National Bipartisan Commission on the Future of Medicare
MEDICARE FROM THE START TO TODAY
Prior to 1965, nearly half of the elderly had no health insurance and many others had inadequate coverage. Medicare was enacted to help assure that virtually all citizens age 65 or older would have health care coverage. The program was modeled on the standard employer-sponsored health plans of the day. Increased access to and insurance coverage of health care has resulted in significant benefits for the elderly including improvements in health and income status. For example, life expectancy at age 65 has increased several years and the poverty rate for the elderly has declined by about half.
As the Nation moves into the 21 st century, Medicare is facing serious financial challenges. Over the next 50 years the number of beneficiaries is expected to more than double while the ratio of workers, whose payroll taxes fund over half of the program, to beneficiaries is expected to decline from about 4 to 1 to a little over than 2 to 1. Moreover, recent estimates from the Congressional Budget Office and the Administration predict that the program will be bankrupt about the time the growth in beneficiaries accelerates as the baby boom generation starts to become eligible in 2010.
This paper discusses the Medicare program at its inception and the changes made to date in such areas as eligibility, covered services, and financing.
ELIGIBILITY AND FUNDING
On July 1, 1966, Medicare, authorized by title XVIII of the Social Security Act, offered health insurance to almost all Americans age 65 or older. Coverage consisted of hospital insurance (part A) and supplemental medical insurance (part B), and benefits mirrored those then available from Blue Cross and Blue Shield plans. A payroll tax paid by employees, employers, and the self employed funded part A, which was available without cost to all those 65 or older who were insured under the old age retirement and survivors program of title II of the Social Security Act. Part B was open to all aged citizens and legal aliens who had resided in the country for 5 or more years. Beneficiaries who voluntarily enrolled in part B paid a monthly premium of $3.00, which was estimated to be enough to fund 50 percent of part B costs, and federal general revenues covered the remainder.
The Social Security Amendments of 1972 authorized the only major eligibility expansion of Medicare. The act granted benefits to those people under 65 who receive Social Security disability cash payments for at least 24 months. The act also added people with end-stage renal disease who require maintenance dialysis or a kidney transplant.
Federal employees began paying the Medicare payroll tax in 1983 and all newly hired state and local employees began doing so in 1986. Thus, most government employees and retirees are now eligible for part A under the same circumstances as other workers. Over the years, several categories of workers, such as domestic servants, were brought under title II and thus also Medicare part A. The number of people enrolled in Medicare has grown steadily over the years increasing at an average rate of about 2 percent per year. Figure 1 shows the number of beneficiaries enrolled in Medicare each year since the program began.
The payroll tax that finances part A began at a rate of 0.35 percent on wages up to a maximum of $6,600. The current rate, set by the Social Security Amendments of 1983, is 1.45 percent and applies to all earned income. The revenues from the tax are deposited in the part A trust fund and, along with interest earned on any surplus in the fund, comprises all the resources available to Medicare for paying for services and administrative costs.
When the program began, premiums were set to cover one-half of total part B costs. Starting in 1975, the annual percentage increase in the amount of premiums was capped at the percentage increase in Social Security retirement benefits, which in turn is tied to the increase in the consumer price index (CPI). Because part B expenses rose at a faster rate than general inflation, the percentage of part B costs covered by enrollee premiums decreased and by 1982 represented less than 25 percent. A series of laws temporarily required premiums to cover 25 percent of program costs and that level was made permanent by the Balanced Budget Act of 1997 (BBA). Figure 2 shows the changes in the part B premium from 1966 to 1998.
Note: Through 1982, premium effective dates were normally July 1; from 1984 on, effective dates were January 1.
People over 65 years of age who do not qualify for part A based on their or their spouse's work experience can elect to buy coverage through payment of a monthly premium that is currently set at the actuarial value of part A benefits for aged beneficiaries. Over 300,000 individuals have used this option to obtain part A coverage. Figure 3 lists the part A premium amounts since 1966.
Notes: Before 1984, premium rates were effective on July 1; from 1984 on, effective date was January 1. Beginning in 1989, the premium calculation method was modified to better reflect actual program costs and resulted in lower premiums than the previous formula.
