Medicare, Senior Living

Social Security Checks – 37% Used for Health Care Costs

Ben Veghte,  Research Director of Social Security Works,, posted a piece on  Huffington Post about how health care costs eat up over a third of social security checks of many older adults (37%).  He offers solutions that could possibly save billions for the U.S. government in Medicare costs.  Article, re-posted here below, is worth reading…

Health Care Consumes Over a Third of Social Security Checks

Posted: 01/22/2014 6:07 pm


Out-of-pocket health care costs for seniors consumed over a third – 37 percent – of the average Social Security check in 2010, according to a new analysis by Social Security Works of data from the Center for Medicare and Medicaid Services. The vast majority of seniors and people with disabilities live on modest, fixed incomes. Median household income for seniors is $34,000, and for Social Security Disability Insurance beneficiaries just under $30,000. Our Social Security and Medicare systems are designed to provide seniors and people with disabilities with a measure of economic and health security, as well as predictability with regard to their budgets in retirement – insurance protections which they earned by contributing to Social Security and Medicare throughout their working years.

Seniors’ high out-of-pocket expenses, however, undermine their economic security in retirement. Social Security benefits were never intended to go mostly toward medical bills. Yet today, even with Medicare (including the prescription drug coverage – Medicare Part D – which took effect in 2006), out-of-pocket health care costs are well on their way to eating up half of the average Social Security check of seniors and their surviving spouses. In 1992, after beneficiary spending on Medicare premiums, deductibles, co-pays, all private premiums, and all other services covered and not covered by Medicare, nearly 80 cents of every dollar in Social Security benefits remained to cover other living costs. Today, however, less than 65 cents of every dollar in Social Security benefits remain to meet living expenses besides health care – with a downward trend.

If the cost-shifting proposals on the agenda now – such as requiring ill seniors to have “more skin in the game,” a crude term for them bearing a greater share of rising provider costs, or increasing Medicare premiums for middle-class beneficiaries – become law, this would cut net Social Security benefits even further.

What proponents of further cost-shifting misunderstand is that the cost problem we face is not a Medicare problem – Medicare is actually better at controlling costs than our private health care system. The problem, rather, is that our system of health-care provision isinefficientwe spend twice as much as those of similar countries, with worse health outcomes. The New York Times‘ Elisabeth Rosenthal, and Time Magazine‘s Steven Brill, have published revealing exposes detailing the manifold perverse incentives and inefficiencies in our health-care system, and showing how these are perpetuated by an army of provider lobbyists in Washington, DC.

True courage on the part of policymakers would be demonstrated by taking on these vested interests to improve the efficiency of our health-care delivery system – which would be a boon to the entire economy – rather than asking seniors and people with disabilities to bear an ever greater share of the rising amounts billed by providers. For example, we could allow Medicare to negotiate with drug companies for lower prescription drug prices, which is prohibited under current law. Medicaid and the Veterans Administration already do so, as do most other countries’ health care systems. Allowing Medicare to also use its market power on behalf of beneficiaries could save the federal government between $230 and $541 billion – and beneficiaries another $48 to $112 billion – over 10 years.

And if policymakers want to ask upper-income Americans to contribute more to financing Medicare, they should do so through progressive income or payroll taxes on working-age Americans, not higher premiums for seniors living on a fixed income. And they should limit their proposals to the truly upper income, not those with incomes of $47,000.

The vast majority of America’s seniors live on modest, fixed incomes. They have paid into Social Security throughout their working lives. Congress has a sacred obligation to protect them from out-of-control health care costs in retirement. There is ample scope for improving the efficiency of our health care system. We should control costs, rather than shifting them onto our seniors and people with disabilities.

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Health & Wellness, Senior Services

Medicare to Penalize Hospital Readmission Rates Oct 2012; What Does This Mean for You?

An interesting dilemma: hospitals and their readmission rates.  Catch 22.  Hospitals remove patients as soon as possible (often too early) to follow dictates of insurance, however many patients are readmitted shortly afterwards.

Medicare will begin to penalize hospitals for high readmission rates in October; many hospitals that serve the poor (not all) have high readmission rates attributable to patient lack of funds for doctor visits and medications.  What does this mean if you are low income?  The indications are the hospital will pay a high premium and may not be able to stay in business and you would have to consider other options.   The article does not address this situation.  What is the solution?

Senior care colleague Steve Moran from posted the report from a hospital chain’s point of view (link + text included below).  Posting of this is merely to present information.  The subject requires much discussion; there are no easy answers… and as with any new policy, it may evolve and be tweaked over time.

Medicare To Penalize 2,211 Hospitals For Excess Readmissions

By Jordan Rau

KHN Staff Writer

AUG 13, 2012

More than 2,000 hospitals — including some nationally recognized ones — will be penalized by the government starting in October because many of their patients are readmitted soon after discharge, new records show.

Together, these hospitals will forfeit about $280 million in Medicare funds over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.

With nearly one in five Medicare patients returning to the hospital within a month of discharge, the government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. Hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.

The penalties, authorized by the 2010 health care law, are part of a multipronged effort by Medicare to use its financial muscle to force improvements in hospital quality. In a few months, hospitals also will be penalized or rewarded based on how well they adhere to basic standards of care and how patients rated their experiences. Overall, Medicare has decided to penalize around two-thirds of the hospitals whose readmission rates it evaluated, the records show.

The penalties will fall heaviest on hospitals in New Jersey, New York, the District of Columbia, Arkansas, Kentucky, Mississippi, Illinois and Massachusetts, a Kaiser Health News analysis of the records shows.  Hospitals that treat the most low-income patients will be hit particularly hard.

