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SOA Health Core Exam - Objective 4
SOA Health Core Exam - Objective 4

Additional Insurance Flashcards




Workers in the US who are not covered by Social Security (175)
1. Federal employees hired before 1984
2. About one-fourth of state and local government workers (those who are covered by plans that are comparable to Social Security)
3. A very small number of people who object to receiving governmental benefits on religious grounds
4. Railroad employees, who are covered by a program similar to Social Security
Requirements for insured statuses under Social Security (176)
Disability-insured status - requires between six credits (at young ages) to 40 credits (at ages 62 or older).
Some credits must have been earned recently, as follows:
a) For those required to have 20 or more credits, 20 credits must be from the last 40 quarters
b) For those required to have between 6 and 20 credits, at least half must have been earned after age 21
c) For those required to have 6 credits, all must be from the last 12 quarters
2. Fully-insured status - requires credits equal to the worker's age minus 22, with a minimum of 6 and a maximum of 40
3. Currently-insured status - requires 6 credits in the 13 calendar quarters ending with the quarter of death
Eligibility and benefit amounts for Social Security disability and survivor benefits (176)
1. Disabled-worker benefits
a) Eligibility - must be disability insured and fully insured and be unable to engage in any "substantial gainful activity"
b) Benefit amounts - calculated using essentially the same procedures used for retired-worker benefit amounts, using an assumed age of 62 and no early-retirement reduction factor
2. Survivor benefits
a) Eligibility - family members may receive survivor benefits if the worker was either fully insured or currently insured at the time of death
b) Benefit amounts - the worker's primary insurance amount (PIA) is computed using the standard procedures and assuming an age of 62. Survivors receive a percentage of the PIA:
i) 75% for eligible children
ii) Between 71.5% and 100% for eligible widows or widowers
iii) 82.5% for an eligible surviving parent, or 75% each for two parents
(a family maximum applies, which is typically 175%)
Individuals eligible for Medicare coverage (180)
1. Aged - at least age 65 and eligible for Social Security or Railroad Retirement benefits
2. Disabled - entitled to Social Security or Railroad Retirement disability benefits for at least two years
3. End-stage renal disease (ESRD) - insured workers with ESRD, including spouses and children with ESRD
4. Some other aged and disabled individuals who pay mandatory premiums
Types of Medicare coverage and funding (180)
1. Part A - hospital insurance (HI)
a) Eligible persons receive coverage automatically with no premium charge
b) Funded through payroll tax rate of 1.45% of all earnings, with a matching employer tax
2. Part B - supplementary medical insurance (SMI)
a) Requires a monthly premium ($99.90 in 2012, except higher for high incomes)
b) Beneficiaries can decline coverage, but a premium penalty (10% per year) applies if coverage is elected at a later date
c) Financed through general revenues (75%) and beneficiary premiums (25%)
3. Part C - Medicare Advantage
a) Alternative to Parts A and B. Offered by private plans, which receive a capitation from Medicare, which varies by county and enrollee risk.
b) Typically offer lower cost sharing and coverage for some services not covered under Medicare

4. Part D - covers most prescription drugs. Provided through private insurers. Funded through general revenues (74.5%) and premiums (25.5%).
5. Medicare Supplement - private insurance to cover out-of-pocket costs and some other benefits not covered by Medicare
Services covered by Medicare Part A (180)
1. Inpatient hospital - semi-private room and ancillary services and supplies
2. Skilled nursing facility (SNF) - semi-private room, meals, skilled nursing, and rehabilitative services after a related three-day inpatient hospital stay
3. Home health agency - services following discharge from a hospital or SNF
4. Hospice care - provided to terminally ill patients with life expectancies less than six months
Medicare Part A cost sharing and coverage limits (181)
Based on a benefit period, which starts at admission and ends 60 days after discharge from hospital or SNF. The dollar amounts are indexed. The amounts shown were for 2012.
