MEDICARE

Chapter 10


MEDICARE



Objectives


After completing this chapter, you should be able to:


image Distinguish the differences and similarities among the various government medical plans


image Relate facts unique to traditional Medicare, such as: eligibility, patient expenses, Part A coverage, Part B coverage, and/or billing considerations


image Relate facts unique to Medicare supplemental policies, such as: eligibility, patient expenses, coverage, relationship to traditional Medicare, and/or billing considerations


image Relate facts unique to Medicare Part C, such as: eligibility, patient expenses, relationship to traditional Medicare, and/or billing considerations



Key Terms



benefit period


the time period in which an additional hospitalization for a Medicare patient is considered to be part of a previous hospitalization for the purpose of calculating the Medicare Part A patient financial responsibility. Readmission within 60 days of discharge is considered to extend an existing benefit period. When there have been 60 consecutive days without inpatient status, a new benefit period begins. There is no limit on how many benefit periods a person may have.


capitation


a method to pay physicians based on the number of patients assigned by the medical plan rather than actual costs incurred. The physician controls the expense of rendering care.


carrier


the insurer or medical plan chosen to administer the portions of a government medical plan specific to one state. For Medicare, the private insurer chosen to administer Part B claims.


deductible


a specified amount of expense the patient must pay before the medical plan pays anything.


end-stage renal disease (ESRD)


end-stage renal disease is kidney failure.


fee for service (FFS)


the physician is paid a fee for each service provided; private fee-for-service medical plans are an option under Medicare Part C.


fiscal intermediary (FI)


the insurer or medical plan chosen to administer Medicare Part A and some Medicare Part B claims for the government, or the insurer or medical plan chosen to administer other government programs(e.g., Medicaid, CHAMPUS, TRICARE).


Kyle provision


legislation included in the 1997 Balanced


Budget Act that allows providers who opt out of the Medicare program (minimum 2-year opt-out) to enter into private contracts with Medicare recipients for services that would normally be covered by Medicare. Special rules apply.


lifetime reserve


an extra 60 days of hospital coverage that a Medicare recipient may use only once. When the days are gone, Medicare coverage for hospitalization beyond 90 days ceases.


Medicare


the federal medical program that provides hospital and medical expense protection for the elderly (age 65 or older), anyone who suffers from chronic kidney disease (any age), and those who receive Social Security disability benefits.


Medicare Advantage


the current name for Medicare Part


C, formerly Medicare + Choice; options Medicare beneficiaries may choose instead of traditional Medicare. Enrollees must have Medicare Part A and Part B, and they cannot have end-stage renal disease (kidney failure).


Medicare Part A


a Medicare program that provides coverage for hospital and hospitalization-related expenses.


Medicare Part B


a Medicare program that provides coverage for physician services, ambulances, diagnostic tests, medical equipment and supplies, and ancillary services.


Medicare Part C


also called Medicare + Choice and Medicare Advantage; a Medicare program that gives Medicare recipients the option of replacing traditional Medicare with a plan that covers Part A and Part B services in one plan. In order to qualify, the enrollee must have both Part A and Part B coverage, and the enrollee cannot have end-stage renal disease (kidney failure).


Medicare Part D


was created by the Medicare


Modernization Act of 2003. It is a voluntary program designed to provide a prescription drug benefit.


Medicare provider number


a Medicare-assigned number that identifies the exact physician in a practice who provided the service reported on line 24 of the CMS-1500 claim form. This number is placed in block No. 24K for a group practice and for a single-physician practice that is incorporated. It is placed in block No. 33 for a single-physician practice not incorporated. This will be replaced by the National Provider Identifier (NPI) when the NPI becomes available. Providers began obtaining NPIs in June 2005, but the implementation date to begin using the NPI is expected to be at least 1 year later.


Medicare Select


Medicare supplemental policies similar to


Medigap except they only provide coverage when preferred providers are used, and they cost less than unrestricted Medigap plans.


Medicare UPIN


a unique provider identification number issued by Medicare to identify each individual physician who is authorized to give referrals for Medicare patients. On a claim form, the UPIN distinguishes between the referring physician and the rendering physician. This number will be replaced with the National Provider Identifier (NPI) when the NPI becomes available.


Medigap


Medicare supplemental policies designed to cover some or all the costs not covered by traditional Medicare. Enrollees must have both Medicare Part A and Medicare Part B.


