Edited October 2011
This is an extremely brief overview of the Medicare Program. One of the best resources on the web is maintained by the Medicare Rights Center and I urge you to visit that site. It’s a great resource. Go when you have time to look at it because there is much to see.
For those who have been told that a family member will not be eligible for continued Medicare coverage in a nursing home because he or she “has failed to progress” please read my analysis below under “Skilled Nursing Facility Care.” I have also weighed in on the plateau or failure to progress issue on other posts.
Medicare is a federal insurance benefit available to qualified individuals without regard to financial need or resources. Medicaid, on the other hand, is a federal-state medical benefit available to certain individuals who financially qualify. Warren Buffet is likely on Medicare. He is definitely not on Medicaid. As a rule, individuals who are age 65 and entitled to Social Security or Railroad Retirement benefits are automatically entitled to (and enrolled in) Medicare Part A and will be deemed enrolled in Part B. Individuals not yet receiving Social Security or Railroad Retirement benefits must enroll in Part A during an initial seven month 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 United States for the five years immediately preceding application for Medicare). For example, someone delaying Social Security retirement benefits because she wishes to work past normal retirement would need to enroll in Part A.
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.
Part C, originally known as Medicare-Choice and now called Medicare Advantage (MA), added a number of financing options for Medicare covered health services. Medicare Advantage plans have generated a considerable amount of controversy over the last few years. Medicare Advantage plans must offer the core package of benefits available under Parts A and B, plus additional benefits.
Part D prescription drug benefits became effective January 1, 2006. Part D requires individuals who want drug coverage to enroll in a prescription drug plan. The initial enrollment period for Part D corresponds to the individual’s initial enrollment period for Part A. Individuals who do not enroll during their initial enrollment period or who want to change the plan in which they have enrolled may do so during the annual coordinated enrollment period for Part C plans, which has been November 15 through December 31 of each year but was chnaged in 2011 to begin October 15 and run through December 7.
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 applies for each full year of late enrollment. Unlike Part A, there is no end point to the penalty under Part B. Under Part D, the penalty is the greater of an amount that is actuarially sound for each uncovered month or 1 percent of the national average monthly beneficiary base premium for each uncovered month. As with Part B, there is no end point to the penalty.
Medicare has established a special enrollment period (SEP) for a person who does not purchase Medicare Part B at age 65 because she (or her spouse) is covered under an employer’s large group health plan. The special enrollment period ends ends on the last day of the eighth consecutive month after the person is no longer enrolled.
Individuals who delay enrolling in a Part D plan because they have drug coverage that is “as good as Medicare” (the group health plan covering such a person must provide a written statement that says that), through another source also have a special enrollment period if that drug coverage ends.
Medicare is divided into four general parts: Part A, Part B, Part C and Part D. Each part offers different benefits and, of course, different rules.
A simple way to think of Part A is that it provides coverage for health care entities (e.g., hospitals); Part B applies to physicians and other medical practitioners, home health services, durable medical equipment and other services not covered by Part A. There are notable exceptions, but that is an easy way to think of the two parts.
A. Hospital Coverage
Part A provides 90 days of coverage for hospital care during each benefit period (called a “spell of illness”) after the beneficiary meets a deductible ($992 in 2007, $1,024 in 2008). A spell of illness begins when a beneficiary receives Medicare-covered inpatient hospital care and ends when the patient has spent 60 consecutive days outside the hospital (or skilled nursing facility).
Also, the beneficiary is entitled to 60 days of hospital care as a “lifetime reserve.” Once used, lifetime reserve days may not be replenished. If the patient remains in the hospital beyond the 60th day, he or she is responsible for a daily coinsurance amount for days 61 to 90 ($248 per day in 2007, $256 in 2008). The coinsurance for lifetime reserve days is even heftier ($496 per day in 2007, $512 in 2008).
B. Skilled Nursing Facility Care
Part A provides limited benefits for care in a skilled nursing facility (SNF) for up to 100 days during each spell of illness. If coverage conditions are met, the patient is entitled to full payment of the first 20 days of SNF care. A hefty coinsurance amount ($124 per day in 2007, $128 in 2008) applies from days 21 through 100. To qualify for any Part A SNF benefits the patient must have been hospitalized for at least three days prior to the SNF admission and be admitted within 30 days of the hospital discharge. Further, the medical condition necessitating skilled coverage must have some sort of causal connection the hospital admission and discharge.
The “Plateau” Myth. One extremely common misconception is that to continue to qualify for SNF coverage the patient must be progressing or improving. Many times a SNF will inform the family that the patient has “plateaued” or is not improving and will no longer qualify for Medicare. This is simply not correct. Pursuant to federal regulations,
The restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities. For example, a terminal cancer patient may need some of the skilled services described in § 409.33.
42 CFR § 409.32(c).
Other federal regulations provide in part:
(c) Services which would qualify as skilled rehabilitation services.
. . . .
(5) Maintenance therapy; Maintenance therapy, when the specialized knowledge and judgment of a qualified therapist is required to design and establish a maintenance program based on an initial evaluation and periodic reassessment of the patient’s needs, and consistent with the patient’s capacity and tolerance. For example, a patient with Parkinson’s disease who has not been under a rehabilitation regimen may require the services of a qualified therapist to determine what type of exercises will contribute the most to the maintenance of his present level of functioning.
