Medicare is the largest health care insurance program in the country, but it doesn’t pay for everything. Older Americans have to weigh their needs against their checkbooks and decide the best way to fill the gaps in its coverage. With managed care on everyone’s lips, discover what that option means to you.
Every month approximately 225,000 Americans turn 65 and become eligible for Medicare, the largest health insurance program in the country. But Medicare beneficiaries soon realize that the coverage does not pay for everything. They must then decide whether to get supplemental insurance (Medigap) to help pay doctor and hospital deductibles and copayments. But another option is gaining ground: enrollment in a managed care plan. (Click here for information on Medicare SELECT, another option now available to Seniors.
While the number of Medicare beneficiaries in managed care is still relatively small, it is growing. As of August 1996 over four million Medicare beneficiaries (about 11 percent of the total Medicare population) were enrolled in Medicare managed care programs – that’s a 25 percent increase from the previous year. And as health care costs keep soaring, such programs are proliferating.
Some politicians have made it clear that they want to convert Medicare to managed care primarily to cut the budget. But as policy makers continue to debate monetary issues, millions of senior citizens are wondering how changes in the system will affect the quality of their care. Here we outline what Medicare Managed Care entails to help you decide what is best for you.
What Is Managed Care?
Traditionally, health care has been provided by independent doctors and hospitals. But managed care refers to various associations, such as health maintenance organizations (HMOs), that link doctors, hospitals and insurance plans in the hopes of controlling costs. To do this, each plan negotiates fees with its affiliated providers and keeps a tight reign on them by reviewing their decisions before, during and after patients receive certain procedures or are hospitalized.
Managed care companies are presumably designed to be responsible for their members’ total health, to emphasize disease prevention and health education, and to actively oversee the quality of care provided. Depending on how the plan is organized, services are provided either at specific health facilities (often called a staff or group model HMO) or in the private practice offices of doctors associated with the plan (called an independent practice association, or IPA model). The plan encourages members to use the affiliated health care providers by imposing financial penalties. For example, some plans won’t pay if you go to a non-participating hospital unless it is an emergency. For more information on how managed care works, click here to go to our Special Report: Your Guide to Managed Care .
What Does Managed Care Mean To Medicare Beneficiaries?
Medicare managed care plans are agreements between the federal Medicare program and a managed care group. If you are enrolled in Medicare Parts A and B, you may elect to receive your benefits under managed care, regardless of pre-existing conditions (the only exceptions are patients with end-stage renal disease or those receiving care from a hospice).
As a member of such a managed care plan, you will not have to pay any of the regular Medicare deductibles and copayments for doctor visits or hospital stays. Instead the plan is permitted to charge you a monthly premium, and/or nominal copayments ($5.00 to $15.00) as services are used. Usually there are no other charges, no matter how many times you visit the doctor, are hospitalized, or use other covered services. However, you must continue to pay the Medicare Part B monthly premium ($43.80 in 1997).
There are many good reasons for enrolling in a Medicare managedcare plan. Since the benefits are comprehensive, members probably will not need to purchase Medigap insurance. This means you can save money since some managed care plans charge no premium. Medicare managed care plans may also pay for preventive care normally not covered under Medicare, such as dental care, eye glasses, or prescription drugs. An added bonus is that there is often a minimum of paperwork associated with enrollment in managed care because participating doctors and hospitals take care of filing claims and overseeing other administrative matters.
Still, other aspects of managed care also need to be considered. (Click here for our report Let the Buyer Beware: Information Is Your Best Ally.) You may have to change your current doctors or hospitals if they are not part of a plan that is available to you. And if you don’t follow the rules, there may be financial penalties, or disincentives. For example, most plans want you to see a primary care physician (often an internist or family practitioner) before you go to a specialist. This system is meant to cut costs by eliminating unnecessary and expensive visits to specialists that may include needless tests.
For the same cost-containing reasons, managed care plans usually require that doctors get approval before admitting a patient to the hospital in a non-emergency situation. So if you decide to go directly to a specialist or to a hospital for certain elective surgeries, you may end up paying for a portion or, perhaps, all of the care you receive. This is one of the most controversial points surrounding managed care, and opponents argue that this system may lead to delays in necessary care. Additionally, some doctors are frustrated by having the burden of controlling health care costs.
What Are My Options If I Join A Managed Care Plan?
