Vol. 7, No. 2 Spring 1999	Previous Issues Subscribe to AT Messenger Download PDF Viewer
	PDF Version (for printing) Large Print Version Text Version

Federal Update for Seniors:
Medicare Changes

by Laura J. Waterland, Esquire, Staff Attorney, Disabilities Law Program

Medicare is the primary health insurance for many older persons and people with disabilities and is now the largest payor of health care in the United States. Recent changes in the Medicare program made by Congress in the Balanced Budget Act of 1997 (BBA) will undoubtedly have a profound impact on health care for many Americans.

The new Medicare Part C or "Medicare+Choice" Program created by the BBA will be implemented in 1999. Congress created Medicare+Choice to provide more options for Medicare recipients while saving money and decentralizing the Medicare program. Currently, Medicare benefits are paid under traditional Medicare fee-for-service, and, in some areas, managed care programs. Medicare+Choice allows for the creation of new health care delivery systems. Recipients can be expected to be bombarded with advertising from these new plans in the coming months.

Medicare recipients should very carefully consider any changes to their existing coverage. Currently, no one is required to switch to Medicare+Choice. Recipients who are happy with their current coverage need not change their enrollment.

Under Medicare+Choice, recipients may choose to receive Medicare-covered services through any of the following types of health insurance plans:

1. Coordinated Care Plans.New managed care plans, including health maintenance organizations (HMOs), provider sponsored organizations and preferred provider organizations will closely resemble existing HMO-type managed care programs in which beneficiaries have a primary care physician who acts as the gatekeeper to specialized services and hospitalization. Some plans will limit the enroller's choice of providers; others will offer benefits not covered by traditional Medicare, such as prescriptions and eyeglasses. Plans may charge a separate premium for these services, although this premium may be combined with the premium charged for Medicare co-payments and deductibles. Plans will be paid a capitated rate by Medicare.

2. Private Fee-for-Service Plans. Medicare makes capitated payments to a Plan, which then reimburses private providers at negotiated rates. These rates are not subject to Medicare fee limitations or review, and private providers are not at financial risk. However, a provider must accept no more than 115% of its contracted rate as payment in full. This system resembles private indemnity-type insurance plans. Beneficiaries can go to any physician who accepts the insurance; however, they may be subject to balance billing and, because providers are not paid (presumably) lower Medicare reimbursement rates, beneficiaries can expect greater costs.

3. Religions and Fraternal Benefit Society Plans. These organizations may provide Medicare+Choice Plans, and can restrict enrollment to their members.

4. Medical Savings Account (MSA) and Medicare+Choice High Deductible Option. This limited, experimental plan combines insurance coverage with a high deductible ($6,000 in 1999) with an MSA. Medicare pays the premium for the high-deductible insurance and deposits the difference between the premium and what it pays annually for the average beneficiary into the MSA. The MSA balance is used to pay expenses until the high deductible is met. If the MSA money runs out before the deductible has been reached, the beneficiary must meet the deductible out of pocket. Remaining balances in the MSA are rolled over into the next year's MSA.

5. Private Contracts Outside of Medicare+ Choice, the BBA allows beneficiaries to enter into private contracts with a provider, a group of providers or a network of providers. These providers have opted out of Medicare, but then contract individually to provide Medicare-covered services. The doctor is not required to submit bills to Medicare and is not limited to Medicare reimbursement rates.

Perhaps the most important question is whether the scope of coverage will change. In theory, all Medicare+Choice Plans, (except MSAs) must provide all current Medicare A and B covered services. Medicare pays for assistive technology in the following ways: as durable medical equipment and speech pathology services under Parts A and B; and as prosthetic devices under Part B. Additionally, Medicare covers home health services, although the scope and availability of these services was reduced by the BBA. The advantage of decentralization may be cost-savings and perhaps more services. Plans must pass on any cost-savings achieved through efficient plan administration to the enrollees in the form of additional benefits. Plans may offer supplemental benefits and charge uniform, separate premiums. The risk is that new plans may not uniformly cover needed services and are not as easily policed as the federal government.

The bottom line is that, as these new delivery systems come "on-line" and as beneficiaries choose which type of system works best for them, the Medicare system will be fluid. The new "choices" will prove confusing and stressful, at least in the short run. Please consider the following guidelines (Guidelines drafted by Center for Medicare Advocacy.) in assessing your insurance needs:

1. Review the benefits of the new Medicare program. Compare those benefits with the coverage you have now under the traditional Medicare program and any continuing Medigap insurance plan, or with your Medicare managed care plan.

2. Determine which of the new options is actually available in your service area. While the plans theoretically may be in operation in January 1, 1999, very few of the new options will be available nationwide.

3. Participate in Health Care Financing Administration's (HCFA) beneficiary education campaign prior to making any enrollment decision. You will receive a booklet from HCFA describing your options. HCFA also has an Internet Website with information about the options (although critics have described some of the information as difficult to access and sometimes misleading.) See http://www.hcfa.gov or http://www.Medicare.gov. You may also get information from HCFA regarding the Medicare+Choice program by calling (800) 318-2596.

4. Be wary of glowing promises from new Medicare+Choice plans. Consumer advocates have long been critical of marketing abuses by Medicare HMOs eager to sign up beneficiaries, and there is no reason to think that the new plans will be any less aggressive in "puffing their goods."

5. Before making a choice, carefully list the pluses and minuses of each plan. Some clearly promise more generous or convenient health care, but at a high cost. Others emphasize cost savings, but may be reluctant to authorize health services that are expensive or ongoing.

6. "Let the dust settle" before making a choice. Some plans, for a variety of reasons, may decide to discontinue serving certain communities. It is important to see whether plans become stable and trusted parts of your medical community.

You do not need to make a change or choose a new Medicare+Choice option. Remember that the traditional Medicare program will still be available. Individuals who fail to make an election will remain in the original Medicare program or, if they are in a Medicare HMO, they will remain in the HMO. A beneficiary who wants to adopt a "wait-and-see" position can remain with his/her current program. There will continue to be opportunities to enroll in the new plans.

A Reminder

Lower income Medicare recipients are entitled to have the Medicaid Program pay their Medicare premiums. Additionally, some recipients are also entitled to have Medicaid pay their Medicare deductibles and co-payments. For individuals on fixed incomes, these "buy-in" programs offer significant savings. Be sure to call your local Medicaid office and find out if you are eligible.