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What is Medicare?

Medicare is the national program that serves as the primary source of health insurance for older people and many people with permanent disabilities.  The program was enacted in 1965 as Title 18 of the Social Security Act. Medicare has evolved significantly over the years; in 2003 additional major changes were made. Pursuant to the 2003 law, Medicare now includes a prescription drug discount card program and, in 2006, beneficiaries will be offered a limited prescription drug benefit.

What Health Care Services Does Medicare Cover?

Medicare works like other health insurance. It pays a portion of the cost of certain necessary medical services. To be covered the Medicare Act says the services must be “reasonable and necessary for the treatment, diagnosis, or rehabilitation of an illness, injury, or malformed body member.” Often cost sharing is required of the individual Medicare beneficiary, including premiums, deductibles and co-payments.

The Medicare program is divided into parts.  Part A covers inpatient hospital care, skilled nursing facility (nursing home), home health, and hospice care. Part B, which is optional, and for which one pays a monthly premium, covers medical care provided by doctors and other health care providers, long-term home health care, durable medical equipment, outpatient hospital services, physical, speech, and occupational therapy. Part C of Medicare, (also known as  Medicare Advantage), provides payment mechanism options including managed care plans. Medicare Part D is the new prescription drug program, which will be effective January 1, 2006.

Who is eligible?

Social Security retirement recipients who are over 65 years old and individuals who have received Social Security disability benefits for 24 months are eligible for Medicare. In addition, individuals who receive Railroad Retirement Benefits and individuals who have End Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS or “Lou Gerhig’s Disease”) are also eligible for Medicare.

Medicare is not a welfare program and should not be confused with Medicaid. While Medicaid is a state run health care financing program for low-income people, Medicare is a federal program and an individual’s income and assets are not considerations in determining eligibility.

As for others, people with Multiple Sclerosis can qualify for Medicare coverage before age 65 if Social Security determines that they are permanently disabled and they have received Social Security disability benefits for 24 months. People with MS will also be eligible for Medicare when they reach age 65 if they receive Social Security or Railroad Retirement benefits.  Individuals who retire early, and decide to receive Social Security retirement benefits at age 62, must still wait until they are 65 to receive Medicare.

How Do People Enroll?

Generally, individuals who are 65 and are entitled to Social Security or Railroad Retirement benefits are automatically enrolled in Medicare Part A and will be deemed to have also enrolled in Part B.  Individuals must enroll in Part A during an “initial enrollment period,” which begins in the third month before the person reaches age 65 (or reaches age 65 and becomes a U.S. citizen, or a permanent resident who has lived continually in the U.S. for the five years immediately preceding application for Medicare). The initial enrollment period extends for the next seven months.

An application for Social Security or Railroad Retirement will also suffice for Medicare. A separate application is not necessary. Individuals who choose to take early Social Security retirement benefits will be automatically enrolled in Medicare when they attain age 65.

Those who are 65 but who delay receipt of Social Security benefits may still enroll in Medicare but must file an application. Individuals who qualify for Medicare because they have received Social Security or Railroad Retirement disability benefits for 24 months are entitled to Medicare but also must file an enrollment application.

Applications for Medicare may be made with Social Security after receiving disability benefits for 24 months. Effective July 1, 2001 the 24-month waiting period was eliminated for disabled persons diagnosed with ALS.

Medicare coverage can be extended up to 78 months after disability benefits are terminated if the beneficiary is engaged in an approved nine-month trial work period after a period of disability. The previous period of disability benefits will count toward the 24-month eligibility requirement should the beneficiary seek to reestablish Medicare eligibility.

Individuals who miss the initial enrollment period must wait for a “general enrollment period’ to enter Medicare Part B. The general enrollment period is the first three months of each calendar year (January 1 through March 31). Medicare Part B benefits do not begin until July of that year.

When the new Part D prescription drug benefit goes into effect in 2006, individuals will have to affirmatively enroll in a prescription drug plan if they want the benefit.  The initial enrollment period will occur from November 15, 2005 through May 15, 2006.  Every year after that individuals will only be able to enroll in a Part D drug plan or change the plan in which they have enrolled from November 15 through December 31 of each year.

Penalties apply for late enrollment under Part A, Part B, and Part D. Under Part A, a 10% penalty, based on the monthly Part A premium price, is imposed for every month of late enrollment up to twice the number of months for which the beneficiary has failed to enroll. Under Part B, a 10% penalty is also imposed. The penalty is for each full year (12 month gap) of late enrollment. Unlike Part A, there is no end-point to the penalty under Part B. Under Part D, the penalty will be the greater of an amount that is actuarially sound for each uncovered month or 1% of the national average monthly beneficiary base premium for each uncovered month, whichever is greater.  As with Part B, there is no end-point to the penalty.

