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"[Medicare Advantage] offers beneficiaries new insurance options that broaden the ways in which they can receive health care. Importantly, that also includes the option to stay right where they are. If beneficiaries are happy with the way they get their health care now, they don't have to do anything."

Nancy-Ann Min DeParle, Former Administrator of the Centers for Medicare & Medicaid Services (The agency that administers the Medicare program.)

INTRODUCTION

In addition to the original Medicare "fee-for-service" program, Medicare offers beneficiaries the option to receive care throughprivate insurance plans. These private insurance options are part of Medicare Part C, which has also been known as Medicare+Choice plans, and is now called Medicare Advantage. The most common type of Medicare Advantage plans are health maintenance organizations(HMOs), Because, to date, most Medicare beneficiaries who participate in Medicare Advantage receive managed care through health maintenance organizations, this discussion will focus on Medicare HMOs.

Medicare Advantage is a means of receiving health care and Medicare coverage. The beneficiary must specifically opt to receive Medicare coverage and care through an HMO, or other private plan insurance. Once the choice is made, the beneficiary must generally receive all of his or her care through the plans providers in order to receive Medicare coverage. The main premise is that through preventive care and the use of a primary physician who acts as a "gatekeeper" to specialized care, health care costs can be reduced while beneficiary health can be maintained.

Private insurance plans are generally paid a fixed rate per beneficiary by Medicare, regardless of how many or how few services the beneficiary actually requires. While many Medicare beneficiaries in Connecticut can choose a Medicare Advantage plan, the number of plans available has diminished as some companies, maintaining that their reimbursement rates were too low, have withdrawn from the market in many areas of the state. Because Congress decided in 2003 to pay Medicare Advantage plans more on average than is paid under traditional Medicare, it is anticipated that the number of Medicare Advantage plans will increase.

HMOs and the private insurance plans are required to provide the full range of Medicare benefits to each enrolled beneficiary for a fixed payment per enrollee. Medicare HMOs are also required to provide additional services, over and above those available through the traditional Medicare program, without additional charge to Medicare enrollees. The HMO not only provides or arranges for direct medical services, but also, at initial decision stages, decides what care is reasonable and necessary. Enrollees are generally "locked in" which means they can receive Medicare coverage only for services provided through the HMO's providers.

SERVICES THAT AN HMO MUST PROVIDE A MEDICARE ENROLLEE

HMOs are required to provide those services and supplies that are covered under Parts A and B of Medicare. In addition, they must generally provide "additional" benefits to enrollees beyond those covered by Medicare. These additional benefits may take the form of either or both a reduction in the premiums, deductibles and coinsurance payments ordinarily required or the provision of health benefits or services beyond the required Part A and B coverage.

HMOs can, with the approval of the Center for Medicare & Medicaid (CMS), require Medicare enrollees to accept and pay for "supplemental" services which are above and beyond both the basic Part A and Part B services and the "additional" services referred to in the previous paragraph. The HMO's charge to the enrollee for these services may not exceed the premium that non-Medicare Advantage enrollees would be charged for a similar benefit package.

Generally, all substantive coverage rules under the regular Medicare benefit must also be met by a Medicare HMO enrollee. In addition, time limitations on coverage that exist in the regular Medicare benefit, such as 100 days of skilled nursing facility care, apply to HMO services. The Medicare Advantage plan should not have its own additional rules or criteria which further limit coverage.

Treating sources outside of the geographic area are covered when it is common practice to refer patients outside of the area for these services. Otherwise, services received by enrollees outside the HMO provider network, will generally not be paid for by Medicare and the beneficiary will be personally liable for the charges. Exceptions to this rule are emergency services, urgently needed services, and services denied by the HMO and found upon appeal to be services the enrollee was entitled to have furnished by the HMO.

Emergency services means services furnished by an out-of-plan treating source because they are needed immediately due to a sudden illness or injury and the time required to reach an in-plan treating source would mean risk of permanent damage to the patient's health. Emergency status continues for as long as transfer to an in-plan treating source is precluded due to risk to health or is unreasonable given the distance and nature of the medical condition.

Urgently needed services means services required to prevent serious deterioration of the patient's health resulting from an unforeseen illness or injury if the patient is temporarily absent from the HMO geographic area and the medical care cannot be delayed until the patient's return to the geographic area.

