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Wednesday, April 29, 2015

Transformation of the Aging Industry

Unprecedented population aging is coinciding with exponential technological changes. The effects on the older population and the economics of the aging industry will be worth watching.

There’s something happening here.
What it is ain’t exactly clear.

Through their cautionary protest song, "For What It’s Worth," Buffalo Springfield and rock legend Stephen Stills reflected and amplified the zeitgeist of 1967: the social and cultural turmoil surrounding the Vietnam War era. This stanza addresses confusion and trepidation over escalating divisiveness within the nation’s borders.

In some odd ways, this protest ballad can be renewed and reinterpreted today as the nation confronts population aging. Heated conversations, recurring almost daily through national media, focus on inexorable increases in the costs of Social Security and Medicare; the questionable benefits and clearcut liabilities of growing old; and, dictated by tradition, the acquiescent social roles that older adults should accept.

Something unprecedented is happening here. Western countries and many eastern countries are growing old fast. Of all the people who have ever reached the age of sixty-five, half of them are alive right now.1 Keep in mind that preceding the seven billion people who are alive today, one-hundred billion have lived and died during the last fifty-five thousand years. 

Population aging is not new or novel. Those cards were played in the 1940s, 1950s, and 1960s during the post-World War II birth boom. Demographics are destiny, and so here we are now in the middle of an aging boom. What a surprise!

But there is another force intersecting population aging that is challenging and changing every industry. We are living in an era of transformational technologies accelerating at an exponential pace—from genetics to robotics and from information to nanotechnology—the so-called GRIN technologies. Relative to human history and the snail’s pace of change in the distant past, the twenty-first century will not involve one hundred years of progress; it will become twenty thousand years of progress.

So, we have extraordinary population aging arriving at exactly the same moment as exponential technological changes. Something’s happening here.

It follows that we cannot be fully capable in the field of aging, serving older adults, without also becoming futurists. And what is a futurist? Someone who believes in the need to look forward with optimism.

Generational Tempest Narrative

Two narratives are competing for public consciousness about aging. The Generational Tempest Narrative portends doom-and-gloom scenarios when the costs of social insurance overwhelm government tax revenues, with older generations committing the sin of fiscal child abuse on the youngest and unborn generations.

According to Laurence Kotlikoff and Scott Burns in their disturbing book, The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy, the nation’s “unfunded liabilities”—money needed by the federal government to pay for all its current promises to retirees, federal employees, military families, and disadvantaged groups—have reached a mind-boggling $211 trillion.

Keep in mind that the nation’s gross domestic product (GDP) in 2013 was $16.8 trillion. Thus, assuming no growth or contraction in future GDP, it will take 12.5 years of income, derived from all goods and services produced and sold by all the companies and individuals in the U.S., simply to pay for promises made to retirees and other “dependents” through the end of this century.

Is this haunting view of the future what’s going down?

On the contrary, Stephen Mihm, an assistant professor of economic history at the University of Georgia, pushes back with an interesting observation about predictions made by economists:

“Recessions are signal events in any modern economy. And yet remarkably, the profession of economics is quite bad at predicting them. A recent study looked at ‘consensus forecasts’ (the predictions of large groups of economists) that were made in advance of sixty different national recessions that hit around the world in the 1990s: in 97 percent of the cases, the study found, the economists failed to predict the coming contraction a year in advance.”

Look at this another way. Find a generational accountant or economist who, in writing, predicted two of the most significant business and technological changes in the twentieth century just ten years before these transformations. Try to identify someone now predicting economic disaster in the mid-twenty-first century who, in 1975, also predicted how desktop microcomputers would transform everything in business by 1985. Try to discover a generational accounting expert who, in 1985, predicted the advent and adoption of the internet in 1995.

Members of today’s oldest generations were at the center of these major transformations, not merely bystanders. In the mid-1970s, Bill Gates founded Microsoft, and Steve Jobs founded Apple, begetting the personal computer industries. Tim Berners-Lee, a British baby boomer, created the World Wide Web, authoring the hypertext markup computer language we use every day when we type http:// into an internet browser. Interestingly, these three digital revolution pioneers were born in 1955.

Looking back over our shoulders today, we can see historical precursors hearkening forthcoming societal transformations around desktop computers and distributed digital networks, including their concomitant economic transformations. If anti-entitlement soothsayers could not predict these major changes ten, or even two years before they happened, how reliable can they be at predicting the future thirty, forty, or fifty years from now?

Warren Buffet, the fourth richest man in the world with a personal wealth of $67.5 billion, has faith in the growth potential of the U.S. economy. He forcefully contradicts those who think pessimistically about the impact of social insurance on the overall economy.

