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TABLE 1.-HOSPITAL INSURANCE-NUMBER OF CLAIMS APPROVED FOR PAYMENT, COVERED DAYS OF INPATIENT CARE, TOTAL CHARGES AND REIMBURSED AMOUNT, BY MONTH CLAIM WAS APPROVED AND TYPE OF HOSPITAL, AS OF FEB. 24, 1967 1
Includes only those claims approved and recorded in the Social Security Administration central utilization record before Feb. 24, 1967.
: Month in which the intermediary approved the claim for payment.
General and special hospitals reporting average stays of 30 days or more; tuberculosis, psychiatric, and chronic disease hospitals; and Christian Science sanitoriums.
Only a small percentage of claims—about 1 percent-is for care in long-stay hospitals. The average number of days per long-stay hospital claim is nearly three times that of the short-stay hospital claim-34 days compared with 12 days. The long-stay hospital claims include only the days of care covered under the program-up to 90 days of care in a “spell of illness.” Inpatient hospital care beyond the maximum covered is not reported here. Although the data presented cover the first 183 days of the program's operation, the period is not long enough to reflect many long stays. Thus, the average length of stay will probably con
tinue to increase monthly as the program progresses, especially for long-stay hospitals.
Total charges for the 1.7 million tabulated claims amounted to approximately $940 million, representing $542 per claim and $43 per day. Distribution of the claims by type of hospital shows that the total charges per claim are almost 30 percent less in short-stay hospitals than in long-stay hospitals but the daily charges for the former are double those for the iatter. Total charges averaged $22 per day in long-stay hospitals and $44 per day in short-stay hospitals.
Approximately four-fifths of the $940 million in total charges was reimbursed under the hospital insurance program. The amounts reimbursed during these early months of the health insurance program are based on interim per diem rates that will be adjusted in the future on the basis of reasonable costs of operation of the hospital. Deductible and coinsurance payments by beneficiaries and noncovered services are, of course, excluded from the amounts reimbursed.
The proportion of total charges reimbursed under the program varies with the type of hospital-79.6 percent in short-stay hospitals compared with 85.9 percent in long-stay hospitals. This difference is a function of the variation in length of stay. When the stay is short, the $40 deductible and any noncovered items (private rooms, if not medically indicated, and other luxury services) account for a larger proportion of the total bill. Conversely, when the hospital stay is long, the deductibles and noncovered items represent a relatively smaller part of the charges. For stays beyond 60 days and up to 90 days in a spell of illness, the eligible beneficiary pays a coinsurance amount of $10 per day. For these very long stays, the proportion of total charges reimbursed will decline.
SUPPLEMENTARY MEDICAL INSURANCE CLAIMS The data on inpatient hospital claims presented above are obtained from the bill form approved for payment by the intermediary and forwarded to the Social Security Administration for recording in the central record. The data on medical insurance claims (excluding home health and outpatient hospital services) are based on a payment record consisting of tape, punched card, or other machinereadable records of each bill paid by the intermediary to a physician, beneficiary, or supplier of service under the program. Thus the payment record provides a rapid method for summarizing data on the number of bills paid and recorded in the Social Security Administration central records, type of service provided, total reasonable charges, and amounts reimbursed under the medical insurance program. For home health and outpatient hospital services, claims data are based on bills approved for payment by the intermediary and forwarded to the Social Security Administration.
Reasonable charges are determined by intermediaries on the basis of customary charges for similar services generally made by the physician or other supplier of covered services and on prevailing charges in the locality for similar services. They cannot be higher than the charges applicable for the intermediary's own policyholder for comparable services under comparable circumstances. Reimbursed amounts are payments by intermediaries after the $50 deductible has been met and excluding the 20-percent coinsurance.
Data are presented for almost all of the first 8 months of the operation of the program, divided into four specified periods based on the date of record summarization : July 1-October 14, 1966 ; October 15-December 2, 1966; December 3, 1966-January 20, 1967; and January 21-February 23, 1967. All the payment records processed during these periods are now included so that, unlike the claims reports in the hospital insurance program, future monthly reports of payment records data under the medical insurance program will not provide additional data for the earlier months. The payment record is intended to provide fairly current data on bills paid by carriers.