Initially, part A covered inpatient hospital care, skilled nursing facility (SNF) services 1. and home health care. For inpatient care, hospitals were required to accept as payment in full Medicare's determination of the reasonable costs 2 of treating the patient. Beneficiaries could use up to 60 days of hospital care and only be liable for a deductible set to equal the average cost of a day in the hospital. For the 61 st through the 90 th day, the beneficiary was responsible for daily coinsurance equal to one-quarter of the inpatient deductible. After 90 days, the beneficiary could pay the full amount or elect to use his or her lifetime reserve of 60 days, each of which required coinsurance equal to one-half of the inpatient deductible. Figure 4 lists the inpatient hospital deductible by year since Medicare's beginning.
SNF care was viewed as a way of decreasing hospital length of stay by providing an alternative place of service for patients who no longer required the hospital level of care but still needed daily skilled nursing or physical therapy. Medicare covered a maximum of 100 days in a SNF after the beneficiary had been hospitalized for at least 3 days. The first 20 days required no payment from the beneficiary and the SNF received from Medicare its full reasonable costs. For the 21 st through the 100 th day, the beneficiary was liable for daily coinsurance equal to one-eighth of the inpatient hospital deductible.
Both hospital and SNF coverage were governed by the "spell of illness" concept. Beneficiaries were considered in the same spell of illness until they had not been in a hospital or SNF for at least 60 consecutive days. This meant that a hospital readmission within 60 days was not subject to a second deductible. It also meant that beneficiary coinsurance for long stays could not be avoided by short absences from the facility and that all benefits could be exhausted by long stays or if several illnesses or readmissions occurred without a 60 day break.
The hospital and SNF benefits are the same today as they were when the program began. Medicare's payment methods have changed but the days covered and how deductibles and coinsurance are determined remains the same.
The home health benefit was also viewed as a means of controlling hospital, and SNF, length of stay because a patient could use home health when he or she no longer needed the level of care available in those facilities but still required some skilled care. Beneficiaries qualified for home health care if they needed intermittent skilled nursing, physical therapy, or speech therapy and were "homebound." The patient had to be under the care of a physician and the care provided had to be in a plan of care ordered and periodically reviewed by a physician. If these requirements were met, necessary occupational therapy, medical social services, and home health aide services were also covered. Part A covered at no cost to the beneficiary up to 100 visits after a hospital stay of at least 3 days. The visits had to be related to the illness or injury treated in the hospital and occur within 1 year of the hospitalization. Regardless of whether a hospitalization occurred, beneficiaries could also obtain up to 100 visits per year under part B. Medicare paid home health agencies based on their reasonable costs of caring for beneficiaries.
The most significant change to the home health benefit resulted from an amendment in the Omnibus Reconciliation Act of 1980 that removed the 100 visit limitations under part A and part B. All home health visits were paid by part A unless the beneficiary was only enrolled in part B. Moreover, no beneficiary cost sharing applied to home health care after this amendment became effective. Several court decisions in the late 1980s also resulted in a liberalization of the home health benefit and for many patients today the benefit has taken on more of a long-term care nature rather than its original acute care emphasis. During the 1990s, Medicare's home health costs have grown rapidly, increasing over 20 percent per year on average, as the number of beneficiaries receiving services and the average number of visits per beneficiary served both doubled. (The BBA made substantial changes to the home health payment method that are discussed later.)
The only addition to part A benefits was coverage of hospice care, passed in 1983, for beneficiaries with a prognosis of death within 6 months. Hospices provide palliative care to ease and make as comfortable as possible a person's last days. Beneficiaries who elect hospice care receive all their care for the terminal condition through the hospice and are only responsible for 5 percent coinsurance on any drugs or respite care used. Hospices receive predetermined daily rates which vary by the number of hours of care required--0 to 8 hours, 8 to 16 hours, and continuous care in the home, and in-facility care. Only minor modifications have been made to the hospice benefit and it remains essentially the same as when enacted.
Part B covered a wide range of non-institutional services and supplies including physician, outpatient hospital, laboratory, x-ray, therapy, medical equipment used in the home, and home health care not covered under part A. As was the case for most private insurance, Medicare paid for most of these services using the reasonable charge method. 3 Outpatient hospital and home health services were paid on a reasonable cost basis. Part B had an annual deductible of $50 (now $100) and the beneficiary was liable for coinsurance of 20 percent of the Medicare allowed amount plus any charge in excess of that amount if the physician did not accept assignment. 4
Some part B benefit enhancements have been enacted over the years. Several preventative benefits have been authorized, including immunization shots for influenza and pneumonia and screening mammography for breast cancer. A few types of outpatient drugs that can be self-administered are now covered including cyclosporine, which helps prevent rejection after organ transplants, and oral anticancer drugs. Two significant out-of-pocket cost savers for beneficiaries became law. Beginning in 1984, outpatient laboratory tests were no longer subject to the part B deductible or coinsurance. Second, a limiting charge was established for physician services; today, physicians cannot charge more than 115 percent of the Medicare allowed amount for unassigned claims. Moreover, various incentives for physicians to accept assignment were enacted in the 1980s and today over 90 percent of all claims are assigned compared with only about half during the 1970s.
