5
Medicare and Medicaid
S. Brent Ridge
Learning Objectives
Upon completion of the chapter, the student will be able to:
1. Distinguish between Medicare and Medicaid.
2. Know the signifi cance of Medicare Parts A, B, C, and D and the cover- age provided by each.
3. Identify who is eligible for Medicare and how it is obtained.
4. Understand the role of Medicare Supplemental Insurance Plans and Medicare Health Maintenance Organization (HMO).
73 Case (Part 1)
Ms. C. is a 69-year-old woman who had not seen a doctor during most of her adult life. One month ago, she was admitted to the hospital after pre- senting to the emergency room (ER) with left-sided weakness. Head com- puted tomography (CT) revealed a small internal capsule infarct on the right. During her hospitalization, she was also diagnosed with high blood pressure and was started on medications for treatment. After a 1-month stay in a subacute rehabilitation center, she comes to see you as a new patient and is accompanied by her daughter. After determining that her blood pressure is well controlled and her physical examination otherwise stable, you ask if the patient or the daughter have any further questions.
Both are concerned about the cost of the recent hospitalization and reha- bilitation. The patient has a small amount of savings and is worried that she will not be able to cover her basic expenses if she now has medical bills to pay. They want to know how much of their hospital bill will be covered by Medicare and want to know what it takes to be on Medicaid.
Material in this chapter is based on the following chapter in Cassel CK, Leipzig RM, Cohen HJ, Larson EB, Meier DE, eds. Geriatric Medicine: An Evidence- Based Approach, 4th ed. New York: Springer, 2003: Vladeck BC. Mechanisms of Paying for Health Care, pp. 1201–1211.
Medicare vs. Medicaid
Medicare is a universal, federally managed health insurance provided to Americans 65 years old and older (Table 5.1) (1). It is a compulsory social insurance program fi nanced by payroll taxes on all wage and salary earners.
Traditionally, there are two parts to Medicare, Part A and Part B (Table 5.2) (2). Medicare Advantage Part C (formerly known as the Medicare + Choice) and the Prescription Drug Plan (Part D) are recent optional features provided for benefi ciaries by the program.
Medicaid is a state-administered, federal-state health insurance program for the poor. Patients older than 65 who get Medicare benefi ts may also qualify for and receive Medicaid benefi ts if their income is lower than the number established by the state in which they live. In most states, the income must be below $600/month. There are no age restrictions on Medicaid.
Medicare Part A covers:
1. Inpatient hospitalization:
a. $812 deductible per benefi t period that the patient or his/her supple- mental insurance must pay
b. After deductible, full coverage for days 1 to 60 of hospitalization c. After day 60, co-insurance or patient must pay.
d. A “benefi t period” begins the day a patient enters the hospital or nursing home and ends only when the patient has been out of the Table 5.1. Medicare eligibility
• 65 years old or older
• U.S. citizen or permanent legal resident for 5 continuous years
• Disabled and have had Social Security for at least 2 years (regardless of age)
• Kidney failure and require continuous dialysis or need a kidney transplant (regardless of age)
• Amyotrophic lateral sclerosis (regardless of age)
Table 5.2. Services covered by Medicare
Part A (no copayment) Part B (20% copayment)
• Home health aide • Physician visit
• Visiting nurse: RN observation/ • Certain durable medical equipment assessment, management and evaluation of • Some diagnostic labs,
care plan electrocardiography, and x-rays
• Social service
• Physical therapy, occupational therapy, speech therapy
Source: Levine SA, Barry PP. Home care. In: Cassel CK, Leipzig RM, Cohen HJ, et al., eds. Geriatric Medicine, 4th ed. New York: Springer, 2003.
nursing home or hospital for 60 continuous days. Readmission prior to the end of the benefi t period is cumulative. If a patient was hospi- talized for 14 days, discharged, and returned 2 weeks later, the fi rst day of the second hospitalization would be counted as day 15, meaning that the 60-day period of full Medicare coverage could be reached very quickly if frequent hospitalizations are necessary.
2. Skilled nursing facility a. No deductible
b. Full coverage for days 1 to 20
c. From day 21 to 100, pays all but $101.50
d. Medicare does not offer coverage after day 100. Nursing home stays greater than 100 days must be paid for by the patient. Nursing home care remains self-pay until the patient’s assets are depleted and they then become available for Medicaid benefi ts.
3. Home health and hospice care a. No deductible
b. Time limited
Medicare Part B covers:
1. 80% of the fees for outpatient doctor’s services, laboratory and x-ray services, durable medical equipment (hospital beds, walkers, wheelchairs, etc.), ambulance services, outpatient hospital care, home health care and blood and medical supplies, chiropractor and physical therapy services.
2. The remainder 20% is covered by co-insurance if the patient has it or directly out-of-pocket. There is a $100 yearly deductible in addition to the monthly fee.