These data, however, should not be construed as current information on the utilization of services under the program. Nor should the average charge per bill be construed as that for the average enrollee. For example, a patient receiving services in a specific month may possibly wait to submit all his bills at the end of the year or, if his physician accepts assignment, the latter may accumulate bills for periods of several months. Current data on the utilization of services
2 For a more complete description of the payment record and other basic records, see Howard West, op. cit., pages 5-8.
TABLE 2-MEDICAL INSURANCE-NUMBER OF REIMBURSED BILLS FOR PHYSICIANS' AND RELATED MEDICAL SERVICES, TOTAL REASONABLE CHARGES, AND REIMBURSED AMOUNT, BY TYPE OF BILL AND PERIOD RECORDED AS OF FEB. 24, 1967 1
2,582, 207 $217,871
138, 035 16,433
893, 765 76, 811
516, 373 98, 416
July 1 to Oct. 14, 1966..
6, 486 11,834 25, 115 27,091
68.9 70.2 71.7 73.0
"Includes only those bills for which reimbursement was made by the intermediary and which were recorded in the Social, Security Administration central utilization record before Feb. 24, 1967.
* Includes 253,257 bills for medical services other than physicians' services, such as home health, outpatient hospital, independent laboratory, and other services covered under the program.
under the medical insurance program are being collected by means of the Current Medicare Survey.
By February 24, 1967, almost 2.6 million bills had been reimbursed by intermediaries under the medical insurance program and were transmitted to and recorded in the Social Security Administration central utilization record. A bill is defined here as a request for payment from or in behalf of a beneficiary as a result of services provided by a single physician or supplier. The bill may cover one or more covered services provided to an eligible beneficiary on the same or different dates. Thus, one bill may cover an office visit to a surgeon before an operation that includes diagnostic procedures, the inhospital surgical procedure, and several postoperative visits in and out of the hospital.
Of the 2.6 million bills for physicians' and related services, 70 percent were classified as medical services and 20 percent as surgical services, and the remaining 10 percent were for other services covered under the medical insurance program (table 2). When a physician includes charges on a single bill for both a surgical procedure and a nonsurgical procedure, the highest-priced service is the determining factor in classifying a bill as surgical or medical.
Total reasonable charges for the 2.6 million bills amounted to approximately $218 million, or an average of $84 per bill. Total charges include the entire amount of the individual's bill, including the deductible and coinsurance, where no previous bills for covered services had been submitted and the bill is more than the $50 deductible. Medical bills totaling less than $50 are submitted to the intermediary but not included here as these are used only to satisfy the deductible and are not reimbursable. Where the beneficiary had previously incurred bills of less than $50, the part of the last bill that was used to meet the deductible is included in the total charges shown.
Although the number of recorded medical bills outnumbered the surgical bills by more than 3 to 1, the total reasonable charges for surgical bills almost equalled the total for medical bills-$98 million for surgical bills and $111 million for medical bills. The average charge for surgical bills is, of course, significantly larger than that for medical bills$191 compared with $61 per bill. As indicated previously, one bill for medical services may and, in fact, often does include more than one covered service provided to an enrollee.
* For a complete description and first findings, see Jack C. Scharf, "Current Medicare Sarvey The Medical Insurance Sample,” Social Security Bulletin, April 1967. (Reprint begins on p. 182.)
The supplementary medical insurance program provides payment for 80 percent of the reasonable charges for physicians and other covered services following payment by the patient of the first $50 of such charges. Thus, in the early months of the program, relatively large medical expenditures were required in order to be reimbursed. It is likely that the first bills were mainly for illness requiring hospital care where the outlays are high. This assumption is supported by the fact that about half the amount reimbursed in the first period was for surgical bills, for which total reasonable charges averaged $211.