MSA


medical savings account; a medical plan option under Medicare Part C.


nonparticipating provider


a provider who signs a Medicare contract but does not accept assignment of benefits.


participating provider


a provider who signs a Medicare contract and who accepts assignment of benefits. Also, a provider who signs a Medicaid or an HMO managed care contract.


POS


point of service; an option that allows HMO patients limited coverage for out-of-plan providers.


PSO


provider-sponsored organization; a new medical plan created by Medicare Part C.


working aged


any person age 65 or older who continues to work.



Introduction


The amount of time Congress spends analyzing medical issues is roughly proportional to the slice of the federal budget consumed by Medicare, and every year Medicare’s slice grows larger. Politicians have strong incentives to consider issues from both the payor perspective (the government is the largest third-party payor) and the voter perspective. They strive to balance a fine line between controlling payor costs for government medical plans and appeasing voters. Polls show that Medicare recipients are more active than any other voter group. They follow legislation, write to politicians, and, most importantly, they vote.


Medicare’s rules are legislated by Congress and not by individual states, so other payors seldom face legal challenges when they adopt rules or reimbursement strategies already in use by Medicare. Therefore other government and private medical programs often adopt fee structures and reimbursement rules that are set first for Medicare. For that reason, even if your practice does not participate in Medicare, it is wise to learn Medicare’s rules and to keep informed of changes as they occur.


Medicare is the federal program with the most participants, but there are other government medical plans, and they are not all alike. Each plan has a distinctly different set of internal rules and regulations. This chapter covers Medicare. You will find the rules for the other government medical plans in Chapter 11.



Medicare


Medicare is a federal medical program that provides hospital and medical expense protection for the elderly (age 65 and older), for anyone who suffers from chronic kidney disease (any age), and for those who receive Social Security disability benefits.



Medicare is a federal medical program that became law in 1965 and took effect in 1966.



Medicare now consists of four parts:



image; Medicare Part A covers specific hospital and hospitalization-related benefits. All workers finance Medicare Part A through a portion of the Federal Insurance Contributions Act (FICA) tax deducted from paychecks, and if they have worked at least 40 quarters, they are automatically eligible for Part A benefits with no monthly premiums once they qualify for Social Security benefits. Part A has deductibles and copayments.Note: Workers who have worked fewer than 40 quarters must pay monthly premiums for Medicare Part A. In 2005, the premiums are as follows: with 30 to 39 quarters, the cost is $206.00 monthly; with fewer than 30 quarters, the cost is $375.00 monthly.


image Medicare Part B is a voluntary program that covers many other medical costs, such as physician fees, lab tests, x-rays, supplies, and ancillary services, such as physical therapy and occupational therapy. It is financed by a combination of tax revenues (which cover most of the cost) and monthly premiums paid by enrollees. In 2005 the premium is $78.20 monthly. Part B also has deductibles and copayments.


image Medicare Part C, currently called Medicare Advantage and formerly known as Medicare + Choice, allows beneficiaries to select managed care programs or other choices to provide both Part A and Part B coverage in one plan. Some of the plans offer more services than traditional Medicare. The recipient must continue to pay at least the same premium or a higher premium than with traditional Medicare. People who have end-stage renal disease (ESRD) (kidney failure) are excluded from eligibility for the Part C option. The 1997 Balanced Budget Act created Medicare Part C, and the first of these plans became available in 1998.


image Medicare Part D was created by the Medicare Modernization Act of 2003. It is a voluntary program designed to provide a prescription drug benefit. The first of these plans will become available in 2006.


Medicare has 10 administrative regions, each of which serves a specific geographical area. Each state is assigned to one of these regions. Each region chooses at least one insurance company to administer Medicare for that region. This company is called the fiscal intermediary (FI). According to the CMS glossary, an FI is a private company that has a contract with Medicare to administer Part A and some Part B bills. Sometimes one FI administers Part A claims, and another FI administers the payment of Part B claims for durable medical equipment and supplies.


Each state appoints an insurance company to serve as a Medicare carrier for the state. The CMS glossary defines a carrier as a private company that has a contract with Medicare to pay Part B bills. The carrier for each state administers payment for the physician portion of Part B claims.



Each FI and each carrier function just like a regular insurance company, except they must follow federal regulations for Medicare instead of their own policies for Medicare clients.