“We’ve made certain promises that promise away a portion of the pie,” Buffet said during a television interview in 2008. “But the wonderful thing is that the pie gets larger. Even with one percent per year real productivity growth per capita, we double the GDP in per capita in real terms in seventy-five years when the Social Security projections go up. So even though seniors may get more of the pie, the pie will grow enough so that everybody will get more of the pie.”

In The Clash of Generations, for example, Kotlikoff and Burns predict that the U.S. GDP in 2030 will be $23.08 trillion. They further predict that the combined cost of Social Security, Medicare, and Medicaid will be $3 trillion, or a hefty 13 percent of GDP. However, the respected Centre for Economics and Business Research, World Economic League, proposes that the U.S. economy will produce a more robust $33.15 trillion GDP in 2030. The social insurance programs would then be 9.05 percent of GDP, a more manageable scenario in line with Buffet’s optimism.

Transformation Narrative

What might propel the making of a much heftier economic pie, one large enough to
feed generations of all ages, including Millennials (b. 1980-1995) and Generation Z (b.

The transformation narrative points to economic expansion because of the creative and
unexpected ways that today’s oldest generations have historically changed business and
society. Science, technology, and social action can advance economies that embrace the opportunities rather than the problems of aging. 

Transformation is in the DNA of generations that reached adulthood during the early
to mid-twentieth century. Those generations have challenged business norms and contemporary thinking at each life stage. They have fueled company and product creation with their fads, fashions, foibles, and refusals to accept past as prologue. 

Their numbers and shared values have grown multinational firms such as Microsoft,
Apple, McDonald’s, Honda, Harley-Davidson, Nike, and Starbucks. They have transformed
outlying bohemian villages into tony places such as Asheville, Telluride, and Santa Fe. They have ignited investment markets with mutual funds, 401(k)s, and online portfolios. They have created enormous wealth, driving the American economy forward. 

So what gifts will exponentially accelerating technologies bestow on today’s oldest
generations, extending their lives with vitality while stimulating new economic growth? Most significantly, we’ll see dramatic evolution in capabilities to protect and restore the human body from the negative effects of aging. 

For example, recall the fantastical technologies showcased in Star Trek, the popular sci-fi television series and blockbuster movie franchise. Dr. Leonard McCoy, or Bones as he was affectionately called, could wave his Tricorder over an injured crew member and instantly diagnose any medical problem.

Science fiction is about to become science fact around 2016. The Qualcomm Tricorder XPRIZE is a $10 million international competition to develop a device that can diagnose patients as well as or better than a panel of board certified physicians, with magical capabilities similar to Dr. McCoy’s.

Imagine a portable, wireless gadget about the size of an iPhone that monitors and diagnoses your health status, providing real-time access to critical health biometrics. This device will help older adults become more aware of developing health problems faster and more accurately. The Tricorder will extend the reach of preventative medicine, further shifting focus from illness and morbidity to disease prevention and wellness. 

End of Slash and Burn Medicine 

Near the end of his storied career spanning four decades, ABC network news anchor Peter Jennings informed viewers through a taped message on World News Tonight, that he had been diagnosed with lung cancer and was beginning chemotherapy treatment. The sad day of this final broadcast was on April 5, 2005. Four months later, on August 7th, substitute anchor Charles Gibson broke into ABC’s regular programming to announce Jennings’s death.

Jennings died just a few months after the FDA approved a new drug developed by Genentech, the biotechnology firm that has pioneered creation of genetically targeted cancer medications. Tarceva, the drug’s brand name, attacks non-small cell epidermal growth factor receptor (EGFR) lung cancer mutations, a variant that strikes about 15 percent of victims. 

By attacking only mutating cancer cells quite effectively, Tarceva has extended the lives of many stage 4 lung cancer patients from several months to several years. Had Jennings cancer appeared just a year later, we can only wonder if he might have benefited from this miracle medication, perhaps enabling him to stay in the news anchor’s chair for awhile longer.

Printing Viruses

Even more amazing, scientists are entering the era of 3D cancer medications—medicine for one person capable of killing the complex, idiosyncratic cell mutations that are unique to each individual’s cancer. Autodesk, a world leader in 3D design software such as AutoCAD, has discovered how to change the process of drug development through “synthetic biology,” also known as digital genetic engineering. 

This highly advanced technology involves employing a 3D laser printer to produce unique DNA codes. “Additive printing” technology will someday be able to construct synthetic, cancer-destroying viruses that can infect only mutating cells and kill them, leaving multiplying healthy cells alone. The cost to do this could actually shrink from $1 billion to develop a single traditional pharmaceutical medication, down to almost nothing to produce an individual’s one-of-a-kind synthetic virus cancer killer. 

