Making the most of a historic opportunity, Congress combined all three into what Wilbur Mills, Chairman of the House Ways and Means Committee, called a "three-layer cake.
" With various modifications, the King-Anderson bill became Part A of Title 18, a hospital insurance benefit. The Byrnes bill became Part B of Title 18, a contributory medical-surgical benefit, without coverage for drugs. And the AMA version of Kerr-Mills became Title 19 or Medicaid (Leighton and Broaddus, 2005). The analogy of a "layer cake" has some expository value. It suggests one truth: that the American people got a lot at one time in the Medicare-Medicaid legislation. But it also serves to illustrate another, lamentably common, characteristic of health policy-making, then and now (Robison, 2005). That is the tendency to deal with or avoid difficulty by combining partial, even potentially conflicting, policy elements into a package that is less than a synthetic whole. Medicare vs Medicaid Such was the case with Medicare-Medicaid; and with that comment as a point of departure, several observations are in order, particularly about ways in which the original legislation has shaped the subsequent development of policy (Marmor, 1992). Alternative ways of protecting hospitals’ revenue streams It is instructive, for a moment, to view Medicare-Medicaid as a system of national health insurance. From that perspective, it is a singularly limited and badly designed version. It dealt with two of the most important categories of need, the elderly and the indigent. But the two programs were very different. Medicare grew out of a tradition and philosophy of social insurance. Payroll taxes were contributed to Trust Funds, and there was a strong sense of entitlement to the same medical care that anyone else got (Pear and Dao, 2004). Medicaid, by contrast, built on a public assistance mode. People had to establish "eligibility" and they often got welfare medicine. From the beginning, then, the American version of "national health insurance" established as policy and law a two-tiered system of mainstream medicine and care for the poor. Aside from the issue of fairness or equity, this difference has divided energies devoted to reform between advocacy of a universal scheme of health insurance and pursuing Medicare or Medicaid only strategies. And because Medicaid was chronically under-funded and still covered a Medicare vs Medicaid minority of the poor, many went without health care or the costs for uncompensated care were shifted to Medicare providers, insurance companies, or other payers (Lewin, 1986). The alternative ways of protecting and generating sufficient revenue streams by the hospitals include the systems and methods that have been designed and implemented by the government. The trick, however, is to learn all of the underlying issues of each policy to be able to use the procedure in the most effective way. In other words, there are many existing policies that help hospitals generate enough revenue to function properly (Leighton and Broaddus, 2005). However, very often the administrations of these medical institutions are not able to choose the appropriate tactic or to employ the needed policy in the correct way.
We will discuss various techniques that have been designed by the government to protect the medical institutions from incurring heavy expenditures or losses. The Prospective Payment System and the Medicare Fee Schedule are both impressive accomplishments, bringing together enormous amounts of data, technical expertise, and clear-headed analysis of policy options. In this respect, they fit with a certain American style of policy-making, depending as they do on vast data collections and their manipulation with the high-speed computer; collaborative endeavors of government, business, and academia; and a shared faith in technical problem solving Medicare vs Medicaid (Lewin, 1986). It remains to be seen what problems have been solved. But both the DRG-based prospective payment system and the resource-based Medicare fee schedule are monumental in scope and complexity, and worth a moment of respectful silence on that account alone (Lewin, 1986). Prospective Payment System (PPS) Together, the two payment reforms are, arguably at least, the most important changes in health policy since the passage of Medicare--Medicaid in 1965. Each in effect cut through a multitude of regulations and incremental changes--the layered accretions of a generation--to establish new, technically sound, and demonstrably fair bases of payment. PPS changed not just the payment mechanism, but transformed the incentives of the hospital industry and the relations between it, as recipient, and the government, as payer (Foster, 2004). Where PPS was radical in concept, the MFS was sweeping in scope, putting over 6000 procedures on a new resource-based value scale, deliberately redistributing income between geographic regions and medical specialties, and encouraging a continuing and fundamental appraisal by physicians of their daily practice decisions. How effective these schemes will prove to be is for some future audit, but the underlying conceptions and the ultimate aims were not paltry in their vision nor timid in their reach (Federal Register, 1990). Medicare vs Medicaid For changes that are so far reaching, both hospital and physician payment reform are remarkable for the lack of intense or visible controversy accompanying them. They were not quite done "in a fit of absence of mind," like Britain's acquisition of empire; but neither was any great attention paid them in Congress. Nor did they kindle much passion among providers, beneficiaries, or the wider public. PPS went through Congress in what was then record time, as a tacked on section of the Social Security Amendments of 1983; and the MFS was one relatively short part of OBRA 1989. Both were closely held and low profile policy events, accorded only a few sticks of newsprint in national newspapers such as the New York Time, the Wall Street Journal, or the Washington Post. Medicare Fee Schedule (MFS) With the prevailing budget deficits and divisions over policy, an approach to Medicare payment reform that entailed a great debate, or even a peaking of the more controversial issues, would almost certainly have doomed either PPS or the MFS to defeat, much as National Health Insurance or Hospital Cost Containment had failed earlier in the Carter Administration.
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Though the process differed, a non-controversial and low profile strategy may have been essential to success for either of these payments reforms (Federal Register, 1990). Conclusion Medicare vs Medicaid Both PPS and the MFS are, in differing ways, based on payment formulas that were intended to be fair and technically sound. They were put forward by their proponents and supported by the physicians and the hospitals as a way of establishing a "level playing field," evened out by equitable initial calculations that could be subsequently "updated" or amended by means of an impartial and largely non-political method (Medicaid in the Cross Hairs, 2005). As a conflict-minimizing device, this approach had obvious merits. Furthermore, had either PPS or the MFS been seriously chargeable with unfairness or provoked general criticism on this account they would have bogged down in political controversy (Dunn, 1988). Yet it is also important to note the policy burden that is put on this notion of technically sound and fair calculations of payment amounts. Each of these payment systems represents virtuoso technical achievements. Yet, each could be viewed, more pessimistically, as high-tech gimmicks that lend plausibility to particular payment or update formulas but that are, at the same time, prone to political manipulation and bury important issues of principle or conflicting interest under these formulas. The history of each of these payment systems is different and each is, in its own way, unique. They developed at different phases in the presidential electoral cycle as well as in the unfolding evolution of Congressional--Executive Medicare vs Medicaid relations (Dunn, 1988). Possibly, several kinds of results or conclusions can be developed. One is a judgment about which decisions in the development or implementation of the payment reforms seem warranted by circumstance and the available weight of opinion. Another result is more anticipatory: seeking to identify unresolved issues that are likely to occasion future difficulty. Finally, there is the broader, systemic concern of how well the American Federal government manages a sector of its health policy in this strange, possibly transitional, period of perennial budget deficits and troubled relations between the President and the Congress. At a high level of abstraction or generality, both PPS and the MFS can be described as similar approaches to different aspects of Medicare payment reform. They both entailed the development of an administered pricing system based on technical calculations of resource use. And they both rely on Congressionally created commissions to advise about annual updates and specific modifications.
There have also been suggestions for combining ProPAC and PPRC into one Medicare commission, that might review Part A and Part B payment issues together and serve as a technical advisory body for future schemes, such as National Health Insurance. As an approach to policymaking, this experiment seems to have substantial appeal. At the same time, PPS and the MFS provide not one example but two: their history, modes of action, and Medicare vs Medicaid their likely courses of development differ substantially--and in ways that can be important for assessing their own future prospects or for adapting this method of policy development to other substantive areas. Medicare vs Medicaid
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