Overview
The Medicare program provides federal health insurance to individuals over the age of 65 who are eligible for social security. The program is administered through the Health Care Financing Administration (HCVA). Medicare has two main parts: Part A covers medically necessary care in a hospital, skilled nursing facilities, psychiatric hospitals, laboratory tests, rehabilitation services, home health care and hospice care; Part B, the medical insurance benefits part, covers medically necessary inpatient and outpatient physician’s services, physical therapy, blood transfusions, diagnostic tests and a variety of other medical services.
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Medicare Part A
Medicare Part A hospital insurance covered charges include a semi-private room and meals, general nursing, intensive care, drugs and medical supplies furnished by the hospitals, transfusions, testing procedures, medical supplies and equipment, operating and recovery room costs and rehabilitation services. After payment of a deductible, Part A pays for all covered services through the sixtieth day of hospitalization. From the sixty-first through the ninetieth day, the patient is responsible for a daily co-insurance payment; thereafter Medicare covers up to sixty extra days called “reserve days” during the lifetime of the patient. Once a patient has been out of the hospital for more than 60 consecutive days, another benefit period is available.
Approved Expenses
Medicare will only pay for ‘medically necessary’ care; elective cosmetic procedures or unnecessary hospitalizations are not covered. Generally, Medicare will pay for 80% of approved charges.
Claims
HCVA processes claims through contracts with private health insurance companies. Claims for payment (reimbursement) are filed with the insurance company directly by the medical provider. The medical provider bills the patient for any applicable deductible or submits the bill under any additional medical coverage available. The health care provider is required to file a claim upon demand by the patient.
Denied Claims
If a claim for benefits is denied, the patient can file for an appeal with HCVA, and thereafter before an administrative judge and in the federal district court.
Assignment
If a participating health care provider has accepted an assignment of Medicare benefits, the approved amount of payment must be accepted in full payment of the medical bill. Non-participating providers are not permitted to bill more than 15% above the approved amount.
Availability
Part A Coverage is provided free to all individuals who are eligible for social security or Railroad retirement who are 65 years of age and older whether they are still working or not. Part B is available to all Part A enrollees for a monthly premium. Under both Parts A and B beneficiaries must pay certain deductibles and co-insurance payments that vary in amount from year to year.
Disabled Individuals
Medicare payments are also available to individuals who are determined to be disabled by the Social Security Administration, irrespective of age. Medicare benefits become available twenty-five months after the date of disability.
Individuals Not Otherwise Eligible
Individuals who are over 65 but not eligible for Medicare due to insufficient contributions into the social security system can enroll in the Medicare program for a monthly fee.
Medical Services Outside of the United States
Other than for emergency services in the Mexico and Canada, Medicare does not provide benefits for medical services rendered outside the United States.
Enrollment
In order to enroll for Medicare benefits, a written application must be filed within the three-month period prior to the applicant’s sixty-fifth birthday. If an applicant fails to enroll during this time, an application can be filed later, however, the monthly premium will be higher.
Medicare Part B
Medicare Part B covers a wide range of outpatient and physical expenses including: doctor services, outpatient hospital services, diagnostic testing, medical equipment such as oxygen, wheelchairs and other necessary equipment prescribed by a physician, dialysis, ambulance services and prosthesis. Part B is available to all Part A enrollees for a monthly premium. Under both Parts A and B beneficiaries must pay certain deductibles and co-insurance payments that vary in amount from year to year.
Limitation On Billing
Several states have passed laws that prohibit a doctor from billing patients for the balance of any bill above the amount Medicare approves. The patient, however, will still be responsible for the twenty percent of approved charges not paid for by Medicare Part B.
Covered Charges
Medicare will pay approximately 80% of charges for medically necessary services. Routine examinations, dental care, prescription drugs and the cost of eyeglasses and hearing aids are not covered.
Medigap Insurance
Supplemental or Medigap insurance is generally available from private insurance companies. These policies cover some of the costs of care that are not covered by Medicare. If Medicare benefits are being provided through an HMO or managed care arrangement, supplemental insurance is generally not necessary.
Medicaid
Medicaid programs vary from state to state. All states require that applicants be at least sixty-five years of age or that they be disabled and meet income and asset tests, i.e., only people whose income falls below a certain level are eligible. Medicaid pays for inpatient and outpatient hospital services, doctors, nurse practitioner services, inpatient nursing home care, laboratory and x-ray charges, and often includes dental care, physical therapy, eyeglasses, prescription medications and more.
The Medicaid program does not require a recipient to pay premiums or deductibles as does Medicare, however, co-payments may be required.
Medicaid is applied for through a state or local agency, variously called Social Services, Public Aid, Public Welfare or Human Services.
Receiving Both Medicare and Medicaid
A patient can receive both Medicare and Medicaid benefits if the entitlement and income/asset limitations and requirements are met.
Home Ownership/Financial Need
The value of a home that is used as a principal residence will not be considered in determining whether an applicant for Medicaid is otherwise eligible.
Alternatives/Options
HMOs
Medicare beneficiaries have the option of joining a health maintenance organization (HMO) or other care plans that participate in Medicare. Many services not covered or subject to deductibles under Medicare are provided at no additional cost through an HMO, including eyeglasses.
Prescription Drugs
The cost of prescription drugs may be included in HMO services. However, other than drugs or medicines administered at a hospital or doctor’s office, Medicare Part B does not cover prescription drugs.
Health Reform Law (Obama Care)
Medicare will begin paying for annual wellness visits and increase reimbursements for primary care physicians. Currently Medicare only pays for a general checkup when someone first enters the program and many health analysts believe regular check ups would help improve the overall health of elderly people and provide for better coordination of care.
The new health bill provides for an improvement in the Medicare prescription drug program. The current program includes a significant coverage gap that the legislation will eventually close. Currently people fall into this so-called doughnut hole falls after a total $2,700 is spent on drugs. Coverage begins again after $6,154 is spent.
In 2010, people who fall into the doughnut hole will get a $250 rebate. In 2011, they will get a 50 percent discount on brand-name drugs. By 2020, the doughnut hole will have been closed and 75 percent of drug costs will be covered.