How Are Medicare Benefits Provided?

Historically Medicare benefits were provided to all beneficiaries in the same way throughout the country, in a manner similar to traditional private health insurance. Beginning in the mid-1990s, however, managed care plans became part of the Medicare program; creating different delivery systems in different parts of the country. With the advent of Medicare Part C in 1997, more kinds of benefit plans became available. The plans are known as Medicare Advantage (MA, formerly known as Medicare+Choice). The options include “coordinated care plans,” (the term used in the law for managed care plans) as well as preferred provider organizations, medical savings accounts, private fee-for-service plans, and other options. In most parts of the country the only available Medicare Advantage options are managed care plans. The majority of beneficiaries are part of the traditional Medicare program; a significant number, however, receive their Medicare through Medicare Advantage plans.

Beneficiaries can receive Medicare through a managed care plan by filing an enrollment form.  Once the choice is made, the beneficiary generally must receive all of his or her care through the plan in order to receive Medicare coverage.  Beneficiaries can change their minds, disenroll from their managed care plan, and return to “original” Medicare.  An election to enroll or disenroll from a Medicare Advantage plan becomes effective the month following the month  in which the election is made, regardless of the date of the election.

The Medicare managed care benefit is different from the traditional Medicare “fee-for-service” system but coverage should theoretically be the same or better. Often a Medicare managed care plan administers the health care treatment of an enrollee by the use of a physician (known as a “gatekeeper”) who must approve the patient’s referral to specialized care.  (Some Medicare managed care plans permit beneficiaries to go directly to a specialized care provider, without the gatekeeper’s approval, in return for payment of an extra premium.)

Does Medicare Cover Prescription Drugs?

Historically Medicare has not covered prescription drugs; that is changing.  There are now a number of ways in which Medicare beneficiaries in general, and people with MS in particular, can receive some assistance with the cost of some of their medications from Medicare.

  • Medicare Part B
    A limited number of outpatient prescription drugs under certain conditions, such as most infused drugs given by a licensed medical provider, will be billed under Part B.

  • Medicare Part D
    In January 2006 Medicare began a new Part D which will offer some assistance with the cost of prescription drugs. The Part D program will be administered by private entities. Coverage will be available for those beneficiaries who enroll, meet the deductible, and pay a monthly premium. Medicare will then pay for part of the cost of those drugs that are on the chosen plan’s drug formulary. After Medicare has paid a set amount of dollars, the beneficiary will be required to meet a second, larger deductible, which has become known as the “donut hole” (Note that Due to the Affordable Care Act, you no longer have to pay the full cost of your drugs during this period, and the gap will gradually diminish until it is complexly gone in year 2020.  You can find more information about closing the Coverage Gap here).  After the donut hole, additional coverage with a lower beneficiary co-payment responsibility will begin.  Beneficiaries with low-incomes will be eligible for assistance with the cost sharing responsibilities.  People eligible for both Medicare and Medicaid will begin receiving drug coverage under Medicare rather than Medicaid.

  • State Pharmaceutical Assistance Programs
    Approximately 20 states have their own state legislated and administered programs that provide assistance with the cost of prescription drugs, usually for individuals who meet certain income guidelines. To learn more about a particular state’s benefit contact the state agency that administers their Medicaid program.

Can People with MS and Other Long-Term Illnesses Receive Medicare Coverage?

There is a long-standing myth that people with long-term illnesses and those in need of long-term care are not covered by Medicare. This is not true. Unfortunately, beneficiaries are too often denied Medicare coverage for a variety of services on the grounds that they have a chronic or stable condition, that their condition will not improve, and/or that the services are to maintain, not to improve, their condition.

Medicare coverage determinations should be based on what is medically necessary and on the specific qualifying criteria for the particular health care setting and services. The Medicare Act excludes certain services from coverage, and other coverable services may not meet the qualifying criteria in a given case. However, people should not be denied benefits for otherwise coverable services simply because they have a long-term illness such as MS. Further, beneficiaries are legally entitled to an individualized assessment of their qualification for coverage. These assessments should be made based on valid standards for the particular services at issue, not on generalized assumptions about people with similar diagnoses.  This is important for people with MS who are too often erroneously denied Medicare coverage for physical therapy, home health care, and other important and necessary services.

Is Medicare Coverage Available for Long-Term Services and Long-Term Care?

Medicare may cover some services for long periods of time. People with MS and other chronic conditions may be eligible for physical, occupational, and speech therapy as long as the services are skilled and medically necessary.  This is so even if the services are needed to maintain the individual’s condition rather than to restore prior function.