CONCLUSION

Many advocates involved in representing Medicare Advantage plan care enrollees find that the system is fraught with difficulties. Beginning with the absence of clear explanations, and thus clear understandings on the part of enrollees, as to what services may be covered under what circumstances, to the concern of advocates that economic issues, rather than quality of care, guide some coverage determinations, the Medicare Advantage system can present great problems for enrollees. The requirements that enrollees use only the HMO's providers and that specialty care must be approved in advance are often viewed as disadvantages to the Medicare Advantage program. This difficult situation is compounded by an appeals system that is often vague and can involve frequent delays.

Another problematic area has been private insurance marketing activities. Although certain marketing techniques are prohibited, including the prohibition of activities that would mislead, misinform, confuse, or defraud Medicare beneficiaries, abuse by some companies has been an ongoing problem. Unfortunately, the regulations provide no direct remedies that the beneficiary subjected to prohibited marketing activities may pursue.

On the other hand, there are some advantages for HMO enrollees. For many enrollees, deductibles or coinsurance payments are reduced or eliminated. In addition, there are no claim forms to be filled out and some plans offer benefits not covered by Medicare.

Each year, many Medicare Advantage plans have decided to withdraw entirely from the Medicare market due to insufficient profits. Under current law, HMOs may decide each year whether to offer a Medicare plan and may discontinue the plan after providing their enrollees with written notice 60 days prior to termination. The closing of plans in many areas of Connecticut and the nation has been frightening and confusing for enrollees.

These uncertain circumstances, variations in the services that a plan may offer, and the charges that plans may impose point out how important it is for a prospective enrollee to examine carefully the benefits and costs of the services offered by the HMOs. A comparison of these benefits and costs with the original Medicare program, combined with coverage from a Medicare supplemental policy (Medigap), should be conducted before enrolling in a Medicare Advantage plan.

Medicare beneficiaries of modest means should also carefully review eligibility for the Qualified Medicare Beneficiary Program (QMB) and Connecticut's prescription drug program (ConnPACE) as a possible alternative to Medicare Advantage enrollment.


THE MEDICARE ADVANTAGE PROGRAM (MEDICARE PART C) — LOOK CAREFULLY BEFORE YOU LEAP

Since its inception in 1965, Medicare has provided a set of coverage and due process protections so that all beneficiaries could expect the same basic level of health insurance. As a consequence, all beneficiaries – rich or poor, well or sick, articulate or silent – had a common interest in making the program work. This system resulted in the evolution of an imperfect, but functional, basic health insurance program for all.

The Balanced Budget Act of 1997 (BBA), signed into law on August 5, 1997, divided the Medicare program into multiple financing and delivery systems. The BBA accomplished this by creating a new Medicare Part C, also called the Medicare+Choice program. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 changed the name of the Medicare+Choice Program to Medicare Advantage. Medicare Advantage expands options for receiving Medicare coverage through a variety of private insurance plans, including health maintenance organizations (HMOs) and preferred provider organizations (PPOs), and through new mechanisms such as medical savings accounts (MSAs).

While the government issues a great deal of information about making new Medicare choices, the traditional Medicare program continues to be the choice of most beneficiaries. It is important to remember that beneficiaries do not have to choose to move out of their current Medicare system – whether they are in traditional Medicare or a Medicare Advantage plan.

Beneficiaries should be cautious about switching from the traditional Medicare program to a Medicare Advantage plan. Many beneficiaries have experienced difficulties with Medicare Advantage plans and appeals, and many plans have pulled out of the Medicare market entirely.

In addition, the methods for delivering and financing health care are in flux. Medicare Advantage plans are changing their benefit packages, some increase with payments, some may join the system while others will leave. We do not know how the new Medicare Advantage options will work or what limitations will unfold:

  • What coverage will actually be available under each plan in their geographic area?

  • What plans will actually be offered and how long will they remain in business?

  • What options are available in the traditional Medicare program to meet the individual's needs?

  • What problems may develop with the appeal systems?

  • What will beneficiaries as a group lose if they are divided into the many subcategories of interests represented by so many different plans?

Wait, listen carefully, and think carefully before making any changes.

