Structuring a Research and Demonstration Waiver for Medicare Portability

Medicare waivers are generally justified if they extend access or improve quality of care for vulnerable populations at no additional cost to the program.  It may be worthwhile to develop research and demonstration waiver(s) under Medicare to examine the impact of some kind of portability of Medicare to Mexico.

Project Design

The communities of U.S. retirees near Lake Chapala and in Guadaljara, Jalisco, in San Miguel de Allende in Guanajuato, or in Tijuana, Rosarito and Ensenada in Baja California Norte would serve as excellent groups from which to draw a population sample for a Medicare study in Mexico.  At the same time, many nationals of Mexico spend many years in the US working and becoming permanent residents and then choose to retire to Mexico.  Many are eligible for Medicare benefits and could participate in a study as well.

Depending on how the research and demonstration project is structured, a random process could determine which Medicare beneficiaries, selected from a group of 1000-4000, would receive Medicare coverage in Mexico and which would not.  All of the applicants would understand that they were involved in a study and would provide their Social Security numbers.  The evaluators would gather from CMS all the cost and utilization data for those who received coverage in Mexico and for any care they received in the United States.  This cost and utilization data could then be compared to the cost and utilization data in the United States provided by CMS for those persons who applied for the study and were placed in the control group (those who were not randomly chosen to receive coverage in Mexico).  If the group receiving care in Mexico had lower total costs than the group that had to return to the United States, then there would be strong evidence that covering care in Mexico saved Medicare money relative to not covering such care.

Options for Coverage

There are a variety of different scenarios under which Medicare benefits could be extended to beneficiaries residing in Mexico.  Listed below are some of the most feasible options.  For a more detailed discussion of these options, please refer to Three Technical Papers on a Research and Demonstration Waiver for Medicare Coverage in Mexico.

Comprehensive Coverage

This would include Part A coverage, which pays for inpatient hospital care, inpatient care in a skilled nursing facility, home health care, and hospice care.  Part A coverage is available to eligible beneficiaries with no premium. It would also include Part B and Part D coverage, as options requiring the payment of a premium. Part B reimburses for both hospital and non-hospital physician services, as well as for clinical lab tests, durable medical equipment, diagnostic tests, ambulance service, and other miscellaneous services.  Part D covers prescription drugs. Comprehensive coverage would be the best option for providing the beneficiaries with health services equal to those that they would receive in the United States, and it could be implemented to function effectively with the Mexican health care system.  Further, this would be the question of whether such coverage would permit enrollees to continue to go to the U.S. for care or if that were only possible if one chose to opt out of the Mexico option.

Part A Only

This would cover inpatient hospital care, inpatient care in a skilled nursing facility, home health care, and hospice care.  In order for individuals to receive services covered under part B or Part D they would have to either pay for them out-of-pocket or return to the United States for care.  The benefit of this option is that it would provide beneficiaries with significantly more coverage than they currently receive, while reducing the level of oversight necessary to monitor the complex array of physicians’ services and pharmacutical access that would be essential in carrying out Part B and Part D coverage.

Part B Only

This would extend coverage to Medicare eligible persons who pay their Medical insurance ($88.50 monthly in 2006).  Potential benefits are that significant cost savings could be achieved for both the individuals in Mexico and the U.S. federal government in that medical care in Mexico is less expensive than care in the U.S.  Also, retirees in Mexico often still pay their Medicare Part B premiums to maintain continuous coverage to avoid incurring the additional 10 percent annual cost when they resume coverage.  Another potential benefit is that individuals without Part B coverage may be more likely to postpone or avoid regular visits to a physician due to the cost and length of travel to the U.S., and consequently may have to undergo more complicated procedures for conditions that could have been avoided through early detection which would translate to higher expenses paid by Medicare in the long run.  If Medicare paid for physician visits in Mexico, there would potentially be fewer cases of people forgoing care and thus receiving more costly services due to the progression of their conditions, while still providing the retirees the security of having covered care in case of an emergency.

Limited Part A (Emergency Care)

Under this option, Medicare would cover only emergency services.  It would provide greater choice for U.S. retirees in Mexico, and would enable more Americans currently living in the U.S. to retire to Mexico.  The major benefit of this option is that it would eliminate many of the accreditation and oversight issues that might be involved if all of the Part A services were covered.

Limited Part A (Emergency Care) Combined with Part B

This option would cover both emergency coverage and physician visits, among other routine services.  Although inpatient hospital care would not be covered, U.S. retirees would no longer have to return to the U.S. for physician services reimbursed by Medicare, with the assurance that if they were to need emergency care, their services would be covered.  Also, if Medicare does not cover inpatient hospital care, the accreditation and quality of care issues regarding the compatibility of the two countries’ health care systems would be significantly reduced.  Third, this option would eliminate the possible opposition of tertiary care providers in the U.S. who might be concerned about losing potential business to Mexican hospitals if full Medicare coverage was extended to Mexico. 

Allocating a Portion of the Part B Premiums to Buying Coverage for Services in Mexico

Under this option, retirees in Mexico could substitute half of their Part B premiums with payments to IMSS or a private health insurance scheme which covers Part B-like services, such as ambulatory care, in Mexico.  It would tend to encourage enrollment in Part B while saving the Medicare program money since Part B premiums cover less than 25% of the program's current costs.

Medicare Advantage Medical Savings Accounts (MSAs)

Archer MSAs are tax-exempt trusts or custodial accounts that self-employed individuals and employees of certain small employers can create to pay for medical expenses.  A Medicare Advantage MSA is an Archer MSA that can be used to pay for the medical expenses of Medicare-eligible individuals.  However, no Medicare Advantage MSAs had been established as of late 2004.

Medicare Health Savings Accounts (HSAs)

At present, individuals are not permitted to open an HSA after enrolling in Medicare.  An individual who had an HSA before enrolling in Medicare can keep it, but cannot make contributions after enrollment in the Medicare program.  Still, much money could be saved over an individual’s working years to be spent on medical expenses in Mexico.