Depending on what is available in the community, there are different types of arrangements under which a Medicare beneficiary can enroll in a managed care plan. And since there are important differences among them that will affect your coverage, it is vital that you read the details of the plan carefully and understand what type of agreement the company has with Medicare. Below is an outline of various arrangements. (Some employers negotiate good coverage with managed care plans for those over 65. Find out if this is the case with your company by contacting the employee benefits office.)
1) Most plans contracting with Medicare have what is called a risk contract. Under such an agreement, the plan must provide all Medicare benefits generally available in the plan’s service area. Whether you are entitled to Medicare Parts A and B or Part B only, you can get all of your Medicare benefits through the plan. The plan may also pay for other benefits not covered under Medicare, such as annual physicals, routine eye exams, eyeglasses and contact lenses, prescription drugs, dental care, and hearing aids. Under a risk contract, plans may offer extra benefits at no additional cost or they may require that you purchase them to enroll.
By law a plan must enroll Medicare beneficiaries in the order in which they applied and without a health screening during at least one 30-day open enrollment period each year. While enrolled, you are “locked-in” to receiving all covered care from the providers associated with the plan or through referrals by the plan. Neither the plan nor Medicare will pay for services received from providers who are not part of the plan, except for emergency treatment that you receive anywhere in the United States, or urgently needed care you may require while temporarily away from home.
Now, however, plans with risk contracts are allowed to offer an alternative to being “locked-in”. This Point of Service (POS) option lets you receive certain services outside the plan’s network and the plan will pay part of the charges. In return for this flexibility, you must pay a portion of the cost, usually at least 20 percent.
2) Another type of arrangement between a plan and Medicare is known as a cost contract. Plans with these contracts differ from those with risk contracts as follows:
– They are not allowed to provide extra benefits at no additional cost and can’t require you to purchase extra benefits as a condition of enrollment.
– They do not have a “lock-in” requirement. If you enroll in a cost contract plan, you can either go to health care providers affiliated with the plan and pay only the applicable copayments, or you can go outside the plan. If you chose to do the latter, Medicare will pay its share of the approved charges and you will be responsible for anything in excess of the Medicare-approved amount as well as applicable Medicare deductibles and copayments.
3) Finally, some plans also have a health care prepayment plan agreement (HCPP). HCPPs are significantly different because they do not have to comply with all the requirements that bind risk and cost contracts. For example, HCPPs are not required to offer all of Medicare’s regular benefits, there is no required open-enrollment period and the plan may refuse to enroll you on the basis of your health. In addition, the Medicare rules that do apply to HCPP plans only affect payment for services covered by Medicare Part B. If the plan offers to provide Part A services to you for a prepaid amount, that part of your contract with the plan is not regulated by Medicare.
Quality Control In Managed Care
Who oversees the quality of care delivered in managed care plans that contract with Medicare? Such plans must meet and maintain specific requirements and standards in order to enter the federal Medicare program and to continue to participate. For example, as part of the application process to work with Medicare, plans must provide information on their financial solvency, contracts with their health care providers and on quality assurance programs. Also, federal Medicare officials conduct on-site monitoring of the plans every two years.
In addition, state Peer Review Organizations (PROs) oversee the quality of care provided in managed care organizations with Medicare contracts. These organizations are made up of practicing doctors and other health care professionals who work with managed care plans on projects to improve the quality of care given.
Another indicator of plan quality is accreditation by the National Committee for Quality Assurance (NCQA), a voluntary non-profit agency based in Washington, DC, that evaluates managed care plans based on a set of stringent quality criteria. While the review is not specific to Medicare patients, accreditation by NCQA indicates an overall commitment to quality in the managed care pla
What If I Don’t Like the Plan?
If you are not happy with some aspect of your enrollment in an HMO, there are several avenues to pursue. As a condition of participation, all plans must have an internal grievance process which handles complaints, such as long waiting periods for an appointment or other administrative issues. If the plan refuses to provide or pay for a Medicare covered service, federal regulations afford Medicare beneficiaries more rights than an ordinary HMO member, forcing the plan to follow a clearly specified appeal process for Medicare members who are not satisfied with the outcome of their cases. If the HMO doesn’t resolve the problem, it must send the case to the federal agency that oversees Medicare for an independent decision. After this there are even more levels of appeal, including a hearing before an Administrative Law Judge or the Appeals Council of the Social Security Administration.