MEDICAREADVANTAGE PROGRAM OPTIONS

Under Medicare Advantage, a Medicare beneficiary may choose to remain in the traditional Medicare program or their current managed care plan, or to receive Medicare covered services through any of the following types of health insurance plans. The Medicare Advantage program is designed to provide access to a wider array of private health plan choices than under the M+C program and to increase the number of areas in which private health care options are available to Medicare beneficiaries.

  • Coordinated Care Plans. These are managed care plans which include health maintenance organizations (HMOs), provider sponsored organizations (PSOs), local preferred provider organizations (PPOs), and other network plans (except MSA and PFFS plans). Starting in 2006, regional PPOs will be offered. Some plans serve only special populations such as people in nursing homes or people who have both Medicare and Medicaid. These plans provide coverage for health care services, with or without a point-of-service option (the ability to use plan or out-of-plan health care providers). Some plans limit the enrollee’s choice of providers. Some plans may offer benefits, in addition to those in the traditional Medicare program. If supplemental benefits are offered, an extra premium may be charged. Some plans offer a combination of a limit on the choice of providers and supplemental benefits. It is very important to analyze the coverage details, advantages, and disadvantages of each plan. In order to offer an MA coordinated care plan in an area, the MA organization offering the coordinated care plan must offer qualified Part D prescription drug coverage meeting certain requirements.

  • Private Fee-for-Service (PFFS) Plans. A private fee-for-service plan is defined as a MedicareAdvantage that:

  • Reimburses providers, on a fee-for service basis, at a rate determined by the plan;

  • Does not put the provider at financial risk;

  • Does not vary rates for the providers based upon their particular utilization, and;

  • Does not restrict the selection of providers among those who are lawfully authorized to provide the covered services, and who agree to accept the terms and conditions of payment established by the plan.

The Medicare program makes capitated payments to private fee-for-service plans just as it does to HMOs. These plans do not have to follow the usual Medicare fee limitations. They establish their own rates, without reference to the Medicare Part B reasonable charge or limiting charge restrictions. The rates set by these plans may be substantially higher than those in the traditional Medicare program.

Providers under contract with a private fee-for-service plan are required to accept an amount not to exceed 115% of its contracted rate as payment in full for covered services (including any permitted deductibles, coinsurance, co-payments, or balance billing). The plan is to establish procedures to enforce its billing limits. If the plan fails to adhere to its billing limits, the plan may be subject to sanctions.

Private fee-for-service plans are to provide beneficiaries with an appropriate explanation of their benefits and liabilities. The plans will also be required to provide Medicare beneficiaries with advanced balance billing information before they incur expenses for inpatient hospital services, (and for certain other services for which balance billing amounts could be substantial).

Medicare Advantage organizations offering private fee-for-service plans can choose to offer qualified Part D prescription drug coverage meeting the requirements in §423.104 in that plan.

Read our PFFS PRIMER FOR ADVOCATES (.pdf).

  • Medicare Specialty Plans. These plans, if available, provide more focused health care for specific groups of beneficiaries. For example, these plans may be for people in long-term care facilities or for people eligible for both Medicare and Medicaid. These plans are designed to provide Medicare health care, as well as more focused care that is specially designed to treat specific groups of beneficiaries or beneficiaries with certain medical conditions.

PRIVATE CONTRACTS

Medicare beneficiaries can now also enter into agreements with some providers, who offer "private contracts." These contracts are totally outside the Medicare program and no Medicare payment is made under these arrangements. The beneficiary must pay all costs in accordance with a private contract made with the provider. Moreover, the provider of services must agree in writing not to bill Medicare for any services for a period of 2 years.

The provider must warn the beneficiary that the Medicare limits on balance billing will not apply and that Medicare Supplemental Insurance (Medigap) policies may not pay benefits on such claims. Importantly, the contract must make clear that beneficiaries may seek medical care from other providers who have not entered into private contracts and who are, therefore, permitted to bill Medicare.

REQUIRED INFORMATION

The Centers for Medicare & Medicaid Services (CMS) must inform beneficiaries about all their Medicare options. The CMS Medicare Handbook includes this information. CMS has a toll free telephone information system (1-800-Medicare) and a web site to describe the programs and to provide comparative information

SCOPE OF COVERAGE

Medicare Advantage plans (except for MSAs) must provide coverage for the services currently available under Medicare Parts A and B. Plans must inform their enrollees about the availability of hospice care, including whether a Medicare participating hospice program is located within their service area or whether it is common to refer outside the area. Plans must pass on to beneficiaries any cost-savings achieved through efficient plan administration, in the form of additional benefits.