Hundreds of other examples demonstrate how population aging converging with exponentially accelerating technologies is constructively changing aging right now. These advances crosscut every major field, from housing to consumer electronics and from nutrition to financial services.

Optimistic, open-minded futurists are alert to these transformations and are able to recognize the opportunities before others less inclined to believe in the abundance that longer, more robust lives bring to society. 

Dr. Theodore Roszak, late author of The Making of a Counterculture and Longevity Revolution, wisely observed: “Modern society has aged beyond the values that created it.”11 The time has clearly come for a new conception of aging, a framework of plenty rather than the paranoia swirling around with not enough thinking.

Policy makers and political leaders must understand that aging means unparalleled opportunities for the U.S. economy. People can and will contribute far longer into late life, focusing their accumulated experiences and wisdom on today’s greatest concerns for the future. Technologies now being developed to cure or ameliorate typical diseases of aging, can also become economic exports that grow the nation’s GDP even beyond Warren Buffet’s optimistic expectations. 

Horrific outcomes predicted by generational accountants and economic doomsayers will not come true as foreseen, partly because the generations over age fifty shift paradigms, create new industries, abolish others, and ultimately reshape the social and economic landscape. The most significant economic transformations in human history are underway today, presaging a future of abundance beget by population aging. •CSA

Brent Green is president and founder of Brent Green & Assoc. in Denver, Colorado. Green speaks, writes, and consults about the intersection of aging and transformational technologies. He has been an outspoken and influential advocate for new social and cultural
frameworks concerning the economic value of population aging. He is author of five books, Including Marketing to Leading-Edge Baby Boomers and Generation Reinvention. Contact him at 303-743-0140,, or visit

Transformation of the Aging Industry was recently published in the Winter 2015 edition of the CSA Journal.

Blog posting provided by Society of Certified Senior Advisors

Tuesday, April 28, 2015

The Other Talk

 There comes a time when it’s necessary for older adults to talk with their adult children about important life decisions that will affect them all. It’s a difficult conversation that most people avoid.

Do you remember how difficult, and absolutely necessary, it was when it came time to sit with your kids to have The Talk, the one about the birds and the bees? Your initial reaction was probably to procrastinate, to keep the door firmly closed on any conversations that revolve around the facts of life with your twelve-year-old.

But, of course, the talk isn’t just about plumbing issues like where things go, how things work, and how embryos turn into babies. It’s also about the judgments and decisions that need to be made as our children enter an important new chapter in their lives.

Ultimately, you undoubtedly confronted your own discomfort and stepped up to the talk because you recognized that there were real, life-altering consequences to putting it off indefinitely—unexpected pregnancy, sexual disease, and unfulfilling relationships with the opposite sex, to name a few.

But, as the first conversation unfolded and subsequent ones ensued, you and your spouse both began to realize that you were empowering your child for something that would have far-reaching and on-going lifetime consequences. 

The Other Talk
There is another equally critical time in your kids’ lives when you need to sit them down to talk about the facts of life. This time, it’s about the many issues and decisions that will confront you and your children during your last chapter of life. Some call it the retirement years. 

It’s time for The Other Talk. 

Unfortunately, you will most likely put off indefinitely any substantive discussion with your children about what they might expect in your later years.

In fact, most parents never have the Other Talk. Data from the National Hospice Foundation (Cullinane and Fitzgerald 2004) reported that 75 percent of Americans have not made their end-of-life decisions known, either through verbal or written communication. 

Furthermore, a recent survey by AARP (Jacoby 2012) found that nearly 70 percent of adult children have not talked to their parents about issues related to aging. Some of them avoid this most intimate of conversations because they believe their parents don’t want to talk about it. Others think they know what their parents want. And some simply don’t want to face the very real truth that old age may include disease, injury, frailty, even loneliness and depression.

Why do most Americans keep the door firmly closed on this important conversation? Because it’s remarkably similar the birds and the bees discussion. 

Emotionally challenging subject. First of all, sitting down with your kids to talk about your last chapter can be uncomfortable, painful, depressing, even paralyzing, especially when you come to the part about the various stages of your deterioration, mentally and physically. 

Not surprisingly, the reality is that this sweep-it-under-the-rug attitude usually has as much to do with the mental fragility of the parents as it does with that of the children. It seems the longer they can cling to the time when they were healthy, independent, and carefree, the less they need to deal with the coming reality.

The unfortunate consequence of protecting the kids is that, when circumstances eventually force your family to confront reality, whether it be a serious injury, a severe financial setback, or a life-threatening diagnosis, you—but most likely your kids—will be reacting in crisis mode. As a consequence, your options will most likely be dramatically restricted, and the pressure to make decisions quickly can become overwhelming.

Evolution of parent/child interaction. For many of us, the most challenging and sensitive issue that we will come up against in the Other Talk are the coming changes that we will experience.