In addition, while Medicare covers only a limited amount of nursing home care in only limited circumstances, the Medicare home health benefit, and sometimes the hospice benefit, can be a source of long-term care and coverage for beneficiaries.  Indeed, in 1980, Congress made an affirmative decision to extend the Medicare home health benefit for individuals who have not necessarily experienced an acute illness and who need home care for long periods of time.  The 1980 statutory changes removed the requirement that the beneficiary have a prior hospital or skilled nursing facility stay in order to obtain home health coverage, and eliminated a 100 visit limitation on coverage.

  • Physical, Occupational, and Speech Therapies
    People with MS are often denied necessary physical therapy services on the grounds that they are not going to improve.  Importantly, restoration is not the deciding factor in determining the right to coverage.  The question for determining the right to coverage should be are the skills of a therapist necessary to establish, provide, and/or supervise the services. Skilled therapy can be needed to maintain the individual’s condition or to arrest further deterioration; in such cases Medicare coverage may be warranted. Each person is entitled to an individualized assessment of his/her right to Medicare coverage.  For many years there was a cap on the annual Medicare payment for physical, occupational, and speech therapy; this dollar limit was lifted by Congress in 2003.  It will be reviewed again for services beginning in 2006.

  • Home Health Care

Unlike the Medicare skilled nursing facility benefit, which provides coverage for a short period of time, Medicare coverage can be available for long-term home health care if the qualifying criteria are met.  There is no legal limit on the duration of time for which home health coverage is available.  Further, Medicare covers home health services in full, with no required deductible or co-payments from the beneficiary. Services must be medically necessary and reasonable and the following criteria must be met:

  1. A physician has signed or will sign a plan of care.
  2. The patient is or will be homebound.  This criterion is met if leaving home requires a considerable and taxing effort which may be shown by the patient needing personal assistance, or the help of a wheelchair or crutches, etc.  Occasional but infrequent “walks around the block” are allowable.
  3. The patient needs or will need physical or speech therapy, or intermittent skilled nursing (from once a day for periods of 21 days at a time if there is a predictable end to the need for daily nursing care, to once every 60 days); and
  4. The home health care is provided by, or under arrangement with, a Medicare-certified provider.

If the triggering conditions described above are met, the beneficiary is entitled to Medicare coverage for home health services.  Home health services include:

  • Part-time or intermittent nursing care provided by or under the supervision of a registered professional nurse.
  • Physical, occupational, or speech therapy;
  • Medical social services under the direction of a physician; and
  • To the extent permitted in regulations, part-time or intermittent services of a home health aide.

The Balanced Budget Act of 1997 made significant revisions to the Medicare home health benefit (BBA). These changes were effective for services provided on or after January 1, 1998.  While the BBA did not change the Medicare home health coverage criteria, the changes did alter the payment structure and, in practice, this change resulted in reduction in services, particularly for individuals in need of long term or extensive care. As with the SNF benefit, denials of Medicare home health coverage should not be predicated upon particular diagnoses or the fact that a patient’s condition is chronic or unlikely to improve.  Each patient should be provided with an individualized assessment of his or her right to coverage in light of the qualifying criteria. Additional advocacy tips include the following:

  1. Medicare coverage should not be denied simply because the patient’s condition is “chronic” or stable.”  “Restorative potential” is not necessary.
  2. Resist arbitrary caps on coverage imposed by the intermediary.  For example, do not accept provider or intermediary assertions that aide services in excess of one visit per day are not covered, or that daily nursing visits can never be covered.
  3. There is no legal limit to the duration of the Medicare home health benefit.  Medicare coverage is available for necessary home care even if it is to extend over a long period of time.
  4. The doctor is the patient’s most important ally.  If it appears that Medicare coverage will be denied, ask the doctor to help demonstrate that the standards above are met.  Home care services should not be ended or reduced unless the doctor has ordered it.
  5. In order to be able to appeal a Medicare denial, the home health agency must have filed a Medicare claim for the patient’s care.  You should request, in writing, that the home health agency file a Medicare claim even if the agency told you that Medicare will deny coverage.
  • Skilled Nursing Facility Care

    Medicare provides a limited benefit for nursing home coverage for a limited period of time.  Nursing homes are referred to in Medicare as skilled nursing facilities (SNFs).  The benefit is available for a short time at best – for up to 100 days during each spell of illness. If Medicare coverage requirements are met, the patient is entitled to full coverage of the first 20 days of SNF care.  From the 21st through the 100th day, Medicare pays for all covered services except for a daily coinsurance amount ($109.50 per day in 2004) The SNF patient will not be entitled to any Medicare coverage unless he or she was hospitalized for at least three days prior to the SNF admission and, generally, was admitted to the SNF within 30 days of the hospital discharge.