Someone who is new to the United States and has never worked here,after they have lived here for at least 5 years and if they would otherwise be qualified, may purchase Medicare. If they purchase Part A, they must also purchase Part B. If they sign up late, they must also pay the same late penalties any citizen would pay for signing up late.






AN OVERVIEW OF MEDICARE PART A


Medicare Part A provides only hospital and hospitalization-related coverage. It covers inpatient hospitalization and skilled-facility and/or home care following a hospitalization. Covered services include a semiprivate room, nursing services, and other inpatient hospital services. Medicare Part A does not cover in-hospital physician visits.


The coinsurance amounts (e.g., deductibles and copayments) for Part A services are rather steep, and these amounts usually increase each year when the Social Security cost-of-living increases take effect. The Medicare deductible and copayment amounts listed in this chapter were valid in the year 2005 and may have changed. You can find current premium and coinsurance rates at the Medicare website, www.medicare.com.


In 2005, after an initial deductible amount of $912.00, the first 60 days of hospitalization are covered for any one illness or injury. Readmission for any reason within 60 days of discharge is considered to be the same incident, or benefit period, for tracking the number of days of hospitalization. For the sixty-first day through the ninetieth day of hospitalization, the patient incurs a daily copayment of $228.00 per day. After 90 days, the patient is responsible for all hospital charges.



A benefit period starts on the first day of hospitalization and ends when the patient has been out of the hospital for 60 consecutive days or has not been an inpatient anywhere (such as a short-term skilled nursing facility) for 60 consecutive days. The hospital deductible is paid only once during a benefit period, and the “number of days hospitalized” for the daily copayment calculations include all hospitalized days that fall within the benefit period.



There is a lifetime reserve of an extra 60 days with a copayment of $456.00 per day that the patient can use for hospitalizations longer than 90 days. However, once that is gone, Medicare coverage for hospitalization beyond 90 days ceases.



A patient may not want to use his or her reserve days for an extended hospital stay if there is any other insurance that could cover those costs. These days could then be saved for a time when extra coverage is not available.



Following a hospitalization, Medicare will cover all expenses for the first 20 days in a skilled nursing facility. For days 21 through 100, the patient must make a daily copayment of $114.00 per day. After 100 days, Medicare coverage ceases.


Medicare Part A also covers post-hospital home health services, but only if Medicare considers the services to be reasonable. Only a limited amount of inpatient psychiatric care is covered. For a full and complete listing of Medicare’s current rules and levels of coverage, contact the Social Security Administration or go to the Medicare website at www.medicare.gov.



AN OVERVIEW OF MEDICARE PART B


Medicare Part B is available to Medicare Part A recipients for a monthly premium that is withheld from the enrollee’s Social Security check. The Medicare base rate is $78.20 per month. Beginning in 2007, those with an annual income of $80,000 for a single person or $160,000 for a couple will pay higher annual premiums. If a person does not enroll during the first 6 months that he or she is eligible, a higher amount is charged as a penalty when enrollment does occur. The late penalty is 10% multiplied by the number of years since enrollment was first available. This amount is added to every monthly premium.


Late penalties are designed to discourage people from waiting until they are sick to enroll.




The patient’s premium is much lower than the cost of the average insurance premium because tax revenues cover a large share of the cost of the program. After the patient’s deductible has been met, Part B covers 80% of the covered services that Medicare considers reasonable. The patient is responsible for paying an annual deductible for Part B ($110.00 in 2005) plus 20% of the Part B covered services that Medicare considers reasonable.




Covered Medicare services include:



Medicare coverage varies for different types of services. The Medicare deductible and copayment amounts listed in this book were valid in 2005 and may have changed. For a full and complete listing of Medicare’s current rules and levels of coverage, contact the Social Security Administration or visit the Medicare website at www.medicare.gov.



The Medicare contract also governs the percentage of cost sharing for Part B services in special circumstances.


For example, for outpatient mental health services, Medicare pays 50% of the “allowed” amount and the patient pays 50%. For inpatient mental health services, Medicare pays 80% of the “allowed” amount for physician services and the patient pays 20%.




MEDICARE MODERNIZATION ACT OF 2003


The Medicare Modernization Act (MMA) is a proposed regulation that creates Medicare Part D. The final rule is expected to be released in late 2005 with a target date for the prescription drug benefit plan to begin on January 1, 2006. Prescription drug cards were an interim measure that was passed until the new regulation could take effect. Medicare recipients could purchase a prescription drug discount card at an annual cost of $30.00 from May 2004 through December 2005. Until this law, Medicare did not cover prescription drugs. The prescription drug discount card cost $30 per year and resulted in a savings of 11% to 18% of the cost of brand name prescription drugs and 30% to 60% or more on generic prescription drugs.