Finally, if your complaint is about the quality of care provided by the managed care plan, you can write to the PRO who must then make an investigation. Be sure you carefully read the managed care plan’s materials about complaints and grievances in order to understand your rights. You can call the Social Security Administration’s Hotline at 800-638-6833 for information on how to contact your local PRO.
If I Join a Plan Am I Stuck In It?
You can disenroll from a plan at any time for any reason. The disenrollment becomes effective the first day of the month after your signed request is received by either the plan or the Social Security Office. There is no standard disenrollment form (generally plans have their own) but anything in writing and signed by the beneficiary will do. Once your disenrollment goes through, you are automatically re-enrolled in Medicare. NOTE: If you disenroll late in the month, the paper work may not have enough time to go through for the first of the month. So if you request disenrollment on October 25th, it may not be fully processed until December 1st.
Do I Still Need a Medigap Policy?
Most people will not need a Medigap policy once they enroll in a Medicare managed care plan. If you have a Medigap policy and decide to join a managed care plan, keep the following factors in mind:
– If you enroll in any managed care plan, it is wise to keep your Medigap policy for a few months, just in case you find the managed care plan unsatisfactory. By doing this, you will not risk being without protection in the event that there is a waiting period, increased premiums or denial of coverage while applying for a new Medigap policy.
– Once you decide you are satisfied with a risk contract plan, a Medigap policy will be of no value because if you go outside of the plan for Medicare-covered services, neither Medicare nor a Medigap policy will pay benefits. With respect to services not covered by Medicare, many of the same benefits that would be covered under a Medigap policy will likely be available through the managed care plan. Also, Medigap policies do not cover any premiums or copayments you may owe the managed care plan.
– If you enrolled in a cost contract or an HCPP, you are better off getting all of your services through the plan since you may already be paying a premium. However, if you expect to go outside the plan for a lot of services, a Medigap policy might cover the deductibles and coinsurance you will incur, depending on the type of Medigap policy you select. The question then becomes whether it is cost effective for you to have both. Click here for agency and contact information
Medicare beneficiaries have one other managed care option called Medicare SELECT. These plans are based on traditional Medigap insurance policies, though they may have lower premiums. SELECT plans are nearly the same as Medigap insurance except that the insurer will only pay full benefits if you obtain medical care from “preferred” health providers who are part of a designated network.
Each time you receive covered services from a preferred provider, Medicare will pay its share of the approved charges and the insurer will pay the full supplemental benefits provided for in the policy. If you go outside the network for non-emergency care, the SELECT plan may deny payment or not pay the full amount. Medicare SELECT may be offered by managed care companies or by traditional indemnity insurance companies who contract with a network of doctors for their enrollees.
Until now, the Medicare SELECT pilot program was being tested in only 15 states, but it has recently been extended by Congress until the year 2000 and is now available all around the country.
Although there are no Medicare SELECT plans in your area at present, there probably will be some soon. For more information, call the Medicare Hotline at 800-638-6833.
The Inspector General’s Office of the Department of Health and Human Services surveyed nearly 3,000 Medicare beneficiaries enrolled in a Medicare risk contract HMO. The survey found that 95 percent of them had good access to all needed care and 84 percent intended to stay with their HMO.
However, the survey did reveal some of these HMOs have broken federal regulations that prohibit HMOs from denying or discouraging enrollment based on a beneficiary’s health status, except for end-stage renal disease or hospice care. According to the report, 43 percent of those surveyed who could remember said they were asked at the time of application about their health problems, and 3 percent were required to have a physical examination.
The survey also found that almost one-third of disenrollments were for administrative reasons, such as moving out of the plan’s service area. The remaining two-thirds of disenrollees voiced criticism of their choice of doctors, access to services, or the expense of premiums or copayments. Ex-enrollees who were disabled and those with end-stage renal disease reported that “their primary HMO” doctors restricted access to needed Medicare-covered services, didn’t refer them to specialists when necessary and didn’t take their health complaints seriously.
Another problem the survey found was that 25 percent of beneficiaries reported they did not know they had the legal right to appeal their HMO’s refusal to provide or pay for services. Managed care plans are required to let members know exactly how they can appeal any decision they feel is unfair.
The Federal Health Care Financing Administration offers a brochure titled Medicare and Managed Care Plans, as well as other information on the subject.
The American Association of Retired Persons (AARP) offers Managed Care: An AARP Guide.
For personal counseling, each state’s Insurance Department has volunteers trained in Medicare and managed care options, as well as Medigap. Counselors may be able to answer your questions over the phone or refer you to help locally.