Type of service Cost-sharing Coverage limits
Inpatient hospital $1,156 deductible per benefit period $289 per day for days 61-90 each
benefit period $578 per day for days 91-150 each
lifetime reserve day 60 lifetime reserve days No coverage beyond lifetime reserve
SNF $144.50 per day for days 21-100 of each benefit period No coverage after 100 days each benefit period
Home health agency None 100 visits per illness
Hospice care None None
Blood Cost of first 3 pints of blood None
Services covered by Medicare Part B (181)
1. Outpatient hospital (including emergency room)
2. Medical care by qualified health practitioners (including diagnostic tests, supplies, and equipment)
3. One-time initial wellness physical within 6 months of enrolling in Part B
4. Ambulance
5. Clinical laboratory and radiology
6. Physical and occupational therapy
7. Speech pathology
8. Outpatient rehabilitation
9. Radiation therapy
10. Transplants
11. Dialysis
12. Home health care beyond that covered by Part A
13. Drugs and biologicals that cannot be self-administered
14. Certain preventive services (such as an annual flu shot and cancer screenings)
Medicare Part B cost sharing (182)
1. Calendar year deductible ($ 140 in 2012)
2. Coinsurance after the deductible (usually 20% of the Medicare-approved amount, but does not apply to clinical lab and certain preventive care services)
Approaches for improving Medicare solvency (184)
1. Increase taxes
2. Reduce or eliminate some covered services
3. Increase Medicare cost sharing through higher deductibles and copays
4. Raise the eligibility age for benefits to age 66 or 67
5. Adjust reimbursement to providers of care
6. Adopt other initiatives to lower cost trend, such as accountable care organizations
Medicare provider reimbursement (185)
1. Hospitals - reimbursed on a prospective payment system basis using the diagnosis-related grouping (DRG) methodology. Paid a set amount for each admission (which encourages hospitals to provide services efficiently) based on the patient's condition and the services provided.
2. Physicians - uses a complex fee schedule to assign relative values to services. Reimbursement equals the sum of area-adjusted unit values, multiplied by a nationwide conversion factor. Unit values for the procedures are based on:

a) Work value - measuring the time and skill required
b) Practice expense - reflecting the cost of rent, staff, supplies, equipment, and overhead
c) Malpractice value - measuring the associated professional liability costs
3. Outpatient services - reimbursed on an outpatient prospective payment system known as ambulatory
payment classification
Categories of Medicaid-eligible individuals (189)
1. Children
2. Parents or other caretakers with dependent children
3. Pregnant women
4. Individuals with disabilities
5. Seniors
6. States also often extend coverage to medically-needy individuals
Individuals in these categories must also meet income and asset requirements (the minimum criteria is set by the federal government). For example, states must cover all pregnant women and children under age 6 with incomes below 133% of the federal poverty level.
Services covered by Medicaid (190)
States must offer the following services:
1. Inpatient and outpatient hospital
2. Physician
3. Lab and x-ray
4. Skilled.nursing facility and home health care
5. Preventive care, prenatal care, and screening and vaccines for children
6. Family planning
7. Services at federally-qualified health centers and rural health clinics
8. Transportation
Optional services, which nearly all states offer:
1. Dental
2. Outpatient prescription drugs
3. Prosthetic devices and hearing aids
4. Optometric services and eyeglasses
5. Rehabilitation and physical therapy
Equivalence requirements for Part D employer group waiver plans (EGWPs) (403)
1. Benefits must be at least as rich as standard Part D benefits
2. The deductible must be no greater than the standard Part D deductible
3. Catastrophic coverage must be at least as rich as standard Part D catastrophic coverage
Types of Part D plans (533)
1. Prescription drug plans (PDPs) - private stand-alone plans that offer drug-only coverage
2. Medicare Advantage prescription drug plans (MA-PDs) - plans that offer both prescription drug and health coverage
Late enrollment penalty for Part D plans (535)
1. Applies to those who do not sign up for Part D when they are first eligible
2. Is 1% of the base beneficiary premium for every month the person waited to enroll
3. Is paid every month for the beneficiary's lifetime
4. Does not apply if the individual had creditable coverage through another source (such as an employer or retirement plan). Coverage is creditable if it is at least as good as Medicare Part D.
Options provided by CMS to incentivize employers to participate in Part D (537)
1. Retiree drug subsidy (RDS)
a) To be eligible, plans must pass an actuarial equivalence test showing that deductibles, coinsurance, and cost sharing are as good as those found in Part D
b) The government reimburses the sponsor for 28% of prescription drug spending otherwise covered by Part D for drug costs between the cost threshold ($310 in 2011) and cost limit ($6,300 in 2011).
c) Drug rebates are subtracted from the amount eligible for the subsidy
d) Easiest and potentially most lucrative option, although PPACA eliminated the employer tax deduction for the subsidy as of 2013
2. Employer group waiver plan (EGWP) - was conceived to be superior to the RDS. Two options are:
a) Direct contract EGWP - contract directly with CMS to become a PDP
b) "800" series EGWP - outsource to a third-party PDP or MA-PD, who performs the administrative and financial functions of the plan
3. Coordinate benefits in a wraparound plan
a) Employer plan fills in benefit voids that are not covered by Part D (e.g., paying the deductible or a percentage of the coverage gap or total out-of-pocket costs)
b) A concern with this option is that pharmacies may not be prepared to manage patients with two benefits (Part D and the wraparound plan)
Advantages of using EGWP instead of RDS (539)
1. Cost savings - savings are about 15-20% in RDS compared to 19-35% under EGWP
2. Minimal disruption to the membership - current plan design can usually be maintained
3. Tax obligations are treated equally between EGWP and RDS
4. Direct monthly subsidy is received from CMS
5. Governmental Accounting Standards Board Statements 43/45 liability is reduced
6. Part D benefit provides catastrophic coverage
7. Additional advantages of using an "800" series EGWP

a) Administrative functions are handled by the third-party sponsor
b) Risk avoidance - risk is shifted to the third-party sponsor
c) The employer has no direct contract with CMS
d) The third-party will handle compliance and regulatory issues
Beneficiary cost sharing for the standard Part D benefit design (541)
Drug cost range Level Beneficiary pays
$0 -$320 Deductible 100%
$320.01-$2,930 Initial coverage 25%
Until member reaches TrOOP of $4,700 Coverage gap ("donut hole") 86% for generic* 50% for brand*
After TrOOP Catastrophic coverage **
* Due to PPACA, these percentages are gradually decreasing until they reach 25% for both brand and
generic drugs in 2020 ** Greater of 5% or a copay of $2.60 for generics and preferred multiple source drugs or $6.50 for other
1. TrOOP = true out-of-pocket cost
2. The deductible, initial coverage limit ($2,930), TrOOP, and catastrophic copays are indexed annually. The amounts shown here are for 2012.
3. Low-income beneficiaries have a different benefit design. For example, dual eligibles pay no premium, have no deductible, and pay only a small copay for drugs.
Guidelines for developing Part D formularies (547)
1. There are 146 therapeutic categories that must be included
2. If a generic is available, it must be included in the formulary
3. Preferred drug rebates must go to the payer
4. Must include at least two drugs in each therapeutic category and class of covered drug
5. May include prior authorizations, step therapy, generic drug requirements, and preferred brand drugs
6. Must include all or substantially all antidepressants, antipsychotics, anticonvulsants, anticancer, immunosuppressant, and HIV/AIDS medications
7. May offer tiered formularies, with tier 1 having the lowest cost sharing and subsequent tiers having increased cost sharing
Tools used in the electronic prescribing process (548)
1. Formulary and benefit transactions - shows which drugs are covered by the plan
2. Medication history transactions - shows which medications a beneficiary is already taking (to reduce adverse drug events)
3. Fill status notifications - prescribers to receive a notice from the pharmacy when the prescription has been filled (to monitor adherence for chronic patients)
CMS requirements for medication therapy management (MTM) programs (549)
1. All Part D sponsors must establish an MTM program to ensure that drugs are used appropriately to optimize therapeutic outcomes
2. It must be designed to reduce the risk of adverse events
3. Enrollment must be only through an opt-out method
4. It must target beneficiaries for enrollment at least quarterly during each year
5. It must target beneficiaries who have multiple chronic diseases, are taking multiple Part D drugs, and are likely to incur annual costs for covered Part D drugs in excess of $3,000
6. It must offer a minimum level of services, including interventions for beneficiaries and prescribers and medication reviews for the beneficiary
7. It must measure and report details on the interventions and medication reviews
Services included in MTM programs (549)
1. Patient health status assessments
2. Medication "brown bag" reviews
3. Formulating, monitoring, and adjusting prescription drug treatment plans
4. Patient education and training
5. Collaborative drug therapy management
6. Special packaging
7. Refill reminders
Services offered by LTC pharmacies (553)
1. Drug packaging, labeling, and delivery systems for LTC medication use
2. Pharmacy operations and prescription ordering
3. Drug delivery service on a routine, timely basis
4. Access to urgent medications on an emergency basis
5. Pharmacist on-call services (around the clock)
6. Emergency boxes and log systems
7. Standard ordering systems and medication inventories
8. Drug disposition systems for controlled and noncontrolled drugs
9. Ability to provide intravenous medications
10. Compounding or alternative forms of drug composition
11. Miscellaneous reports, forms, and prescription ordering supplies
Definition of Part D covered drugs (557)
1. Available only by prescription, approved by the Food and Drug Administration, used and sold in the US, and used for a medically-accepted indication
2. Includes prescription drugs, biological products, insulin, and vaccines
3. Also includes medical supplies associated with the injection or inhalation of insulin, and fees for vaccine administration