Average charges per bill, as shown on table 2, decreased from $119 in the first reporting period (July 1-October 14, 1966) to $75 in the last period (January 21February 23, 1967). This decreasing average charge per bill during successive months is undoubtedly the result of the application of the deductible provision to payments for covered services at the beginning of the program. Many of those who had met the deductible in the first months of the program may have used some covered services during succeeding months, for which the charges were relatively small. In addition, some persons may have partially met the deductible in the early months of the program and the bill used later for meeting the deductible may be relatively small.
Of the aggregate total reasonable charges of $218 million for physicians and related medical services, $147 million or more than two-thirds was reimbursed through payments made by intermediaries. The percentage reimbursed is higher for surgical bills than for medical bills (72 percent compared with 64 percent) because the amount paid by the patient ($50 deductible and 20-percent coinsurance) constitutes a relatively smaller proportion of the total when it is applied to the larger surgical bill.
The proportion of total reasonable charges reimbursed rises slightly in successive periods from 64 percent for bills reimbursed July 1-October 14, 1966, to 69 percent in January 21-February 23, 1967. This increasing trend in the later months probably reflects the increasing number of persons who had met the deductible in previous months and, consequently, only needed to pay the coinsurance amounts on all subsequent bills for medical services incurred during the year. Nearly all the recorded payments for the first 2 months of 1967 probably reflect utilization of services in 1966.
Table 3 presents a more detailed distribution of the bills, by type of service, their total reasonable charges, and the amount per bill. Of the 253,000 paid bills for services other than physician services, the majority are for outpatient hospital services. The average charges per bill per outpatient hospital service are considerably smaller than for any other type of service, and amount to $19. Bills for home health and independent laboratory services averaged $61 and $32, respectively. Included in the latter group are only those charges for laboratory services billed directly by independent laboratories. Where the bill for physicians' services includes charges for laboratory services, these are classified as physicians' services,
Approximately 38,000 bills are classified as other medical services. These include rental of durable medical equipment, ambulance service, internal and external prosthetic devices, and appliances, and supplies. The average charge per bill reimbursed during the period July 1, 1966, to February 23, 1967, for these other medical services amounted to $52.
The distribution, by type of service, of the bills reimbursed during each of the four periods shows an increasing number of bills for other than physician services in the later periods. At the beginning of the program, there were relatively few bills for these other services, perhaps because procedures for reimbursement for the new benefits were developed somewhat more slowly than for other medical services. In addition, many beneficiaries may not have been fully aware of the coverage for these services early in the program. Finally, these are relatively inexpensive services and, without a large physician's bill, require a cumulation of several bills to meet the $50 deductible before reimbursement of the claim is made.
Data have been presented that relate to inpatient hospital claims for the first 6 months of the program and to medical insurance claims reimbursed in the program's first 8 months. Similar data will be published in the Bulletin in its regular series of tables.
TABLE 3. ---MEDICAL INSURANCE-NUMBER OF REIMBURSED BILLS FOR PHYSICIANS' AND RELATED MEDICAL SERVICES. TOTAL REASONABLE CHARGES, AND AMOUNT PER BILL, BY TYPE OF SERVICE AND PERIOD RECORDED, AS OF FEB. 24, 1967 1
1 See footnote 1, table 2. 1 Includes 4,281 bills, $371,480 in total reasonable charges, and $87 in amount per bill for which type of service is un* Fewer than 50 bills.
* Includes rental of durable medical eouipment, ambulance service, internal and external prosthetic devices and apDijances, and supplies.
C-HEALTH INSURANCE FOR THE AGED: THE STATISTICAL PROGRAM
By HOWARD WEST* (Reprint from Social Security Bulletin, January 1967) On July 1, 1966, the health insurance program for the aged under the Social Security Act went into effect. This program helps to close a major gap in the economic security of the elderly by providing protection against the high costs of kospital and medical care. The program will have a significant impact on the organization, prorision, and financing of health and medical care in the country. Information on the broad scope of benefits and the large population group inrolred is being incorporated in a comprehensire data-collection system that will proride a means for cvaluating the effectiveness of the program.
This article describes briefly the provisions of the health insurance program for the aged, outlines the various components of the statistical system for collection
Director, Division of Health Insurance Studies, Office of Research and Statistics.