Medicare Advantage plans may offer supplemental benefits for which a separate premium is charged, but the separate premium may not vary among individuals within the plan and must not exceed certain actuarial and community rating requirements.

The Balanced Budget of Act 1997 required the Secretary to establish standards, regulations, and rules for Medicare Advantage that are consistent with existing standards and regulations governing the Medicare program.

ENROLLMENT AND LOCK-IN

Every November CMS conducts an "annual, coordinated election period" during which time all Medicare beneficiaries are able to choose between "original" Medicare program (the traditional Medicare fee-for-service program) and a Medicare Advantage plan.

Beneficiaries who fail to make an election who are in the traditional Medicare program remain in original Medicare. Those who do not make an election, but are already in a Medicare Advantage plan, remain in that plan.

Beneficiaries can enroll and disenroll from Medicare Advantage plans at anytime during 2005. In 2006, there will be a six-month lock-in and in subsequent years beneficiaries will be locked in to a Medicare Advantage Plan for the entire year. >

A Medicare Advantage plan may not deny enrollment to an eligible individual based upon health status or certain other factors. Individuals who enroll in MSA plans, must remain in that plan for a year, although those choosing MSAs for the first time have until the December 15th after their election to disenroll.

Medicare Advantage PLAN ELIGIBILITY

To be eligible to enroll in a Medicare Advantage plan the individual must be entitled to benefits under Part A and enrolled under Part B of the Medicare program. Persons with end-stage renal disease are excluded; however, an individual who develops end-stage renal disease while enrolled in a Medicare Advantage plan may continue to be enrolled in that plan and may not be required to disenroll.

An individual is eligible to elect a Medicare Advantage Plan if the plan serves the geographic area in which the individual resides. If, after enrolling in a plan, the individual leaves the geographic area, the plan can offer the individual the option of staying in the plan so long as the plan provides the individual with reasonable geographic access to all basic plan benefits.

Certain Medicare beneficiaries are prohibited from enrolling in Medical Savings Accounts. Federal Employee Health Benefit Plan members (FEHBP) are not eligible to enroll in an MSA until the Director of the Office of Management and Budget (OMB) certifies to the Secretary that the Office of Personnel Management (OPM) has adopted policies which will ensure that the enrollment of FEHBP individuals in such plans will not result in increased expenditures for the federal government for health benefits under FEHBP. Similar rules may be applied to the Veterans Administration and the Department of Defense.

Persons eligible for the Qualified Medicare Beneficiary Program (QMB), qualified disabled and working individuals eligible for Medicaid, or persons otherwise entitled to have Medicare cost-sharing amounts paid by a state Medicaid plan are also ineligible to enroll in an MSA plan.

CONCLUSION

With the advent of Medicare Advantage, the Medicare program and its beneficiaries are divided into different systems. Before beneficiaries move into the various Medicare Advantage options they need to be certain that the plans meet their particular needs. This takes study and consideration.

Beneficiaries should approach HMO plans cautiously. They, and their advocates, need to be careful in order to ensure that the basic goals of the Medicare program are met for all beneficiaries and that they continue to be met over time.


GUIDELINES FOR CONSIDERING MEDICARE ADVANTAGE

Not all Medicare beneficiaries belong inMedicare Advantage plans and beneficiaries should make informed decisions before enrolling. Following some simple rules before enrolling in a plan can avoid problems and disappointment later. These guidelines will help to ensure that beneficiaries make wise decisions about Medicare Advantage. After careful evaluation, some Medicare beneficiaries will choose a private insurance plan while others may determine that the original Medicare "fee-for-service" program better suits their needs. Beneficiaries should consider the following:

  1. Review coverage provided by the original Medicare program and by Medigap insurance policies. Beneficiaries should understand the coverage and costs available through the original fee-for-service system combined with an appropriate Medigap policy. Explore eligibility for the Qualified Medicare Beneficiary Program (QMB) and state-sponsored drug coverage programs, such as Connecticut’s ConnPACE program.

  2. Read each plan's literature to see what kind of plan it is and what it pays for.

  3. Does the plan include Part D prescription coverage?

  4. Determine what plan services are provided at additional cost and how much. All preventive services should be identified, as well as any limitations associated with visits or services. The beneficiary should fully understand where to go for emergency, urgently needed, and routine care.

