History of SSA During the Johnson Administration 1963-1968

APPENDIX E- PRINCIPAL CHANGES IN MEDICARE MADE BY THE 1967 AMENDMENTS

Payment for Physicians' and Other Medical Services May Be Made on Unpaid Bills
If no assignment is taken, medical insurance payments may now be made directly to the patient on the basis of an itemized bill--even though it has not been paid. There is no change in the assignment method under which physicians and suppliers may have payment made directly to them. This new provision applies to all bills received or processed by carriers on or after January 2, 1968 (the date of enactment) even though the services were rendered before that date.

Time Limit for Filing Medical Insurance Bills (Paid or Unpaid)
In order for payment to be made on a bill it must be submitted before December 31 of the year following the year in which services are received. For purposes of this rule, services received in the last 3 months of a calendar year are counted as received in the following year; thus, bills for such services may be submitted until December 31 of the second year after the year in which services were actually received.

A special extension permits bills for covered services received in July, August, or September, 1966, to be submitted until March 31, 1968.

Elimination of Certain Physician Certifications
Physician certification of medical necessity for virtually all outpatient hospital services and admissions to general hospitals has been eliminated. The provision applies to admissions and to outpatient services furnished on and after January 2, 1968. The first certification for inpatient services in a general hospital will now be required as of the 14th day of services. Initial certification is still required for admissions to psychiatric and tuberculosis hospitals and to extended care facilities.

Additional Inpatient Hospital Benefit Days (Effective January 1, 1968)
Each hospital insurance beneficiary will have a "lifetime reserve" of 60 additional days of inpatient hospital coverage. These additional days can be used at the patient's option whenever the 90 days covered in a "spell of illness" have been exhausted, and are subject to $20 a day coinsurance. This benefit is not renewable; the number of days in a beneficiary's "lifetime reserve" is permanently reduced by the number of days used.

NOTE: If the beneficiary is an inpatient of a participating hospital on January 1, 1968, and has previously exhausted his inpatient hospital benefits, the lifetime reserve days can be drawn on immediately.

Full Reimbursement of Radiology and Pathology Services to Hospital Inpatients (Effective April 1, 1968)
Payment of the full reasonable charges may be made under medical insurance for radiology and pathology services furnished by physicians to inpatients of participating hospitals. The $50 annual deductible does not have to be met. Thus, because there will rarely be any patient liability for these services, medicare reimbursement procedures can be greatly facilitated and the patient can frequently be left out of the process completely.

Under this provision, it will also be possible to pay for radiology and pathology services to hospital inpatients in a manner that is more consistent with the usual billing procedures of many hospitals and the manner in which these services are reimbursed by most other health insurance programs. Where the hospital customarily bills for both the hospital's services and the services of the pathologists and radiologists, the absence of the medical insurance deductible and coinsurance will now make it unnecessary to break down the bill on a patient-by-patient basis into the parts covered under the hospital insurance and medical insurance programs, since this can be done on an aggregate basis. Thus, where the total services are billed through the hospital, the provision would provide opportunities for the development of hospital billing procedures that will greatly reduce paperwork and facilitate administration.

Inclusion of All Outpatient Hospital Benefits Under Medical Insurance (Effective April 1, 1968)
This provision consolidates all covered outpatient hospital services under the medical insurance program. Thus, there will be only a single deductible and coinsurance applied to all covered outpatient hospital services (the $50 annual medical insurance deductible and 20 percent coinsurance), and no need to separate diagnostic from therapeutic services as in the past, for allocation of costs and charges to different parts of the medicare program.
Also, effective April 1, 1968, hospitals may, in situations to be described in forthcoming regulations, collect an outpatient charge of $50 or less from the beneficiary. This provision will simplify hospital collection processes in situations where the hospital cannot readily determine whether the patient has met the deductible, and he is able to pay the bill at the time services are rendered. Where such collections are made, the beneficiary would ordinarily receive the medical insurance reimbursement on the basis of a claim prepared on his behalf by the hospital. Payments to the hospital will be periodically adjusted to assure that total hospital reimbursement for outpatient services does not exceed what the hospital would have received if it had submitted all bills on a cost reimbursement basis.