42 CFR § 409.33(c)
The issue is not whether someone has “plateaued;” rather, the issue is simply whether the individual needs skilled nursing services in order to attain an improved condition or to maintain his or her current condition.
C. Home Health Care
Medicare covers home health services in full, with no required deductible or copayments from the beneficiary. Services must be medically necessary and reasonable. The following criteria must be met:
A physician has signed or will sign a plan of care.
The patient is 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.
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).
The home health care is provided by, or under arrangement with, a Medicare certified provider.
If qualified, 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.
D. Hospice Care
Hospice care is intended to provide palliative and supportive care for terminally ill people and their families rather than treatment for the underlying condition. Medicare covers two 90-day periods of hospice care and an unlimited number of additional periods of 60 days each.
To receive Medicare hospice coverage, a patient must elect affirmatively to enter hospice coverage and, as a consequence, out of most other Medicare coverage for treatment of the underlying terminal condition.
To qualify for hospice care, the patient’s physician must certify the patient as terminally ill. If coverage conditions are met, Medicare is available for a variety of hospice services.
Part B provides coverage for a complete array of services in non-institutionalized settings. Part B is optional and is financed by premiums paid by program participants (a base premium of $93.50 monthly in 2007 – $96.40 in 2008; higher for individuals with incomes in excess of $80,000 or couples with incomes in excess of $160,000) and by general revenues from the federal government. Individuals receiving Social Security Retirement Income Benefits, individuals receiving Social Security Disability Income Benefits for 24 months, and individuals otherwise entitled to Medicare Part A are automatically enrolled in Part B (unless they decline coverage). Others must affirmatively enroll.
Each year, before Medicare pays anything, the patient must incur medical expenses sufficient to meet the deductible, based on Medicare’s approved “reasonable charge,” not on the provider’s actual charge.” These figures are updated annually, effective April 1st of each year.
After the beneficiary meets the deductible, Part B pays 80% of the reasonable charge for covered services. Beware: The reasonable charge is often less than the provider’s actual charge. If the provider agrees to “accept assignment,” the provider agrees to accept Medicare’s reasonable charge rate as payment in full, and the patient is only responsible for the remaining 20 percent.
If the provider does not accept assignment, the patient will be billed for a balance beyond the 20% coinsurance payment. There is, a ceiling known as the “Limiting Charge,” which is often higher than the Medicare reasonable charge (but no more than 115% of the reasonable charge).
Physicians’ services are the most common services provided under Part B. Other services include durable medical equipment, outpatient therapy, diagnostic X-rays, and laboratory tests are covered. Congress has also mandated an increase in the home health services covered under Part B and added additional preventive benefits.
Part C – Medicare Advantage
As an alternative to “straight” Medicare under Part A and Part B, beneficiaries may elect to receive their Medicare coverage through a private Medicare Advantage plan (if one is available in the geographic area). In order to do so, beneficiaries must be enrolled in both Part A and Part B. Beneficiaries enrolled only in Medicare Part B are not eligible to enroll in a Medicare Advantage plan.
Medicare Advantage Plans may be structured as an HMO (a health maintenance organization), a Preferred Provider Plan (one in which beneficiaries must use medical providers approved for use by the plan) or a Private Fee for Service Plan (in which the beneficiary may use any provider willing to accept payment from the plan).
Many Medicare Advantage Plans seem attractive because they offer various benefits not provided under regular Medicare (e.g., dental or vision benefits). Often, however, the trade-off comes in the form of higher co-payments or reduced benefits in other areas.
Medicare Advantage Fee for Service Plans, in particular, have been the subject of regulatory and legislative scrutiny. A number of states (including Georgia and North Carolina) have opened criminal inquiries with regard to sales methods, and the Georgia Insurance Commissioner has made a number of arrests.
Beneficiaries may elect to enroll or disenroll from a Medicare Advantage plan only in accord with certain rules.
If more than one Medicare Advantage plan is offered in a service area at the time the individual first becomes entitled to benefits under Part A and enrolled under Part B, the individual may make an election during an initial election period. Coverage under the Plan becomes effective as of the first date on which the individual may receive coverage, i.e., the month in which the individual becomes entitled to Medicare A and B.
“Lock-in” rules, so called because beneficiaries become “locked in” to the choices they made during the previous October-December annual enrollment period. Between January 1 and February 14, however, an Advantage Plan participant may opt out and return to original Medicare Part A and Part B (and select a Medigap policy).
New in 2011, starting December 8 a participant may switch to a 5-Star Advantage Plan at any time. The Medicare has begun to collect customer satisfaction data and provider input with regard to Advantage plans and yo rate them (a 5-Star rating being the highest). Presumably the right to switch at anytime will provide an incentive for plans to provide better service.
All beneficiaries may make an election during an “annual open enrollment period.” This annual election will permit beneficiaries to enroll or disenroll from the various offerings during the period from October 15 through December 7 each year (as set in 2011).
Certain “special election periods” apply if the Medicare Advantage plan was terminated; the beneficiary ceased to be eligible for enrollment in such plan; the beneficiary demonstrated that the plan violated its contract with Medicare; or some other exceptional circumstance exists.
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