While the Medicare benefit structure has remained fairly stable, medical technology has rapidly increased the tools available to diagnose and treat patients far beyond the capabilities of those in 1966. For example, when Medicare began, cataract treatment involved a major operation to remove the eye's lens, a 7-day or longer stay in a hospital, and use of thick cataract eyeglasses afterwards. Today, almost all cataract operations are performed on an outpatient basis, the natural lens is replaced with an artificial lens, and regular, or no, eyeglasses are used afterwards. Other examples are the many new drugs available now, bypass surgery and angioplasty to treat blocked coronary arteries, and magnetic resonance imaging (MRI) that shows tissues and details not possible with x-rays. A later section of this paper discusses technology changes in more detail.
Medicare's cost almost immediately exceeded estimates made when it was enacted and costs accelerated rapidly. Figure 5 shows the cost increases over the life of the program unadjusted for inflation or changes in number of beneficiaries. Figure 6 compares the increases in Medicare costs to growth in GDP.
In Medicare's first years, a major reason for higher then estimated costs was the pent-up demand for care by the large number of formerly uninsured elderly, which had not been fully considered in the cost estimating process. After this initial demand was satisfied, costs continued to climb at rates substantially above growth in general inflation or GDP.
For illustrative purposes, increases in Medicare's total costs have often been subdivided into three factors
- General inflation, equal to roughly one-half of total growth
- Increase in beneficiaries, equal to roughly one-quarter
- Intensity of services, a residual category equal to roughly the remaining quarter.
The intensity category is a catchall used to explain what remains after inflation and beneficiary growth. The category includes changes in technology, such as MRI and cardiac surgery, which have tended overall to increase costs. It also includes increases in the use of particular services, whether resulting from medical need or overuse, and the use of more costly services rather than less costly ones, such as increased numbers of intermediate office visits and fewer brief office visits.
CHANGES TO PAYMENT METHODS
As Medicare's costs continued to grow, the Congress and the Department of Health and Human Services (HHS) took actions to help control costs, many of which modified provider payment methods. Major legislation was enacted in the Social Security Amendments of 1967, 1972, and 1983, the Medicare and Medicaid Anti-Fraud and Abuse Acts of 1978 and 1987, the nine budget reconciliation acts between 1980 and 1993, and the Balanced Budget Act of 1997. Highlights of the changes follow.
Inpatient hospital services always represented the largest single Medicare cost and these costs grew rapidly during the program's first 15 years. A number of regulatory and legislative efforts were made to gain better control over payments under the cost reimbursement method. These included increased review of service use through establishment of Professional Standards Review Organizations (PSRO) and setting upper limits on payments for routine operating cost. However, these efforts were not sufficient to overcome the financial incentives of cost reimbursement to maximize revenues by increasing service use and Medicare payments to hospitals continued to escalate.
In 1983, the Congress enacted a prospective payment system (PPS) for inpatient hospital services that pays a predetermined amount for each discharge. The PPS payment amount varies depending on the patient's condition. Separate rates are set for diagnosis related groups (DRG), each of which includes diagnoses expected to take the same amount of hospital resources to treat. PPS gives hospitals financial incentives to control costs because they profit or lose based on whether their costs are less or more than PPS payments. Thus, hospitals have incentives to minimize lengths of stay and service use (average length of stay decreased from over 11 days in 1982 to less than 7 days in 1997) but to increase the number of patients admitted. To help prevent hospitals from over-responding to the new incentives by discharging patients too soon, admitting patients not needing the hospital level of care, or underusing services to maximize profits, the law reconstituted the PSROs into utilization and quality control
peer review organizations (PRO). The law directed PROs to review (1) admissions for necessity, (2) readmissions for evidence of premature discharges, and (3) quality of care to detect underuse of services.
