Medicare's New Coverage Options under the "Medicare+Choice Program."

Errold F. Moody Jr.

Health care benefits covered under the Medicare program are divided into two parts: hospital insurance, also known as ``Part A,'' and supplementary medical insurance, also known as ``Part B.'' Health care services covered under Part A include: inpatient hospital care, skilled nursing facility care, home health agency care, and hospice care. Part B coverage is optional and requires payment of a monthly premium. Part B covers physician services (in both hospital and nonhospital settings) and services furnished by certain nonphysician practitioners. It also covers certain other services, including: clinical laboratory tests, durable medical equipment, medical supplies, diagnostic tests, ambulance services, prescription drugs that cannot be self-administered, certain self-administered anti-cancer drugs, some other therapy services, certain other health services, and blood not covered under Part A.

Starting in November 1998, Medicare recipients will have some new alternative coverage. They may still be covered under the traditional Part A and Part B (though B remains optional) but retirees must remember that full coverage comes with deductibles and co-payments. Further, Part B has been subsidized by the government for some time and one should expect considerable increases in the next few years to around $67 per month in 2002. Part B will, however, expand to include coverage for mammograms, Pap smears and prostate and colo-rectal exams.

MEDIGAP: For those wanting extended coverage under the Basic A and B plans, you can purchase one of the ten Medigap (Medicare Supplemental Plans) offered by numerous companies. Coverage under one of the plans is MANDATORY if requested during the 6-month period beginning with the date a beneficiary is both age 65 or over, and enrolled in Medicare Part B. ( New amendments now specify additional situations in which beneficiaries will, after July 1, 1998, be guaranteed access to certain types of Medigap policies on a guaranteed issue basis if they apply within 63 days after losing other coverage, and submit evidence of the date the prior coverage terminated. The law also requires the entity that provided the prior coverage to notify beneficiaries of these rights.) But caution is advised in that plans vary tremendously in price in a state and from state to state so prudent and extensive research is suggested. Further, make sure you pick the one best suited for your needs. If you decide the first one was not what you wanted and were to select a different one later on, you will almost undoubtedly need to requalify medically and could therefore be denied any coverage at all. It is for this reason that, in any pursuit of new insurance coverage, you do not cancel the old policy until the new one is in force.

M+C: The introduction of the M+C program represents what is arguably the most significant change in the Medicare program since its inception in 1965. As its name implies, the primary goal of the M+C program is to provide Medicare beneficiaries with a wider range of health plan choices to complement the Original Medicare option. Alternatives available to beneficiaries under the M+C program include both the traditional managed care plans (such as HMOs) that have participated in Medicare on a capitated payment, as well as a broader range of plans comparable to those now available through private insurance.

OPTION 1: This plan offers coverage under a Medicare HMO and is not necessarily new. The major point of these plans is that the coverage does not required a separate plan- and the associated costs- of a Medigap plan. (As stated, Medigap costs vary by plan and state, but a monthly rate of $100 is not unrealistic.) The major benefit from a Medicare HMO is the fact that there may not be any additional costs for care at all- Medicare will cover everything. Detractors of HMO's point to the poor care, bad physicians , the requirement to use a limited number of specific physicians and so on. However, a more realistic and objective analysis tends to show good to very good approval ratings for HMO's overall. Additionally, one must recognize that private care by private physicians is not exempt from problems. All in all, care under an HMO is most apt to reach high approval ratings the more one is involved with their own health. As C. Everett Koop noted, "The Best Prescription is Knowledge".

Under the current option, an enrollee has the right to opt out of an HMO and convert to standards coverage with only a 3 months notice. Starting in 2002, however, the required notice will be nine months. This appears to be an intent to stop frequent switching but it will unquestionably require a lot more research of the HMO that an enrollee selects since, if they opt for an unsatisfactory one, they will not be able to get out as quickly. This is part of the change in government and corporate philosophy in requiring more consumer involvement in making their own selections.

OPTION2 : Medicare PPO's. A Preferred Provide Organization is similar to an HMO in that it is a network of physicians and hospitals and offer care at reduced costs to enrollees. They may use a form of gatekeeper, but the major difference is that you can 1. use any physician within the PPO network or, 2., more importantly, pay a higher fee and opt to use a physician OUTSIDE of the PPO network. (This format is now being offered by some major HMO's).

OPTION 3: Provider Sponsored Organizations: Under this plan, hospital and physicians will be able to form their own plans- PSO's similar to an HMO. An article by the American Institute for Economic Research notes that an organization that involves such a small number of physicians and enrollees may be severely limited by finances and numbers to offer care at the same level of an HMO or PPO.

OPTION 4: Medical Savings Accounts. MSA's were introduced to the corporate world several years ago and has met with reasonable success. It offers enrollees (390,000 maximum) the ability to establish tax free savings accounts that are used mostly for medical expenses. These would be partially funded by Medicare based on the difference between what Medicare normally pays for beneficiary care and the cost of a high deductible traditional hospital and major medical coverage for catastrophic care. The deductibles would be taken from the MSA balance. If there was an excess, the account could be withdrawn and used for other purposes. But if it was not sufficient, the enrollee would have to pay the difference. Essentially, there is the risk- if you are healthy and stay that way, you can come out ahead. If you are sickly and end up with large medical bills, they would come out of your own pocket.

OPTION 5: Fee-for Service. This is effectively what has been the "standard" for care for the past 20 years before the advent of HMO's. One is able to pick whatever physician he/she wants, but is also responsible for any costs beyond what Medicare allows. There are caveats to remember however. If you go back to the 80's, you can count the huge number of articles of how difficult it was to get a doctor who would accept Medicare payments. This is a most acceptable option if one has a lot of money, but if not, it could backfire against the bulk of the public if doctors left the Medicare system for the higher payments.

OPTION 6: This goes further in that Medicare would not even be involved with any medical coverage at all. The patient would contract directly with the Physician to provide care. The number of doctors might be limited however in that Section 4507 of the Balanced Budget Act requires that any physician that does opt for this system will NOT be able to take Medicare patients for up to two years. Since so much medical care now covers the elderly, it is debatable how successful this option might become. But if too many doctors found it financially beneficial, maybe all the "good" doctors would become private and the bulk of the citizenry would be left with the rest.

This is, quite obviously, just a quick overview to help you formulate a direction for care. Further detailed information is available a http://www.hcfa.gov/medicare/mplusc.htm. Bring two brains- you'll need them both to understand everything.

MEDICARE FEE FOR SERVICE: (2000) A private fee-for-service plan is a private insurance program that charges enrollees a premium and cost-sharing amounts and lets beneficiaries choose the providers they want to see. No one knew if consumers would actually use the system. However, the First Medicare Private Fee-for-Service Plan is now approved in eight more states. The U. S. Health Care Financing Administration approved a request by Sterling Life Insurance Company to expand private fee-for-service health care coverage to Medicare beneficiaries in eight states: Arizona, Delaware, Illinois, Iowa, Oklahoma, Pennsylvania, South Carolina and Washington state on September 1. Earlier this year, Sterling Option 1 was approved to offer private fee-for-service health care coverage to Medicare beneficiaries in 17 other states. In most cases, beneficiaries enrolled in the private fee-for-service plan will pay less to see a doctor than under original fee-for-service Medicare.

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