Payment for Additional Outpatient Physical Therapy Services (Effective July 1,1968)
At present, physical therapy services are covered when furnished under the direct supervision of a physician or to homebound patients under a home health plan. Effective July 1, 1968, physical therapy services will also be covered under the medical insurance program when furnished by qualified providers of services or others under arrangements with, and under the supervision of, such providers. For purposes of this additional coverage, the term "providers of services" includes approved clinics, rehabilitation agencies and public health agencies. In order for payment to be made for such services, a physician must certify that the patient requires physical therapy services on an outpatient basis, and is under a plan of treatment established and periodically reviewed by a physician which prescribes the type, amount, and duration of the services. The patient does not need to be confined to his home.

Payment under Medical Insurance for Certain Ancillary Services Not Payable Under Hospital Insurance (Effective April 1, 1968)
Under this provision, payment can be made under medical insurance for certain ancillary services furnished by a hospital or extended care facility for which no payment can be made under hospital insurance. This provision would apply, for example, where a patient has exhausted his hospital insurance eligibility or where an extended care facility patient has not met the prior hospitalization requirement. These benefits are subject to the $50 deductible and 20 percent coinsurance.

Inclusion of Certain Podiatrists' Services and General Exclusion of Specified Foot Care Services (Effective January 1, 1968)
Services of doctors of podiatry or surgical chiropody are covered under the medical insurance program as physicians' services, but only with respect to functions which they are authorized to perform by the State where they practice. However, certain specified foot care services will now be excluded whether performed by a podiatrist or medical doctor. These exclusions include treatment of flat foot conditions, the prescription of supportive devices for such conditions, treatment of subluxations of the foot, and routine foot care (including cutting or removal of corns, warts or callouses, trimming of nails and other routine hygienic care).

Specific Exclusion of Eye Refractions
All procedures performed during any eye examination on and after January 2, 1968, to determine the refractive state of the eyes (even in connection with furnishing prosthetic lenses) are now excluded from coverage. The exclusion applies whether the refractions are performed by ophthalmologists, other physicians, or optometrists, and even though the total examination is for the treatment or diagnosis of eye disease or injury.

Payment for Purchase of Durable Medical Equipment (Effective January 1, 1968)
In addition to payment for rental, payment can also be made for purchase of durable medical equipment by or for an individual. Except for inexpensive items, payment will be made periodically in the same amount as if the equipment were rented, but only for the period of time that the equipment is medically necessary or until the purchase price has been met, whichever occurs first.

Payment fof Portable X-Ray Services (Effective January 1, 1968)
Payment will be made for diagnostic X-ray services furnished in the patient's home or other place of residence. These services will be covered under medical insurance if they are provided under the general supervision of a physician and if they meet health and safety regulations.

Blood Deductibles (Effective January l, 1968)
Under this provision, the definition of "blood" is broadened to include packed red blood cells as well as whole blood. A 3-pint blood deductible will now also apply to the medical insurance program for blood furnished during a calendar year in connection with services covered by that program. This deductible is separate from the 3-pint blood deductible for each "spell of illness" in the hospital insurance program, and neither can be used to meet the other.

Payment for Services Furnished to Inpatients of Non-Participating Hospitals
Under this provision, partial payment may be made for inpatient emergency or non-emergency services furnished by certain non-participating hospitals between July 1, 1966, and January 1, 1968, and for emergency inpatient services furnished by certain non-participating hospitals in respect to admissions on or after January 1, 1968. A facility is considered a hospital under this provision if it is licensed as a hospital, has a full-time nursing service and is primarily engaged in furnishing medical care under the supervision of a doctor of medicine or osteopathy. Hospital insurance will pay 60 percent of the room and board charges and 80 percent of other charges for covered services after the usual deductibles are met. These benefits are limited to 20 days if the hospital does not qualify to take part in medicare, but if the hospital begins to participate in medicare before January 1, 1969, and applies its utilization review plan to the services rendered, the full duration of hospital insurance benefits can apply.

Incentive Reimbursement Experimentation
The Secretary of Health, Education., and Welfare is authorized to experiment with alternative methods of reimbursement to organizations and physicians under the medicare, medicaid and child health programs. The experiments would test various incentives for increasing the efficiency and economy of health services without adversely affecting the quality of care. Experiments may involve only those physicians, institutions, and organizations that agree to participate and may not be initiated until the Secretary obtains the advice and recommendations of specialists competent to evaluate the possibility of securing productive results.