Medications that are excluded from Medicare Part D (559)
1. Medications available under Medicare Parts A or B
2. Drugs that are excluded or restricted under Medicaid (e.g., fertility and hair growth drugs), with the exception of smoking cessation agents
3. Prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations
4. Nonprescription drugs
5. Outpatient drugs where the associated tests or monitoring services must be purchased exclusively from the manufacturer
6. Barbiturates
7. Benzodiazepines
8. Drugs used to treat erectile dysfunction
9. Drugs used to treat morbid obesity
10. Drugs used to relieve cough and cold symptoms
This last item came from a similar list in Bluhm (group) chapter 13
Medicaid federally-mandated services (533)
1. Hospital (inpatient and outpatient)
2. Physician
3. Early and periodic screening, diagnostic, and treatment (for ages under 21)
4. Family planning
5. Federally-qualified health center
6. Freestanding birth center
7. Home Health
8. Lab and X-Ray
9. Nursing Facility
10. Nurse midwife
11. Rural Health Clinic
12. Tobacco cessation counseling and pharmacology for pregnant women
13. Non-emergency transportation
Medicaid optional services most commonly covered (533)
(each of these are covered by almost all states)
1. Medical or remedial care provided by licensed practitioners under state law
2. Intermediate care facility for individuals with mental retardation
3. Clinic services
4. Nursing facility (for ages under 21)
5. Occupational therapy
6. Optometry and eyeglasses
7. Physical therapy
8. Prescribed drugs
9. Targeted case management
10. Prosthetic devices
11. Hospice
12. Inpatient psychiatric (for ages under 21)
13. Dental
14. Services for individuals with speech, hearing, and language disorders
15. Audiology
Key characteristics of an effective Medicaid managed health care plan (544)
1. A comprehensive network of providers who are responsive to Medicaid consumers
2. Effective utilization programs
3. Targeted and effective disease management programs
4. Targeted and effective case management programs for pregnancies, neonatal services, chronic illnesses, and childhood illnesses such as asthma
5. Excellent and effective call center support
6. Effective outreach that is both culturally and linguistically sensitive and addresses health literacy
7. Coordination of any service that may be carved out, such as behavioral care, pharmacy, and LTC
8. Capability for patient-centered medical home and health homes
9. Ability to work with accountable care organizations
10. Robust quality program to meet and exceed state requirements
11. Operational excellence for providers, such as claims payment accuracy and timeliness
12. Innovation with providers as it relates to use of electronic medical records and pay for performance
13. Compassion
Elements to ensure success of managed LTC programs (545)
1. Population - should include as broad a population as possible
2. Benefits - should include all Medicaid and waiver benefits, if possible
3. Program authority - the state should ensure the authorization for the program does not impose participation limits
4. Program design - for example, can use personalized evaluations of individuals to determine appropriate placement and allocation of services
5. Rate design - rates should be structured to incentivize appropriate utilization (e.g., encourage health plans to place as few people in nursing homes as possible)
6. Clinical delivery - care managers develop comprehensive care plans and work with multiple providers to ensure reduced utilization of costly services
7. Identification and intervention - use analytic tools and face-to-face assessments to identify individuals who are at risk of needing services as early as possible, in order to effectively impact community placement
8. Comprehensive care management - the care plan should tie primary care to specialty care to home supports
9. Transition management - proper management of the transition from acute care to a new setting can help reduce the number of nursing home placements
10. Network development and increased access - networks must include nontraditional providers such as personal care, adult day care, and home-delivered meals
Long-range financing challenges for the Medicare program (4)
1. Income to the Hospital Income (HI) trust fund is not adequate to fund the HI portion of Medicare benefits. The HI trust fund is projected to be depleted in 2024, at which time payroll tax revenues are projected to cover only 87% of program costs.
2. Increases in Supplement Medical Insurance (SMI) costs increase pressure on beneficiary household budgets and the federal budget. The SMI trust fund is expected to remain solvent because its financing is tied to projected future costs. But this will require increases in beneficiary premiums and general revenue contributions.
3. Increases in total Medicare spending threaten the program's sustainability. Total Medicare expenditures were 3.7% of GDP in 2011. Under current law projections, they are expected to grow to 6.7% of GDP in 2085.
PPACA provisions to address Medicare's financial condition (7)
1. Reductions to provider payment updates - to reflect productivity improvements
2. Medicare Advantage plan payments will be reduced gradually relative to FFS costs
3. Health care payment and delivery system improvements - for example, initiatives on bundled payments and accountable-care organizations
4. Increases in Medicare revenues - increasing the payroll tax, Part B premiums, and Part D premiums for those with higher incomes
5. Creation of the Independent Payment Advisory Board - to recommend changes to provider payments if Medicare spending exceeds a target per capita growth rate
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