There is a fundamental and potentially difficult adjustment that occurs as we enter our last chapter of life. It is the reversal of roles between parent and child that is triggered when you reach the point, physically and/or mentally, where you can no longer operate independently.

In essence, the parent becomes the child and the child becomes the parent. Why is this reversal of roles so difficult and potentially life-changing for both parties? Because it is not merely a mechanical reassignment of responsibilities—it is the shattering of the relationship that you as a parent have had with your children since their birth. As a result, you lose the power and control of being the adult and your kids give up the security and freedom of being the child.

Impact of role reversal on the parent. For the parents, it’s the crushing realization that despite all the successes they may have achieved throughout life, all the good deeds bestowed on others, all the love and support heaped on family and friends, the great injustice at the end of life is the fear of losing control.

As described by Kathleen, a retiree in Florida, it can start out as an uneasy premonition:

Doing it our way isn’t going to work indefinitely; in fact, I feel we’re in this in-between stage, a time when we can still control how we live but not how much longer we’re going to be able to make choices before we’ve become ‘too old.’ When I contemplate it, what we’re all dealing with is how much longer can we continue to be us?

As the aging process continues, the primary reason that older adults begin to actively resist turning over responsibility and decision-making to their offspring is due to their escalating fear of: 

• powerlessness
• becoming a burden on the family, physically, and financially
• loss of self-worth, self-respect and self-dignity
• abandonment by the family

To make matters worse, since most people wait until a crisis hits before confronting the need to transfer power and control to their children, role reversal is often forced on the parents with little or no discussion.

Impact of role reversal on the child. For the children, it’s the sinking feeling that they need to start taking responsibility for their parents’ lives, physically, financially, and socially. Typically, the shock of responsibility at the “moment of truth” is followed by feelings of inadequacy, embarrassment, and resentment as the plight of their parents comes to dominate their lives.

Unlike another major event in life, childbirth, there are no pre-natal classes on caregiving issues and techniques, there are no baby showers to help with the expense of care giving, and there’s no parent to turn to for advice or just a shoulder to cry on.

As a result, for the child with parental responsibility, the world of role reversal can be a very dark and lonely place. Again, the comparison with the childbirth event is instructive:

• For child care, there are nine months to prepare, the evolution to term is usually predictable and straightforward, and there is a general crowding around of friends to share in the event.

• For parent care, the catalyst is often a sudden, unexpected crisis, the decline is unpredictable and full of unpleasant surprises, and there is almost never any crowding around of friends to share in the event.

Bottom line, the impact of the role reversal process can be very debilitating, for both parent and child.

The Value of Stepping Up

Fortunately, the Other Talk shouldn’t just be about the necessary transactions, such as how to access the key to the safety deposit box which contains a will, a life insurance policy, and a paid-up funeral service receipt. 

It should go beyond funeral and burial plans, wills, and donations to science. It needs to delve into the judgments and decisions that need to be made and how your children will impact and be affected by them.

In essence, the Other Talk covers your entire last chapter, which opens on day one of your retirement. This will require some work on your part, both emotionally and rationally, but ultimately will have powerful implications for your family’s remaining time together. It begins with creating in yourself, then sharing with your kids, a tone and attitude that should permeate the discussion: 

• You, the parent, are proactively taking the responsibility for empowering and preparing your children for the reversal of roles that will take place.

• You, the parent, embrace the eventual reversal of roles as not giving up power and control, but rather achieving security and freedom.

The conversation then turns to building a mental framework that will allow a smooth transition when the time comes to shift decision-making responsibilities: 

1. First, acknowledging the inevitability of the need and the wisdom to transfer decision-making and management of the day-to-day.

2. Second, discussing and establishing ground rules on the potential circumstances or triggers that affect the change of responsibilities on key functions, such as bill paying, driving, living arrangements, money and asset management, and medical decisions.

3. Finally, it culminates in a series of conversations that cover in depth how you would like to deal with four important facts:

• Financing your uncertain future
• Selecting the most effective living arrangements
• Getting the necessary medical care
• Taking charge at the end of your life

Initially, the Other Talk will be uncomfortable for both you and your children but, as the first conversation unfolds and subsequent ones ensue, you all will begin to realize that you are empowering your kids for something that will have far-reaching and ongoing consequences for the rest of their lives. 

Because you will change, physically and financially, over time, and your kids’ family structure, assets, and geographic location may change as well, it’s important to review and update the talk every year. 

In essence, the Other Talk can have a powerful impact on your children on a number of levels:

1. Coping with and successfully handling some of the difficult challenges that lie ahead for all of you.

2. Creating a new dimension to the family relationship that comes from participating in, rather than suffering through, these difficult issues. 

