Medicare Reimbursement Analysis

Medicare is a government program that was formed in 1965. It was created to help provide health coverage for people 65 years old or older, people under 65 years old with certain disabilities, and people with End-Stage Renal disease. Medicare is currently the largest payer for health services in the United States. Medicare paid for 20% of the total national health spending in 2012. Since 1969, Medicare spending per enrollee has continued to rise. With this rising cost per enrollee and the increasing number of enrollees due to the aging population, the sustainability of the program looked bleak. In order to retain sustainability, the way in which Medicare processed reimbursements continued to evolve. Constant change in the reimbursement system

The US Healthcare system is plagued with a tremendous amount of waste, high costs that are continuing to rise, and low quality, fragmented care.2 The price of health care has been a major topic over the last few years. Health care accounts for almost 18% of the gross domestic product. Blue Cross and Blue Shield set the standard for reimbursement systems when Medicare was created in 1965. This original system paid hospital costs and physician fees retrospectively with no regard for the quality of care provided. This system encouraged higher costs and fees and provided no incentive to control spending. In fact, spending skyrocketed. Over the course of a decade, from 1975 to 1985, Medicare annual spending per beneficiary rose from $472 to $1,579.4 Despite efforts to alter the Medicare reimbursement system, costs continue to climb. The reimbursement system was slow to move away from the fee-for-service model and contributed to this high inflation rate. As healthcare spending increased, financial strain was placed on businesses, individuals, and the government. Medicare spending began taking up more and more of the federal budget, threatening the continuation of the entire program and the ability of the government to help provide access to help for the elderly and disabled.2 These higher healthcare costs do not

These issues affect anyone that comes in contact with the healthcare system, especially Medicare and it’s beneficiaries. Almost 50 million Medicaid beneficiaries currently rely on Medicare for access to healthcare. If the program were to fail, many of these beneficiaries would experience an increase in financial burden and a significant reduction in access to healthcare. The Affordable Care Act implements a number of systems meant to tackle some of these issues and improve the quality of healthcare, lower readmissions, and lower rates of hospital-acquired