A total of 278 hospitals nationally will lose the maximum amount allowed under the health care law: 1 percent of their base Medicare reimbursements. Several of those are top-ranked institutions, including Hackensack University Medical Center in New Jersey, North Shore University Hospital in Manhasset, N.Y. and Beth Israel Deaconess Medical Center in Boston, a teaching hospital of Harvard Medical School.

“A lot of places have put in a lot of work and not seen improvement,” said Dr. Kenneth Sands, senior vice president for quality at Beth Israel. “It is not completely understood what goes into an institution having a high readmission rate and what goes into improving” it.

Sands noted that Beth Israel, like several other hospitals with high readmission rates, also has unusually low mortality rates for its patients, which he says may reflect that the hospital does a good job at swiftly getting ailing patients back and preventing deaths.

Penalties Will Increase Next Year

The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. This year, the $280 million in penalties comprise about 0.3 percent of the total amount hospitals are paid by Medicare.

According to Medicare records, 1,933 hospitals will receive penalties less than 1 percent; the total number of hospitals receiving penalties is 2,211. Massachusetts General Hospital in Boston, which U.S. News last month ranked as the best hospital in the country, will lose 0.5 percent of its Medicare payments because of its readmission rates, the records show.  The smallest penalties are one hundredth of a percent, which 50 hospitals will receive.

Dr. Eric Coleman, a national expert on readmissions at the University of Colorado School of Medicine, said the looming penalties have captured the attention of many hospital executives. “I’m not sure penalties alone are going to move the needle, but they have raised awareness and moved many hospitals to action,” Coleman said.

The penalties have been intensely debated.  Studies have found that African-Americans are more likely to be readmitted than other patients, leading some experts to be concerned that hospitals that treat many blacks will end up being unfairly punished.

Hospitals have been complaining that Medicare is applying the rule more stringently than Congress intended by holding them accountable for returning patients no matter the reason they come back.

Hospitals That Serve Poor Are Hit Harder Than Others

Some safety-net hospitals that treat large numbers of low-income patients tend to have higher readmission rates, which the hospitals attribute to the lack of access to doctors and medication these patients often experience after discharge. The analysis of the penalties shows that 76 percent of the hospitals that have a lot of  low-income patients will lose Medicare funds in the fiscal year starting in October. Only 55 percent of the hospitals treating few poor patients are going to be penalized, the analysis shows.

“It’s our mission, it’s good, it’s what we want to do, but to be penalized because we care for those folks doesn’t seem right,” said Dr. John Lynch, chief medical officer at Barnes-Jewish Hospital in St. Louis, which is receiving the maximum penalty.

“We have worked on this for over four years,” Lynch said, but those efforts have not substantially reduced the hospital’s readmissions. He said Barnes-Jewish has tried sending nurses to patients’ homes within a week of discharge to check up on them, and also scheduled appointments with a doctor at a clinic, but half the patients never showed. This spring, the hospital established a team of nurses, social workers and a pharmacist to monitor patients for 60 days after discharge.

“Some of the hospitals that are going to pay penalties are not going to be able to afford these types of interventions,” said Lynch, who estimated the penalty would cost Barnes-Jewish $1 million.

Atul Grover, chief public policy officer for the Association of American Medical Colleges, called Medicare’s new penalties “a total disregard for underserved patients and the hospitals that care for them.” Blair Childs, an executive at the Premier healthcare alliance of hospitals, said: “It’s really ironic that you penalize the hospitals that need the funds to manage a particularly difficult population.”

Medicare disagreed, writing that “many safety-net providers and teaching hospitals do as well or better on the measures than hospitals without substantial numbers of patients of low socioeconomic status.” Safety-net hospitals that are not being penalized include the University of Mississippi Medical Center in Jackson and Denver Health Medical Center in Colorado, the records show.

Bill Kramer, an executive with the Pacific Business Group on Health, a California-based coalition of employers, said the penalties provide “an appropriate financial incentive for hospitals to do the right thing in terms of preventing avoidable readmissions.”

The government’s penalties are based on the frequency that Medicare heart failure, heart attack and pneumonia patients were readmitted within 30 days between July 2008 and June 2011. Medicare took into account the sickness of the patients when calculating whether the rates were higher than those of the average hospital, but not their racial or socio-economic background.

The penalty will be deducted from reimbursements each time a hospital submits a claim starting Oct. 1. As an example, if a hospital received the maximum penalty of 1 percent and it submitted a claim for $20,000 for a stay, Medicare would reimburse it $19,800.

The Centers for Medicare & Medicaid Services has been trying to help hospitals and community organizations by giving grants to help them coordinate patients’ care after they’re discharged. Leaders at many hospitals say they are devoting increased attention to readmissions in concert with other changes created by the health law.

Sally Boemer, senior vice president of finance at Mass General, said she expected readmissions will drop as the hospital develops new methods of arranging and paying for care that emphasize prevention. Readmissions “is a big focus of ours right now,” she said.

Gundersen Lutheran Health System in La Crosse, Wis., and Intermountain Medical Center in Murray, Utah, were among 1,156 hospitals where Medicare determined the readmission rates were acceptable. Those hospitals will not lose any money.  On average, the readmissions penalties were lightest on hospitals in Utah, South Dakota, Vermont, Wyoming and New Mexico, the analysis shows. Idaho was the only state where Medicare did not penalize any hospital.

Even some hospitals that won’t be penalized are struggling to get a handle on readmissions. Michael Baumann, chief quality officer at the University of Mississippi Medical Center, said in-house doctors had made headway against heart failure readmissions by calling patients at home shortly after discharge. “It’s a fairly simple approach, but it’s very labor intensive,” he said.

The problems afflicting many of the center’s patients—including obesity and poverty that makes it hard to afford medications—make it more challenging. “It’s a tough group to prevent readmissions with,” he said.

Data for individual hospitals are available as a PDF file and as a CSV spreadsheet.