    There are certain requirements that must be met in order for a patient to receive Medicare coverage. These requirements include:

  1. A physician must certify that the patient needs skilled nursing facility care.

  2. The beneficiary must generally be admitted to the SNF within 30 days of a 3-day qualifying hospital stay.

  3. The beneficiary must require daily skilled nursing or rehabilitation.

  4. The care needed by the patient must, as a practical matter, only be available in a skilled nursing facility on an inpatient basis.

  5. The skilled nursing facility must be a Medicare-certified provider.

If coverage is available, the benefit for SNF care is intended to cover all the services generally available in a SNF:

  • Nursing care provided by registered professional nurses,

  • Bed and board,

  • Physical therapy,

  • Occupational therapy,

  • Speech therapy,

  • Social services,

  • Medications,

  • Supplies,

  • Equipment, and

  • Other services necessary to the health of the patient.

Examples of services recognized as skilled by Medicare include the following:

  • Overall management and evaluation of care plan.

  • Observation and assessment of the patient’s changing condition;

  • Levin tube and gastrostomy feedings;

  • Ongoing assessment of rehabilitation needs and potential;

  • Therapeutic exercises or activities;

  • Gait evaluation and training.

Unfortunately, Medicare coverage is often denied to individuals who qualify under the law.  In particular, beneficiaries are often denied coverage because they have certain chronic conditions such as MS, Alzheimer’s disease, Parkinson’s disease, or because they need nursing or therapy to maintain their condition.  These are not legitimate reasons for Medicare denials of SNF care.  The question to ask is does the patient need skilled nursing and/or therapy on a daily basis, not, does the patient have a particular disease or will s/he recover. Other important advocacy tips include the following:

  1. The restoration potential of a patient is not the deciding factor in determining whether skilled services are needed.

  2. The doctor is the patient’s most important ally.  If it appears that Medicare coverage will be denied, ask the doctor to help demonstrate that the standards described above are met.

  3. The management of a plan involving only a variety of “custodial” personal care services is skilled when, in light of the patient’s condition, the aggregate of those services requires the involvement of skilled personnel.

  4. The requirement that a patient receive “daily” skilled services will be met if skilled rehabilitation services are provided five days per week.

  5. If the nursing home issues a notice saying Medicare coverage is not available and the patient seems to satisfy the criteria above, ask the nursing home to submit a claim for a formal Medicare coverage determination.  The nursing home must submit a claim if the patient or representative requests; the patient is not required to pay until he/she receives a formal determination from Medicare.

  • Hospice Care

Since 1982, Medicare has provided coverage for hospice care.  Hospice care is intended to provide palliative and supportive care for the terminally ill and their families rather than treatment for the underlying condition.  With the passage of the BBA in 1997, Medicare now covers two 90-day periods of hospice care and an unlimited number of additional periods of 60 days each. Formerly, Medicare coverage was available for two 90-day periods, for one 30-day period, and for a fourth unlimited period of hospice care.

In order to receive Medicare hospice coverage, a patient must elect to opt into hospice coverage and, as a consequence, out of most other Medicare coverage for treatment of the underlying terminal condition.  The hospice care must generally be provided by, or under arrangement with, one Medicare-certified hospice program during each period.

To receive Medicare coverage for hospice care, the patient must be certified as terminally ill by the patient’s physician and/or the hospice staff physician, and the hospice care must be part of a written plan of treatment established by the attending physician and hospice medical professionals. If coverage conditions are met, Medicare is available for an array of services, including:

  • Nursing care;

  • Physician services.

  • Counseling services for the patient and the family or other caretakers.

  • Medical social services;

  • General inpatient care;

  • Respite Care;

  • Home health aides;

  • Homemaker services.

  • Medical supplies, equipment appliances, and biologicals (including pain medication);

  • Physical, occupational, and speech therapy.

What Can Be Done to Contest a Medicare Denial?

Because of the size and complexity of the Medicare program and because of the desire to contain costs, Medicare coverage is often denied when it should be granted. Sometimes these denials are a result of errors; sometimes they are a result of policy that places cost containment concerns over the needs of individual beneficiaries. Whatever the underlying reasons for the denial, the Medicare program includes an appeals system that is designed, at least in theory, to reverse erroneous denials and to correct mistakes. If the patient’s attending physician feels the care in question is medically necessary and the care is not simply excluded from Medicare coverage (e.g., hearing aids, dental care, skilled nursing facility care when there was not a prior hospital stay), the beneficiary should appeal.