PPS gave Medicare more tools to control the growth rate of its hospital costs; during the 1990s, growth in hospital payments has been relatively close to inflation in the economy as a whole. Under PPS, hospitals also decreased the rate of growth in their own costs to rates approaching general inflation.
The payment method for physician services has also changed substantially since Medicare began. The first major change was limiting the annual increase in allowed changes to an economic index that measured changes in general wage levels throughout the economy. Before this change, the amount that allowable charges increased for a given year was determined by how much actual charges had increased in the previous year. This application of the economic index prevented physicians from getting higher amounts in the next year merely by increasing charges in the current year. The next major change in the physician payment method was the establishment of a resource based relative value scale (RBRVS) fee schedule in 1992. Under the reasonable charge method, physician payments often were not in sync with the effort and resources they required. Patient evaluation and management received relatively low payments while surgeries often received relatively high amounts. On the other hand, RBRVS sets rates for each procedure based on the physician work and other resources needed to deliver it. RBRVS was coupled with a volume performance standard under which annual increases in fee schedule amounts were decreased if total physician payments in previous years exceeded a preestablished growth rate for those years. Separate standards were set for evaluation and management services, surgeries, and other services. The BBA made some adjustments to RBRVS method including setting one growth measure for all physician services to replace the three performance standards.
Most other part B services have also shifted from the reasonable charge payment method to fee schedules. The trend toward fee schedules began with the shift for clinical laboratory services and durable medical equipment in 1984 and culminated with the directive in the BBA to use fee schedules for all part B services except hospital outpatient services. A PPS for hospital outpatient departments is scheduled to begin in 2000.
A third major area of payment method change relates to prepaid health plans. The original Medicare act did not make provision for paying plans. The 1967 amendments added a mechanism whereby plans could be paid, basically on a cost basis. The 1972 amendments authorized Medicare to contract with health maintenance organizations (HMO) on two bases--cost reimbursement and risk contracts. Risk contract HMOs received a monthly amount based on the adjusted average per capita cost (AAPCC) that in turn reflected the expected cost if enrolled beneficiaries had stayed in the fee-for-service sector. At the end of the contract period, the HMO and Medicare shared any savings above 5 percent of total payments and the HMO was limited to a 10 percent profit rate. The HMO had to absorb any loses. This method did not prove to be popular with HMOs and only one risk contract was ever entered under the 1972 amendment.
In 1982, the law was again amended and risk contract HMOs were authorized to be paid at 95 percent of AAPCC with the expectation that Medicare would save on average 5 percent for those beneficiaries electing to enroll in the plans. HMOs could retain profits up to the rate they earned on their commercial business. A process, referred to as the adjusted community rate (ACR), was established as a way of enforcing the profit limit. If the ACR showed that the HMO was expected to profit more on Medicare than commercial enrollees, the HMO has to either supplement benefits for enrollees or return the excess to Medicare. All HMOs whose ACRs showed excess profits have elected to supplement benefits. The number of HMOs with contracts and the number of beneficiaries enrolled in them has grown substantially, particularly since 1994. Today, there are over 350 contracts and more than 5 million Medicare enrollees.
The BBA modified how Medicare's monthly payment rates for health plans will be set. A $367 floor on rates was set to make contracts in rural areas more attractive to plans. Also, future rate increases will be less directly linked to growth in the fee-for-service sector and a floor and a ceiling was set on the amount rates could increase from year to year. Moreover, BBA expanded the types of plans that can contract with Medicare. In addition to HMOs, provider sponsored organizations (PSO) 5. preferred provider organizations (PPO) 6. and traditional indemnity plans can contract beginning in 1999. A demonstration of medical savings accounts was also authorized.
Medicare continues to pay SNFs on the basis of their reasonable costs with a cost limit on routine costs, but the BBA requires the use of a PPS beginning July 1, 1998. This PPS will pay per diem rates that cover all SNF costs--routine, ancillary, and capital costs. This change should give SNFs financial incentives to control use of ancillary services and to improve efficiency but the payment method itself does not give incentives to control the number of admissions to or days in the SNF.
Cost reimbursement also continues for home health care but the BBA significantly tightened the per-visit cost limits (from 112 percent of average costs to 105 percent of median costs) and established a per patient cost limit. In addition, the BBA requires that a PPS be used beginning in 2000. These changes should immediately give home health agencies incentives to control their costs, particularly agencies whose costs are above or near the new cost limits. The per-patient limit should also help control what has, during the 1990s, been rapid growth in the number of visits furnished to each beneficiary served. The other primary area of concern, furnishing visits to patients who do not need or do not qualify for them, remains to be addressed. The Administration has announced its intention to increase the level of review of home health services and this could help identify unnecessary and non-covered care.