Those with monthly incomes below $1,048 for a single person or $1,406 for a married couple did not have to pay for the card and some qualified for a credit of $600 per year on the card to help pay for prescription drugs in 2004 and 2005. If a portion of the credit was not used in 2004, it rolled over into 2005. Some also qualified for larger discounts. People who received prescription drug benefits from Medicaid were not eligible for the prescription drug discount cards.


Under the proposed regulation, effective January 1, 2006, everyone with Medicare may choose to enroll in Part D plans that cover prescription drugs. The various payor participants who offer the Part D plans will negotiate discounts with the pharmaceutical companies just as they always have for managed care plans.


The enrollee will choose a Part D plan and Medicare will cover 75% of the cost of the new premium, with the beneficiary paying 25% of the cost of the premium. Depending on the plan chosen, the beneficiary portion of the premium is expected to be around $35.00 a month in 2006. There is a $250 deductible, and then Medicare will pay $75% of drug costs up to $2,250. Between $2,250 and $3,600, there is no coverage from Medicare. However, after $3,600, Medicare pays 95% of drug costs.


In the proposed regulation, Medicare covers the premiums and deductibles, and there are only nominal copays with no gaps in coverage for those “dual eligible” low income beneficiaries who qualify for both Medicare and Medicaid. The copays are expected to be as little as $1.00 to $3.00 per prescription. Nursing home residents who are “dual eligible” will have no copays.


In addition, Medicare pays most of the costs for those with limited assets who have annual incomes less than 135% of the federal poverty level (below $12,124 for a single person or $16,363 for a married couple). Those who qualify do not have to pay premiums, deductibles, and there is no gap in coverage. However, they are expected to have small copays of a few dollars per prescription. Medicare will cover 95% of their drug costs on average.


For those with assets up to $10,000 ($20,000 if married) and incomes less than 150% of the federal poverty level ($13,942.00 for a single person or $18,875.00 for a married couple), the Medicare benefit will provide 15% copays with a sliding scale premium and no gaps in coverage, covering 85% of their drug costs on average.



PARTICIPATING/NONPARTICIPATING PHYSICIANS


Each physician who applies for a Medicare provider number signs a Medicare contract and designates whether he or she wants to be a participating (“par”) provider. Participating physicians are listed in the Medicare Provider Directory. In addition, they may not charge Medicare patients more than the amount “allowed” by Medicare, and they are required to submit electronic claims to Medicare for their patients. They are given priority in claims processing over nonparticipating providers. Participating providers must accept “assignment of benefits,” and Medicare sends payment directly to the provider. The “allowed” amount is determined by the Medicare fee schedule and by medical necessity requirements. After the patient’s deductible has been met, Medicare pays 80% of the allowed amount and the patient pays 20% of the allowed amount. FIs receive bonuses for recruitment of new par providers to the Medicare program.


Those who designate they do not want to participate in Medicare are called nonparticipating (“nonpar”) providers. They may not accept assignment of benefits for Medicare, so payment is sent to the patient, and it may be difficult to collect. Nonparticipating physicians also must submit claim forms electronically to Medicare for their patients. The Medicare fee schedule for nonpar providers is 5% less than the Medicare fee schedule for par providers.


Nonpar providers may charge Medicare patients up to 15% above the current-year Medicare non-participating physician fee schedule. This is called the limiting charge. Medicare pays 80% of the nonpar physician allowed amount for each claim, and the patient pays 20% to 35% of the allowed amount. The physician may collect up to a total of 115% of the allowed amount.


The lower nonpar provider fee schedule and the rule allowing an additional 15% to be charged to the patient are designed to discourage Medicare patients from seeing nonpar providers.



Related posts:

  1. DEVELOPING CRITICAL THINKING SKILLS: ANALYZING PROBLEMS AND MAKING DECISIONS
  2. REIMBURSEMENT SUCCESS
  3. OTHER GOVERNMENT MEDICAL PLANS
  4. HOSPITAL/FACILITY BILLING RULES

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May 25, 2017 | Posted by in GENERAL & FAMILY MEDICINE | Comments Off on MEDICARE

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