Fall 2008

Parsing Policies: Unraveling Medicare Mysteries
By Karyn Blake
Aging Well
Vol. 1 No. 4

The aggressive advertising of the new Medicare Advantage or Private Fee-for-Service plans has recently prompted controversy over Medicare coverage. Many Medicare beneficiaries are confused about the differences between traditional Medicare supplement policies and Medicare Advantage Plans, unable to discern which type of plan would better cover their doctor and hospital costs and best suit their needs. Be careful that clients do not confuse Medicare Advantage Plans with the original Medicare benefits combined with a traditional Medicare supplement policy.

Here’s an important piece of information: If clients have joined a Medicare Advantage Plan and are unhappy with it for any reason, they have 12 months to opt back to original Medicare and a Medicare supplement policy with no underwriting and no health questions. They cannot be turned down for coverage within that 12-month period. The Medicare Advantage Plans fail to make this known.

Since 2006, state offices of insurance commissioners have received some 300 consumer complaints about Medicare Advantage Plans, sometimes known as Part C. Some consumers complained that agents misled them or misrepresented themselves as government workers. Others objected to high-pressure sales in homes or group settings or stated that they had been enrolled in plans without their consent. Older adults who believe they’ve been misled can call 800-633-4227 to contact the Centers for Medicare & Medicaid Services (CMS).

During the summer of 2007, the marketing and sales of Medicare Advantage Plans were suspended due to the many misunderstandings and outright unlawful sales tactics used by companies and salespersons pushing Medicare Advantage Plans over the traditional Medicare supplement policies. They have recently been placed back on the market following Medicare’s imposition of new language that all companies and salespersons must use when giving Medicare presentations. The new language is: “A Medicare Advantage Private Fee-For-Service plan works differently than a traditional Medicare supplement policy. Your doctor or hospital must agree to accept the plan’s terms and conditions prior to providing healthcare services to you, with the exception of emergencies. Doctors, hospitals, and all providers may make this decision on a patient-by-patient basis and visit-by-visit basis.”

This means that physicians can accept a Medicare Advantage Plan at one visit and refuse it at the next visit if they choose. If older adults have been patients of specific physicians whom they prefer and do not wish to change their doctor or hospital preferences to ones that accept these terms, those individuals will have more coverage security with a traditional Medicare supplement policy.

“Medicare Advantage Plans are offered by private insurance companies. Medicare Advantage Plans are not the same as original Medicare that is offered by the federal government. Medicare Advantage Plans do not work like traditional Medicare Supplement, Medigap, Medicare Select or stand-alone PDP [prescription drug] plans. A Medicare Advantage Plan does not pay after Medicare pays its share. CMS/Medicare is not involved in individual transactions,” according to the CMS.

In other words, when older adults elect to join a Private Fee-For-Service Plan, it doesn’t cover the 20% that Medicare doesn’t cover. Even though elders pay $96.40 per month for Part B Medicare, such coverage is not the responsibility of Medicare but only of the Medicare Advantage Plan for which the elder has opted. Individuals must have Part B Medicare to join an Advantage Plan. However, Medicare pays the private insurance plan a fixed rate per beneficiary, regardless of how many or how few services the beneficiary actually requires.

With a traditional Medicare supplement policy, individuals can choose any doctor or hospital that they prefer without referrals for specialists. Such plans require a monthly premium for the supplement. Medicare will pay 80% of doctor and hospital costs, and the supplement will pay the remaining 20%. There are no hidden costs, copays, or hoops to jump through. In addition to the doctor and hospital Part B traditional Medicare supplement policy, individuals will need a stand-alone Part D drug plan to cover the costs of prescriptions. These are the only two policies elders would need to join Medicare Part A and/or Part B.

With a Medicare Advantage Plan, elders may have a built-in prescription drug plan that they must use. If this is the case, it’s important to compare the drug plan against the choices for stand-alone drug plans. If the coverage provided by a stand-alone drug plan is better, elders may need to reconsider enrolling in that particular Advantage Plan. They may be able to choose the drug plan that is best suited to their needs if the Advantage Plan they are considering allows a stand-alone plan.

Shop With Care

While the Medicare Advantage Plans may lure older adults with the promise of no or very low premiums, such plans can be better than no coverage at all for elders on disability and those who cannot afford to pay the premiums on a traditional Medicare supplement policy. Elders could also consider a Medicare Advantage Plan if they are in good health and their current doctors and hospitals are willing to accept the terms.

Older adults should certainly ask their physicians whether they plan to continue to accept the terms of the Advantage Plan before joining. Some Medicare Advantage Plans have vision and dental coverage, albeit very limited, that traditional Medicare does not offer. Some plans have even offered gym memberships or healthcare classes to boost enrollment. Another benefit of Advantage Plans is that they require no health questions or underwriting. The only exception for joining such plans is end-stage renal disease. There are annual limits on out-of-pocket costs as well. It’s important that clients weigh all these options carefully when selecting health coverage.

For individuals with ongoing health issues, there may be additional copays and expenses for services that are not covered by the Advantage Plan. The plan does not cover durable medical equipment such as wheelchairs. If coverage security and the doctor selection are priorities, a Medicare Advantage Plan may not provide the best coverage.

For older adults new to Medicare and facing initial enrollment in a traditional Medicare supplement policy or Advantage Plan, remember that this is the only time to get a traditional Medicare supplement policy with no underwriting. If elders join an Advantage Plan and keep it for more than 12 months and subsequently develop health problems or find that a physician refuses to accept the terms of payment, it may be impossible to get a traditional supplement policy due to the health questions involved. Also, if an individual moves out of the area of the Advantage Plan’s territory, he will lose his coverage.

Individuals can use traditional Medicare supplement policies at any time, anywhere in the United States. If a Medicare Advantage Plan ends its Medicare contract and goes out of business, the plan must provide notice to subscribers. Subsequently, subscribers have 63 days from the date coverage ends to enroll in another Medicare Advantage Plan or a traditional Medicare supplement policy with no underwriting or health questions.

Analyze and Compare

The most important aspect when learning about Medicare options is recognizing that all traditional Medicare supplement policies are regulated by the CMS. Some insurance companies charge a higher premium for the same benefits as another company, so it’s important to compare prices. Some insurance companies have huge advertising budgets and urge membership in their organizations. Don’t let clients be fooled into believing that a company necessarily has the lowest prices and the best coverage. Many times, although a company may not have the best price, the company name is familiar, so seniors enroll before they check or compare.

Older adults should also call to speak to the company’s customer service department before enrolling to determine what kind of help they will receive. These are not the enrollment department salespeople. If clients have a question or a problem, such as filing an appeal for a prescription or service that has been denied, they will be transferred to another department for assistance. Before enrolling, it’s important that elders determine whether they can understand the customer service representative. Does he or she provide respect and consideration when helping? Is there a long wait time? Many companies outsource their customer service to other countries and have employees who are not trained to be of help. It pays for older adults to anticipate potential problems before the necessity arises to address difficulties with specific plans and their administration.

— Karyn Blake, founder of My Part D USA, has written numerous articles regarding Medicare coverage. Additional information is available at www.MyPartDUSA.com.