TECHNOLOGY AND MEDICARE
By providing an assured source of funding for new technology, Medicare has contributed to the development and dissemination of many of the new diagnostic and treatment options that have become available over the last 30 years. Research and development of procedures, devices, and equipment can be costly and is dependent at least in part on the expectation that payment for their use will be available. Medicare covers the populations most likely to need health services, and the program traditionally has paid for developments once their safety and effectiveness have been demonstrated.
When a technology first arrives, it tends to be expensive because economies of scale in production are not yet available, it is often hard to use, and usage rates per unit are low as it becomes more widely adopted. As a result, initial payment levels are often quite high. Over time, unit costs tend to decrease as a technology matures and its ease of use and capabilities increase and its utilization rates go up. For example, when MRIs first appeared, the cost of a machine was several million dollars and operating costs were high. MRIs have been continually improved; today, the cost of a more capable machine is lower, it is easier to use, and imaging costs are substantially lower. Another example is heart pacemaker implants. Initially, this procedure was quite complicated and entailed a lengthy operation done under general anesthesia. Today, the procedure is relatively straightforward, takes less than an hour, and is done under local anesthesia.
One problem that Medicare and others have had with technology is how to update payment rates. Payers often do not have a routine means of adjusting payments as technologies mature and the cost of providing them decreases. This can compound the problem because high payment rates encourage over-proliferation because providers can profit at low utilization rates. Another potential problem is that questions have been raised about the length of time Medicare takes to approve payment for emerging technologies.
The Department of Health and Human Services (HHS) 7 has overall responsibility for administering Medicare. Much of this authority has been delegated to the Health Care Financing Administration (HCFA) 8 which sets overall policy for Medicare by (1) establishing regulations that implement and interpret applicable laws, (2) contracting with claims processors and utilization and quality review organizations that perform the day-to-day functions of operating Medicare, and (3) administering various provider survey and certification functions.
The administrative structure for Medicare remains largely as it was when the program began. Insurance companies contract to process and pay claims, furnish services to beneficiaries and providers, and safeguard against fraud and abuse through such activities as cost report auditing, medical review, and assuring other responsible insurers pay before Medicare. Part A contractors are called intermediaries and those for part B are called carriers. Providers nominated insurers to be intermediaries and most elected to be served by the local Blue Cross plan in their area. Other companies that served as intermediaries included Aetna, Mutual of Omaha, Prudential, and Travelers. HCFA selected the insurers to be carriers and most of them were local Blue Shield plans along with commercial insurers such as Metropolitan Life, General American, Prudential, and Occidental. Most states had one carrier, but some had multiple carriers. Intermediary and carrier contracts operate on a cost basis without an allowance for profit and HCFA has used a negotiated budget process to set upper limits on costs.
Initially, over 100 insurance companies had Medicare contracts. Over the years, the number of contractors has been reduced as less efficient contractors were replaced, contract areas were consolidated, and some insurers discontinued contracting for various reasons. Today, thirty-eight different insurers hold contracts. Two types of specialized contractors have also been established. Six regional home health intermediaries process claims for services furnished by freestanding home health agencies (hospital based agencies continued to be served by the hospital intermediary). Four durable medical equipment regional carriers handle most claims for equipment, prosthetics, orthotics, and supplies. 9 Processing these types of claims is quite different than for other types and it was thought that the regional contractors, by specializing, could better handle the peculiarities of these claims.
The Health Insurance Portability and Affordability Act of 1996 (HIPAA) introduced several new features to Medicare's contracting authorities. One major change authorized HCFA to contract with multiple companies to carry out the functions assigned to carriers and intermediaries. Separate contracts can be awarded for claims processing, utilization review, cost report auditing, and review to assure other liable insurers pay before Medicare. It is believed that hiring firms that specialize in one of these functions will result in more effective accomplishment of the tasks and help hold down Medicare costs. The Administration has announced its intention to make use of this new authority.
