When it comes to entitlement programs, Medicare ranks very highly in terms of importance to a huge number of American citizens. Although it's primarily used by the elderly, more than 55 million Americans qualified for Medicare benefits as of 2013. Given that most of us will rely on Medicare benefits to some degree at some point in our lives, knowing the details about Medicare is important to all of us.
To help our readers get to know Medicare a little bit better, we asked our team of Motley Fool contributors to shed light on a Medicare fact that is generally not well known.
George Budwell: Something that may surprise you is that FDA-approved weight-loss medicines such as Arena Pharmaceuticals' (NASDAQ:ARNA) Belviq and Orexigen Therapeutics' (NASDAQ:OREX) Contrave are generally not covered under the standard Medicare Part D prescription drug plan. So despite the American Medical Association officially recognizing obesity as a disease in 2013, most Medicare beneficiaries still have to pay out-of-pocket for these drugs.
Although obesity is well known to increase a person's chances of contracting serious and potentially fatal conditions such as cancer, diabetes, and heart disease, public and private payers alike have balked at covering these medicines due to the lack of long-term safety data. The problem is that prescription weight-loss drugs have a terrible track record when it comes to safety. In 1997, for example, the FDA removed Fen-Phen from the market after studies linked the popular weight-loss drug to an increased risk of heart-valve damage.
Earlier this year, Orexigen appeared to be making excellent progress toward completing a pivotal long-term cardiovascular-outcomes trial for its fat-fighting pill Contrave that might have changed this situation. Unfortunately, the study was tainted by a premature release of an interim analysis, forcing the company to start from scratch. So it's highly unlikely that Medicare will start covering these drugs anytime soon.
Todd Campbell: Hearing loss is one of the most common things affecting seniors, yet Medicare doesn't cover hearing aids, and in most cases, it doesn't cover hearing tests. That's a pretty shocking revelation given that the National Institute of Health estimates that 30% of people age 65 to 74 years, and 47% of people age 75 years or older, have a hearing impairment.
Because the loss of hearing is tied to a variety of other problems seniors face, including depression and deteriorating brain function, treating hearing loss is particularly important. Getting that treatment, however, can cost seniors thousands of dollars. According to AARP, the cost of a pair of middle-of-the-road hearing aids is about $4,200 at UCLA's Audiology Clinic.
Because more than 40% of Americans older than 65 would have incomes that are south of the poverty line without Social Security, and Social Security payments average just $16,000 per year, the cost of a hearing aid can be a major financial burden for many seniors.
To manage the costs associated with getting a hearing aid, people might want to consider saving money specifically for them ahead of time. Seniors might also want to consider the pros and cons of buying a Medicare Advantage plan that covers them. However, not all Medicare Advantage plans will pick up the tab for a hearing aid, so seniors will need to do some research before signing up for coverage.
Brian Feroldi: In an effort to help reign in the ever-expanding cost of healthcare, Medicare is currently in the process of shifting away from paying providers based only on the volume of services they provide, and is attempting to implement a system that rewards them for the quality of care.
One of the ways that Medicare is attempting this feat is by implementing what's known as a Value-Based Payment Modifier. In essence, this is a new tool that Medicare has that allows them to raise or lower payments made to providers based on the quality of care that Medicare patients receive. Because this change represents a way that providers get paid, it's slowly being phased in to use. When it started in 2013, it was targeted only at large practices with 100 or more eligible professionals. However, with each passing year, it requires smaller and smaller practices to get on board, and it will be completely phased in by the end of 2016.
While this system sounds like it would increase the cost of healthcare, it has been designed to be budget neutral, so as it pays more for higher-quality care, it conversely pays less for lower-quality care. In addition, there could be penalties that providers will pay if they do not participate, or do not report results accurately.
The Department of Health and Human Services has set a goal of tying 85 percent of all traditional Medicare payments to quality by 2016, and 90 percent by 2018. If your provider hasn't been affected by this change yet, they will be soon, so all Medicare recipients need to be aware of this.
Brian Feroldi has no position in any stocks mentioned. George Budwell has no position in any stocks mentioned. Todd Campbell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.