Advisory Council Study of Health Insurance for the Disabled
An advisory council, to be appointed in 1968, will study the question of providing health insurance protection for the disabled under Title XVIII. The council will make its recommendations to the Secretary not later than January 1, 1969.

Changes in Reduction of Benefit Days for Psychiatric end Tuberculosis Treatment (Effective January 1, 1968)
Any inpatient days in a psychiatric or tuberculosis hospital in the 90-day period before his hospital insurance coverage began have previously counted against a beneficiary's days of coverage during his first "spell of illness." This provision has been modified as follows:
1. The reduction will not apply to tuberculosis hospitals.
2. The provision no longer prevents payment for inpatient services in a general hospital unless the services are primarily for the diagnosis or treatment of mental illness and the spell of illness began in a psychiatric hospital.
3. The applicable period prior to hospital insurance eligibility has been extended from 90 to 150 days to reflect the new lifetime reserve of 60 additional inpatient hospital days.

Health Insurance Benefits Advisory Council
The 1967 amendments expand the responsibilities of the Health Insurance Benefits Advisory Council to include reviewing the utilization of services under medicare and making recommendations for program changes.

Study of Drug Proposals
The Secretary will study a proposal to establish quality and cost standards for drugs for which payment is made under the Social Security Act, and a proposal to cover drugs under the medical insurance program. He is required to report his findings and recommendations to the President and the Congress by January 1, 1969.

Coverage of Services of Additional Health Practitioners
The Secretary will study the need for extension of coverage under the medical insurance program to the services of additional types of licensed practitioners performing health services in independent practice. He will make recommendations to the Congress prior to January 1, 1969.

Hospital Insurance Eligibility
Individuals reaching age 65 prior to 1968 were eligible for hospital insurance benefits, under a "transitional insured status" provision, even though they did not have any social security work credits. Under the new law, people who reach 65 in 1968 and are not entitled to monthly social security or railroad retirement benefits will need 3 calendar quarters--about 3/4 of a year--of social security work credits, in order to be eligible for hospital insurance.
For people who reach 65 after 1968, the amount of work credits needed increases by 3 quarters each year--6 quarters will be needed by those who reach 65 in 1969, 9 by those who reach 65 in 1970, and so on. Eventually the amount of work required for hospital insurance protection will be the same as that required for monthly cash benefits.

However, a person who qualifies for monthly benefits as the dependent or survivor of an insured worker will not need any work credits.

Medical Insurance Enrollment
Changes were also made in the provisions for medical insurance enrollment. A person who is not enrolled for medical insurance may enroll during the first 3 months of any year, provided this period begins within 3 years after he had his first opportunity to enroll. People already 65 or older who do not have medical insurance may enroll through April 1, 1968; if they do not enroll by that date, they will have to wait until 1969 for another opportunity to do so.

A person who is enrolled for medical insurance may give notice of his intention to drop the insurance at any time. The notice is effective at the end of the next calendar quarter (except for notices received on or before April 1, 1968, which are effective on that date). He may re-enroll during the first 3 months of any year, but only if he does so within 3 years after his coverage is terminated.

Financing Hospital Insurance
The favorable actuarial balance of 0.74 percent of payroll that the social security program has is sufficient to finance a substantial part of the cost of the cash benefit provisions in the new law. The remaining cost of the cash benefit increases and the income required to assure an adequate financing base for the hospital insurance program will, be secured through: (1) an increase in the contribution and benefit base from $6,600 to $7,800 (effective January 1, 1968), and (2) revised contribution rate schedules for the cash benefits and hospital insurance parts of the program. There will be no increase in the total contribution rate for 1968. The ultimate contribution rate for cash benefits will be increased from 4.85 percent to 5.0 percent beginning in 1973 and the ultimate rate for hospital insurance will be increased from 0.80 percent to 0.90 percent beginning in 1987.

The tables below compare the contribution rates under the old and the new law. For each they show the percentage for retirement, survivors, and disability insurance and the percentage for hospital insurance: