Cost Estimates for Expanded Medicare Benefits: Skin Cancer Screening, Medically Necessary Dental Services, and Immunosuppressive Therapy for Transplant Recipients
November 1999
Institute of Medicine
The Lewin Group was commissioned by the Institute of Medicine (IOM) Committee on Medicare Coverage Extensions to prepare cost estimates for selected expanded Medicare benefits. Congress in the Balanced Budget Act of 1997 mandated that the IOM examine Medicare coverage for certain preventive benefits. The Lewin Group prepared cost estimates for the following services:
Skin cancer screening
Medically necessary dental services (in connection with treatment of specific diagnoses)
Elimination of the three-year limit on immunosuppressive therapy. The purpose of these cost estimates is to support the Committee's analysis of their efficacy based upon the clinical evidence available. The following sections summarize our cost estimates for these services, the data sources used for these estimates, and the key assumptions that underlie these estimates. Congressional Budget Office (CBO) type budget-neutral procedures ("pay as you go") apply to each of these extended benefits. Under these congressional budget scoring rules, additional Medicare benefits must be estimated to at least break even over a five-year time period, or funding must be reappropriated from an existing budgetary source.
Our analytic process required estimations of both gross and net costs to Medicare for the five- year period of 2000 through 2004. Gross costs are the direct costs to Medicare of the services, and net costs are the gross costs minus the potential cost offsets Medicare would realize as a result of covering these services. We also reduced our cost estimates to account for cost sharing offsets of 20% and premium offsets of 25% per CBO standards. Cost offsets are derived from the Committee's analysis of the research evidence available and expert judgement.
Projections of the Medicare Part B population for the years 2000 through 2004, as well as other sources of Medicare Part A and Part B population statistics (such as race and sex) were provided by the HCFA Office of the Actuary.