3. Gaining a thorough understanding and actual experience for when they will sit down with their own kids to have the Other Talk. 

On the surface, all of this sounds like common sense. But the reality is that powerful, emotional barriers including denial, role reversal, and loss of control preclude many families from ever discussing the subject. What often helps older adults get past these hurdles is for a professional advisor, or a non-family member to broach the need for the other talk. Trusted advisors have the unique opportunity to introduce the wisdom of long-term planning, and focus on how it can positively impact the family relationship. • CSA

Tim Prosch, MBA, is author of The Other Talk: A Guide to Talking to Your Adult Children About the Rest of Your Life, featured in the Washington Post, Wall Street Journal, and other national publications. A marketing professional, he currently focuses on the needs, wants, and challenges of the baby boom generation and end-of-life issues. Contact him at 773-244-1474, or visit

The Other Talk was recently published in the Winter 2015 edition of the CSA Journal.

Blog posting provided by Society of Certified Senior Advisors

Thursday, April 23, 2015

Don't Let Your Hospital Bill Cause a Heart Attack

Even if you’ve managed to avoid hospitals for most of your life, as you age chances increase that you’ll require a hospital stay. But there may never be a better time to have surgery, because hospitals are working to be more responsive to patients.

Just when you’re starting to recover from your hospital stay, you get the bill, and those chest pains start to come back. But you don’t have to feel like you have no control over your health care expenses. You can take steps—both before and after a hospital stay—to ensure the best possible financial outcome.

Admitted vs. Observed

One good way to make sure you’re not paying unnecessary costs is to pay attention when you first enter the hospital. Is the hospital classifying you as an admitted patient or just for observation? The difference can mean that you end up paying for your rehabilitative care.

Because Medicare considers hospital observation an outpatient service, it won’t pay for rehabilitation. Current Medicare law requires a patient to be in the hospital, admitted as an inpatient, for three days in order to receive coverage for rehabilitation in a skilled nursing facility. After that, Medicare pays for the first 20 days of rehab or other care. Conversely, if a patient has been under observation—for all or part of that time—he is responsible for the entire cost of rehab.

Because hospitals provide observation care on an outpatient basis, patients must usually pay co-payments for their doctors’ fees and each hospital service. In addition, patients must pay out of pocket for any medications the hospital provides for pre-existing health problems. Medicare drug plans are not required to reimburse patients for these drug costs because Medicare covers outpatient costs under Part B rather than Part A. This can mean paying more out of pocket for prescription drugs.

How to Avoid “Observation” Status
To prevent having to pay for skilled nursing rehabilitation after your hospital stay, AARP and Kaiser Health News recommend taking proactive steps:

  • Ask about your status each day you are in the hospital, as it can be changed (from inpatient to observation, or vice versa) at any time.

  • Ask your doctor whether observation status is justified. If not, ask her to call the hospital to explain the medical reasons why you should be admitted as an inpatient. However, even if the doctor agrees, the hospital may be able to overrule that decision, or Medicare can change it later when reviewing the claim.

  • After discharge, if you learn that Medicare won't cover your stay in a skilled nursing facility, ask your doctor whether you qualify for similar care at home through Medicare's home health care benefit or for Medicare-covered care in a rehabilitation hospital.

  • If you have to pay for services at a skilled nursing facility, but you believe those services should have been billed as inpatient, you can try formally appealing Medicare's decision. When you receive your quarterly Medicare Summary, follow the instructions to challenge the charges from the hospital listed under Part B of the notice. If this is denied, you can go to a higher level of appeal, following instructions on the denial letter. Also challenge any charges from the nursing home for outpatient services such as physical therapy.

  • If you are billed for care in the nursing home, ask the nursing home to submit a “demand bill” to Medicare. When it is rejected, you can appeal. The Center for Medicare Advocacy’s online "self-help packet" offers more details about how to challenge observation status.

    Source: “Medicare: Inpatient or Outpatient?” AARP; and “FAQ: Hospital Observation Care Can Be Costly For Medicare Patients,” June 18, 2014, Kaiser Health News.

Because Medicare has strict criteria for hospital admissions and usually won’t pay anything for admitted patients who should have been observation patients, hospitals in recent years have increased their share of observation patients. Yet, a government investigation found that observation patients often have the same health problems as those who are admitted (Kaiser Health News).

Growing Trend

More Medicare beneficiaries are entering hospitals as observation patients every year. The number rose 88 percent over the past six years, to 1.8 million nationally in 2012, according to the Medicare Payment Advisory Commission, which helps guide Congress on Medicare issues (Kaiser Health News). At the same time, Medicare hospital admissions stayed about the same.

The Center for Medicare Advocacy filed a class action lawsuit against the federal government in an attempt to abolish the observation status—or at least for patients to be notified and given the opportunity to make a swift appeal against the decision. However, a federal court judge in Hartford, Conn., dismissed the lawsuit, which was filed on behalf of 14 Medicare beneficiaries who were denied nursing home coverage.

The trouble is that hospitals don’t necessarily tell you how you are classified when you first come to the hospital (and Medicare doesn’t require this). So you need to be proactive to make sure you are admitted rather than observed. (See sidebar, “How to Avoid ‘Observation’ Status” for actions to take.) To counteract the overuse of observation status, in August 2013 Medicare introduced a new regulation that will require physicians to admit patients whom they expect to be in the hospital for longer than two midnights. However, the so-called “Pumpkin Rule” has gotten so much resistance from hospitals that its implementation has been delayed.

Steps to Control your Hospital Bill

In addition to inquiring about your status when you enter the hospital, you can take steps to lower health costs before and after going to the hospital.

Plan ahead. If you have the luxury of planning a procedure or surgery (that is, it’s not an emergency or you’re not restricted to certain hospitals), you can find out which hospital is the least expensive for your procedure (and is within your insurance network). Surprisingly, some of the higher-rated facilities offer the least expensive procedures. Using the billing code (available from your doctor) known as CPT (current procedural terminology), you can check Internet sites, includingFAIR Health, Healthcare Blue Book and New Choice Health for rates local hospitals charge for your procedure.

Also, when planning ahead, you may need pre-authorization, so be sure to check with your insurance company.

A freestanding ambulatory surgery facility, which is less costly than the hospital, can do some elective procedures. Check with your doctor and insurer. If you need an anesthesiologist, find out if they are in the network, because they bill separately. However, if unknown, most plans will bill at the in-network rate.

Stay on top of bills. After the surgery and once you start getting bills from the hospital, make sure you stay organized. For example, you could have bills coming from the hospital, various doctors, the lab and the ambulance. Some won’t come from the hospital itself, but from the provider who performed a service.

Check all the bills for errors. For example, if the hospital discharged you in the morning, protest if the hospital is charging a full daily-room rate for the date you left. Similarly, make sure there are no charges for medications you brought to the hospital. Also, the hospital daily-room charge should include fees for routine supplies, such as gowns, gloves and sheets, and not be extra.

Negotiate bills. If you think your bill is out of line, you can check other hospitals’ rates for the same procedure and use that data to try to convince the hospital to lower your fees. You can also use Medicare rates as a guide. Even though the government program typically has the lowest reimbursement rate for hospitals and medical providers, the Medicare fees indicate the government value of that hospital service and provide a good starting point for negotiating.

Also, many hospitals are willing to work with you if you can’t pay the bill, either giving you extra time or lowering their fees. Most hospitals have generous financial-assistance programs to help trim large bills even if your household income is above the poverty line. If the hospital can’t help, public, private and nonprofit programs are available to help. The federal government’s website and the nonprofit offer information on patient assistance programs.

Get professional help. If you think you were overcharged, and you’re unable to make any headway with the hospital, you can get assistance from a medical or patient advocate. These often experienced medical billing professionals can step in and look for errors and overcharges in your bill and ultimately negotiate a lower rate. Typically, there is no upfront cost. The advocates charge anywhere from 15-50 percent of the money they save you, and some put a cap on their fees.

Some state governments, including Connecticut, Rhode Island and California, provide medical advocates. There are also nonprofit groups, like the Patient Advocate Foundation, that will negotiate on your behalf for free or a small fee. You can also find patient and medical billing advocates through theNational Association of Healthcare Advocacy Consultants or the Alliance of Claims Assistance Professionals.

Don't Let Your Hospital Bill Cause a Heart Attack was featured in the April 2015 Senior Spirit newsletter.

Blog posting provided by Society of Certified Senior Advisors


Monday, April 20, 2015

ACA: A 2014 Update

As the ACA continues to evolve, it’s wise to stay abreast of any changes that
affect Medicare spending.

The Affordable Care Act has a number of provisions that affect both Medicare and older adults. Those provisions are designed to achieve four major goals:
  • Make preventive health care more accessible and affordable.
  • Eliminate the Medicare Part D prescription drug benefit coverage gap, also known as the “donut hole.”
  • Reduce overall Medicare spending and extend Medicare’s financial solvency.
  • Increase efficiency and reduce Medicare waste, fraud, and abuse.
Most of the provisions in the ACA designed to achieve these goals are ongoing or have already been implemented. It’s worth noting that the law and its provisions cannot reduce traditional Medicare benefits, change eligibility, ration care, or increase premiums,
co-pays, deductibles, and co-insurance. 

People on Medicare have the opportunity to receive a free annual wellness visit that includes nine services, an annual health plan, and a five to ten-year schedule for preventive health screenings. In addition, Medicare will cover seventeen preventive services without any out-of-pocket costs. These preventive services have been available since 2011.

Medicare Part D Donut Hole
The donut hole—the coverage gap in Medicare Part D prescription drug benefit—will be closed by 2020. The closure began after the passage of the law in 2010 and is on track to shrink according to the schedule in the chart below:

Funding to close the donut hole is provided, at least in part, through Medicare spending reductions achieved through the Affordable Care Act.

Medicare Spending
Prior to the passage of the ACA, the Medicare Part A Trustees Board projected that Medicare would become insolvent in 2016. This means that the program would spend more money than it would receive in revenue. For a program with over forty-nine million beneficiaries, insolvency would have significant implications that could eventually impact both benefits and delivery of services.

As a result, a major focus of the ACA was to extend Medicare’s solvency. And to a large degree, that effort has been successful. The latest projection from the Trustees Board extends Medicare’s solvency through 2030. While this solvency extension is not entirely the result of the ACA, the law’s spending reductions do play a major role.

In 2012, the non-partisan Congressional Budget Office (CBO) estimated that the ACA will reduce projected growth in Medicare spending by more than $700 billion between 2013 and 2022. In other words, Medicare spending will still continue to grow every year, but that spending growth will be lower because of the ACA. In 2010, the Centers for Medicare and Medicaid Services (CMS) estimated that Medicare spending without the ACA was projected to increase at an average annual rate of 6.8 percent. With the ACA, spending would grow at 5.3 percent.

It’s also important to understand where these spending reductions are targeted as well as the reasons behind them. In 2012, the same year as the CBO estimate, about 32 percent of all Medicare benefit payments went to hospitals, 23 percent was spent on reimbursements to Medicare Advantage (MA) insurance companies, and 19 percent went to physician payments. That means payments to hospitals and Medicare Advantage plans represented almost 60 percent of all Medicare benefit spending.

Based on those numbers, it’s not surprising that almost 70 percent of the ACA’s Medicare spending reductions focus on reimbursements to hospitals and Medicare Advantage plans.
Hospital reimbursements. Medicare’s largest spending reductions affect hospitals.

According to the Congressional Budget Office, Medicare hospital reimbursements will be reduced by about $260 billion between 2013 and 2022.

It is hoped that reduced hospital reimbursement rates will promote greater efficiency and reduce administrative waste without affecting service quality. But whether cuts will negatively affect long-term service quality remains to be seen. However, the most significant impact may be on the financial security of some hospitals. In 2011, CMS projected that 15 percent of hospitals could become unprofitable within a decade.

Another significant part of the law’s spending reductions includes reducing unnecessary hospital readmissions and Medicare waste, fraud, and abuse. Under the ACA, hospitals receive reduced reimbursement payments for “unnecessary” readmissions. Between January 2012 and August 2013, unnecessary readmissions were reduced by 130,000. CMS estimates that these provisions will lower Medicare spending by $8.2 billion between 2010 and 2020. Since 2010, efforts inspired by the ACA to reduce Medicare waste, fraud, and abuse have recovered about $19.2 billion from parties seeking fraudulent payments.

Medicare Advantage reimbursements. The second-largest spending reduction affects Medicare Advantage. Federal reimbursements to private insurance companies offering Medicare Advantage coverage became a focus of ACA spending reductions, not only because of their contribution to overall spending, but also what was viewed as systemic overpayment. Prior to the ACA, MA plans were being reimbursed 14 percent more on average than traditional Medicare fee-for-service plans. That translated into an extra $1,280 per MA enrollee, or $14 billion in higher aggregate payments.

As a result, the ACA reduced MA payments while providing marketing and other incentives for quality improvements. According to the CBO, MA reimbursements will be lowered by an estimated $156 billion between 2013 and 2022. Those spending cuts began in 2012 and are scheduled to end in 2017. MA payments have been reduced, on average, from 114 percent of Medicare fee-for-service in 2009 to 106 percent in 2014.

In reality, that estimate will likely be lower than projected, since planned reimbursement cuts were not made in 2014 and won’t be made in 2015. Instead of a 2.2 percent cut for 2014, MA reimbursements were actually increased by 3.3 percent. For 2015, a scheduled 1.9 percent cut will be changed to a 0.4 percent spending increase. Those changes were based upon lower Medicare spending trends over the next several years.

With one exception, the impact of these provisions on Medicare Advantage coverage has been pretty minimal. According to the Federal Department of Health and Human Services, since passage of the ACA:

  • MA enrollment has increased by more than 30 percent. Average MA beneficiary premiums have decreased by 10 percent. Total revenues for MA insurers have increased by 29 percent.
  • Plan quality has improved, with more than half of all MA policyholders enrolled in plans with four or more “quality stars.”
  • More than one-third of all MA contracts have four or more quality stars in 2014, compared to only 14 percent in 2011.

The downside for MA policyholders may be the potential impact on provider networks. The biggest overhead cost for insurance companies is the direct cost of health care, and they frequently adjust or reduce their provider networks to better manage costs and profits. UnitedHealth Group, a leading MA plan provider, has reduced its national provider networks by some 30,000 physicians over the last two years. The company’s stated goal is to reduce its networks by 10 to 15 percent over last year.

The Sequester and the latest spending trends. Medicare spending has also been significantly reduced by another law that has nothing to do with the Affordable Care Act. The so-called sequester (mandatory, across-the board spending cuts) created by the Budget Control Act of 2011, implemented a maximum 2 percent cut on all Medicare physician claims submitted after April 1, 2013. The CBO estimates that these sequester-based cuts will reduce Medicare spending by $123 billion between 2013 and 2021.

As it turns out, all of these spending reductions, as well as other factors (such as the enrollment of younger and healthier baby boomers into Medicare’s risk pool), have helped to create the lowest growth rate in Medicare spending in many years. This trend has been so significant that the CBO has lowered its projections for Medicare spending each year since 2010. Medicare spending was expected to be $1,200 lower per beneficiary in 2014 than was projected in 2010 and more than $2,400 lower in 2019. 

For the first time in recent history, Medicare spending is growing much slower than the rate of growth in the U.S. economy. Medicare hospital spending has been growing at an average rate of about 0.8 percent per year since 2009, compared to the overall economy, which has been growing at a rate of about 3 percent. 

However, this spending trend is not going to last. With the ever-growing aging population in the United States, Medicare spending is sure to increase. At some point in the not too distant future, Medicare will be facing insolvency issues again. At best, the ACA is helping in the short run.

The IPAB and the Elder Justice Act 
One of the more controversial provisions of the ACA is the creation of the Independent Payment Advisory Board, (IPAB) a board of experts nominated by the President and approved by the Senate. If Medicare spending growth increased more than a half of a percent above the economy, the board would make recommendations to bring that spending in line. Congress could implement those recommendations or reject and replace them. However, Congress would still have to reduce spending by the targeted amount.
Due to political concerns and the downward trend in overall Medicare spending, the board has not been appointed; it could not convene until spending thresholds have been reached. In the current political climate, it is unlikely that any appointee to the IPAB would be confirmed. As a result, the IPAB has had no impact on Medicare.

Another provision of the law is the Elder Justice Act. The act was designed to reduce elder abuse through funding of adult-protective services at the state level, as well as the development of legal guidelines, national databases, and forensic centers to address elder abuse and neglect. Unfortunately, the act was not funded in the law’s original appropriation and very few of these provisions have received meaningful funding since 2010.

Impact of the Midterm Elections
Since this article was written in November 2014, it’s not entirely clear how the midterm elections will impact the Affordable Care Act. There will be at least one more attempt by the House of Representatives to repeal the entire law, but that is not likely to pass the Senate, since the Democratic minority will likely filibuster the effort. Even if the repeal could pass in the Senate, it would certainly be vetoed by the President. As a result, the law is likely to remain in place through 2016.

Attempts will be made to repeal the medical-device tax, the individual mandate, and provisions of the employer mandate. There will also be attempts to defund specific parts of the ACA and its implementation.

A number of federal court cases and lawsuits may impact the ACA as a whole, but most of these do not specifically affect the provisions of the law that directly apply to Medicare.
In terms of specific legislation, incoming Senate Majority Leader Mitch McConnell and House Speaker John Boehner are clear that the new Congress will attempt to repeal the Independent Payment Advisory Board. Inasmuch as it was never implemented, that repeal would have no immediate impact on Medicare.

The real issue is whether the IPAB will be repealed without being replaced with another alternative. Given the aging baby boom population and higher Medicare utilization in the future, there is no doubt that Medicare spending will significantly increase over time. Even with current spending trends, Medicare is still projected to become insolvent in sixteen years. Clearly, some mechanism to manage Medicare spending will need to be introduced long before then. If the IPAB is simply repealed without some other major Medicare reform or restructuring, we will be forced to confront the problem with an important tool missing from the toolbox. •CSA

Bob Semro is a policy analyst for the Bell Policy Center, a non-partisan, nonprofit research and advocacy organization in Denver, Colorado. He currently serves on the Health Plan Advisory Workgroup for the Colorado Health Benefits Exchange. Contact him at 303-297-0456, ext. 225, or

ACA: A 2014 Update was recently published in the Winter 2015 edition of the CSA Journal.

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