Modernization of claims processing systems has been a major concern for Medicare. HCFA initiated a project in 1992 to develop a single claims processing system--called the Medicare Transaction System or MTS--to replace the 14 systems then in use and to integrate part A and part B claims processing and the HMO enrollment and payment system. Substantial administrative savings and many other benefits, such as better coordination of part A and part B care review and improved information for managing the program, were expected to arise from MTS. However, the MTS contractor encountered significant problems and delays and HCFA cancelled the contract in 1997, except for the portion dealing with the managed care subsystem. HCFA is currently moving to one part A and one part B system and contemplating what to do beyond that for the future.
MEDICARE'S CONNECTION TO MEDICAID
Medicare is closely connected to Medicaid, the federal/state health insurance program for low-income Americans. Virtually all senior citizens who qualify for Medicaid also qualify for Medicare as do about a quarter of disabled Medicaid beneficiaries. For these "dual eligibles," Medicare acts as the primary insurer, paying claims first. Medicaid pays Medicare's premiums, deductibles, and coinsurance as well as any services covered by Medicaid but not Medicare such as outpatient prescription drugs. Medicare beneficiaries whose incomes are too high to qualify for Medicaid but below the poverty level qualify for Medicaid to pay Medicare's premiums, deductibles, and coinsurance. These beneficiaries--called Qualified Medicare Beneficiaries or QMBs--are not eligible for services covered only by Medicaid. In effect, Medicaid acts as a Medigap policy for QMBs. A third group is Medicare beneficiaries with incomes between 100 and 135 percent of the poverty level--known as Specified Low-Income Medicare Beneficiaries or SLMBs--who qualify for Medicaid payment of their Medicare premiums only.
Dual eligibility and QMB status fully protect beneficiaries from the costs of covered health services. SLMB eligibility helps ease the financial burden of enrolling in part B of Medicare.
It has been estimated that only one-half of the elderly who could qualify as QMBs have actually applied for benefits and that even a lower portion of potential SLMBs has done so. When GAO reported on the QMB program in 1995, it found a number of reasons for the low participation rate. These included the belief by potential eligibles that a stigma is associated with applying for a "welfare" program and complicated application procedures. Another factor was the perception by potentially eligible people that the benefits were not worth very much when in fact benefits were quite valuable. On average, QMBs save over $1,000 a year in out-of-pocket costs and, for those who have a serious illness, the program can be worth many thousands of dollars.
Because of the close relationship between Medicare and Medicaid, changes to one program can have significant effects on the other. For example, if Medicare increased its part B deductible, Medicaid costs for dual eligibles and QMBs would increase. On the other hand, if Medicaid changed its eligibility requirements, it could either positively or negatively affect Medicare costs depending on how many and what types of beneficiaries are affected. Because the federal government funds about 55 percent of Medicaid costs, changes that reduce Medicare costs do not always reduce the federal budget by the same amount.
Tom Dowdal, Commission Staff
1 Originally, SNFs were referred to as extended care facilities (ECFs).
2 Reasonable costs are those that are appropriate, necessary, actually incurred, and related to patient care. Any costs not meeting these conditions are unallowable and not reimbursed by Medicare.
3 The reasonable charge for a service or supply is the lowest of (1) the actual charge, (2) the physician's or supplier's customary charge, or (3) the prevailing charge. The customary charge is defined as an amount high enough to cover the actual charge for the service or item made by the physician or supplier 50 percent of the time. The prevailing charge is an amount sufficient to cover at first 83 and later 75 percent of customary charges for the service or item in the applicable geographic area.
4 When a physician (or supplier) accepts assignment of the beneficiary's right to payment, Medicare pays the physician directly who in turn agrees to accept Medicare's allowed amount as payment in full. Thus, the beneficiary's liability is limited to the 20 percent coinsurance and any unmet deductible amount.
5 PSOs are HMO-like entities that are owned and controlled by the providers who make up the plan's health care network.
6 PPOs contract on a discounted fee-for-service basis with providers whom the plan judges to be cost effective. If enrollees elect to use providers outside the PPO's network, out-of-pocket costs are higher. PPOs also may do more utilization review than traditional indemnity plans.
7 HHS replaced the Department of Health, Education, and Welfare in 1977.
8 The Bureau of Health Insurance within the Social Security Administration administered Medicare before HCFA was established in 1978.
9 Prosthetics are items that substitute for body members or organs such as artificial legs. Orthotics are braces and supports. Supplies are items used with one of the other items such as drugs used with nebulizers and bloodlines for dialysis machines.