  5. Try to assess the plan’s stability. Is it likely to continue to serve your geographic area with similar or broader benefits and with a consistent group of physicians and other providers?

  6. If plan materials do not provide answers to all questions, the beneficiary should contact the plan for additional information. Beneficiaries should make a note of how plan staff respond to such inquiries and use that information in evaluating the plan.

  7. Beneficiaries should ask about plan physicians, determine if their physicians are in the plan, and find out how to change physicians if a satisfactory relationship with a plan physician cannot be established. Ask treating physicians about their experiences with the plan. In addition, beneficiaries should ask which hospitals, skilled nursing facilities and home care agencies the plan contracts with to insure that there are satisfactory choices available.

  8. Beneficiaries should know how to use the plan's complaint system and how appeals and grievances are handled.

  9. Beneficiaries should inquire among friends and relatives to determine if any are currently enrolled in Medicare Advantage plans or have been enrolled in the past. Beneficiaries should ask them about their experience with the plan.

  10. Beneficiaries should ask the plan representative if member satisfaction surveys are conducted and if the results are available for review.

  11. Beneficiaries should contact the CMS Regional Office of Beneficiary Services to determine if a plan has failed to comply with CMS regulations.

For further help in Connecticut contact the CHOICES program at (800) 994-9422.


COMPARISON CHART:ORIGINAL MEDICARE AND Medicare Advantage OPTIONS

Option

What It Is

Things to Consider

TraditonalMedicare

Traditional Medicare provides Medicare Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. It is a fee-for-service arrangement managed by the Federal government and available nationwide.

You can go to any provider that accepts Medicare. Some services are not covered and you have to pay some out-of-pocket costs. You can also join a Medicare Prescription Drug Plan to get Part D coverage.

Traditional Medicare Plan With Supplemental Medigap Policy

Traditional Medicare plus one of up to twelve standardized Medicare supplemental insurance policies, also known as “Medigap” insurance, available through private companies. Individuals in Traditional Medicare may want to obtain Medigap insurance because Medicare often covers less than the total cost of health care.

Depending on the standardized policy you buy, you will have coverage for at least some deductible and coinsurance costs. There may be coverage for extra benefits not otherwise covered by Medicare. You will have to pay a monthly premium for your supplemental policy.

Medicare Advantage Plans

In addition to the government’s Traditional Medicare program, Medicare offers individuals the option to receive services through a variety of private insurance plans. These private insurance options are part of Medicare Part C. Medicare Advantage is a means of receiving health care and Medicare coverage. An individual who joins a Medicare Advantage plan is still in the Medicare program.

Options available under MA include:

  • Coordinated Care Plans These plans include the following:

    • Health Maintenance Organizations (HMOs)

    • Provider Sponsored Organizations (PSOs)

    • Preferred Provider Organizations (PPOs)

  • Medical Savings Accounts (MSAs) combine the use of a health care savings account with a high deductible catastrophic health plan.

  • Private Fee-For-Service Plans (PFFSs) allow an individual to go to any Medicare-approved provider that accepts the plan’s payment.

  • Special Needs Plans (SNPs) target enrollment to one or more types of special needs individuals identified by Congress as: 1) institutionalized; 2) eligible for both Medicare and Medicaid; 3) individuals with severe or disabling chronic conditions. A SNP is a type of coordinated care plan.

Once you elect to receive coverage through an Medicare Advantage plan you must generally receive all of your care through the plan’s providers in order to receive Medicare coverage.

A Medicare Advantage plan must provide enrollees in that plan with coverage of all services that are covered by Medicare Parts A and B, plus additional benefits beyond those covered by Medicare. These additional benefits may be either or both a reduction in the premiums, deductibles and coinsurance payments ordinarily required or healthcare services not covered by Traditional Medicare.

Many Medicare Advantage plans also include Part D prescription drug coverage. If you are enrolled in a Medicare Advantage plan that offers prescription drug coverage you must use your Medicare Advantage plan’s drug benefit.

You are only permitted to join or leave a Medicare Advantage plan at certain times during the year.

 

*Adapted from Medicare & You, U.S. Dept. H.H.S., Pub No. HCFA-02119 (August 1998).

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