Medicare does not cover private duty nursing, custodial care, cosmetic surgery, care outside of the United States, acupuncture, eyeglasses, or dental care (3–7).
Medicare Advantage (Part C)
Medicare Part C, formerly known as Medicare+Choice, is now known as Medicare Advantage. If benefi ciaries are entitled to Medicare Part A and enrolled in Part B, they are eligible to switch to a Medicare Advantage plan, provided they reside in the plan’s service area. Medicare Advantage provides for coordinated care plans (the Balanced Budget Act of 1997’s umbrella term for managed care plans) with the following options:
1. Health Maintenance Organization (HMO) plans emphasize preven- tive care but without coverage for providers or facilities outside the HMO network. They almost always require a network primary care physician referral to access a network specialist; they usually offer drug benefi ts.
2. Point of Service (POS) plans offer a network of preferred providers, like HMO plans, but also provide reduced benefi ts for providers or
facilities outside the HMO network. They typically require a referral from a network primary care physician to access a network specialist; they sometimes offer drug benefi ts.
3. Regionally expanded Preferred Provider Organization (PPO) plans are similar to POS plans but have broader geographic access to network providers in a larger service area, and with reduced benefi ts outside the PPO network. They do not typically require a referral from a network primary care physician to access network specialists. They may or may not offer drug benefi ts.
4. Provider-Sponsored Organization (PSO) plans are similar to the POS plans but are usually organized with physicians that practice in a regional or community hospital. There may or may not be coverage for providers or facilities outside the PSO network, depending on the plan designs offered. They may require a referral from a network primary care physician to access network specialists. They typically offer drug benefi ts.
5. Medical savings accounts set up in conjunction with private fee-for- service plans provide at least the same benefi t coverage levels as Medicare Parts A and B or high deductible coverage.
Medicare Prescription Drug Plan (Part D)
The Medicare Prescription Drug, Improvement and Modernization Act of 2003 added Part D. Medicare benefi ciaries purchasing optional part D are able to get drug coverage through a separate drug insurance policy. If they are covered by a privately operated health plan that includes a prescription drug benefi t, they would be ineligible for Part D (7).
The government guarantees drug coverage in any region that does not have at least one stand-alone drug plan and one private health plan.
Employers that offer equivalent drug coverage for retirees would receive tax-free subsidies. Employers could also offer premium subsidies and cost- sharing assistance for retirees who enroll in Medicare drug plans.
Enrolling in Medicare
If patients are getting Social Security when they turn 65, they will be auto- matically enrolled in Medicare Part A and Part B on the fi rst day of the month in which they turn 65. A card will be mailed to them. If patients are not receiving Social Security, they should go to the local Social Security offi ce to enroll in Medicare 3 months before their 65th birthday. They have 4 months after their birthday to enroll without penalty. Regardless of pri- vately held insurance, all patients turning 65 should enroll in the Medicare program. People can sign up for Social Security retirement benefi ts at the age of 62. They cannot sign up for Medicare until turning 65 unless one of the special medical circumstances cited above applies.
Medicare Fee
Medicare Part A is free. Medicare Part B has a monthly premium of approximately $88.50 (2006), and this amount is generally deducted from the monthly Social Security check. Patients can decide not to take this benefi t. Medicare Part D has a monthly premium of approximately $35 (2006).
Medicare Supplemental Insurance
There are supplemental insurance packages offered by private companies and organizations like the American Association of Retired Persons (AARP). These are often referred to as “Medigap” policies. While the characteristics of the Medigap market differ dramatically from one state to the next, premiums for these plans have been rising dramatically in most of the nation in the last decade.
Medicare Health Maintenance Organizations
Medicare HMOs are private companies paid by the federal government to provide Medicare-covered health care. Patients interested in an HMO must have Part A and Part B. Unlike regular Medicare, a Medicare HMO will dictate which doctor the patient may or may not see, and although some HMOs cover prescription medications, they may cover only certain drugs of a particular class and not the one that the physician prescribed (8–10). Medi- care HMOs are not available everywhere. The social worker in your clinic or hospital should be able to tell you what programs exist in your community.
There are also Medicare assistance programs funded by the state govern- ments that offer varying degrees of coverage for the health expenditures not covered by Medicare and/or will pay for the Medicare Part B premium (11,12). Enrollment in these programs is based on income and assets. These programs are meant to aid those individuals who do not qualify for Medicaid.
Income limitations vary by state. There are four such programs: Qualifi ed Medicare Benefi ciary (QMB), Specifi ed Low-Income Medicare Benefi ciary
Case (Part 2)
Ms. C. does have Medicare Part A and B but is worried about paying the deductible. You tell her and her daughter that the local Medicaid offi ce would be able to determine if she qualifi ed for this program. You also mention that she and her daughter may want to explore supplemental insurance to cover the health-related expenses not paid by Medicare.
(SLMB), Qualifying Individuals (QI-1), and QI-2. The local Medicaid offi ce can help patients determine whether they qualify for assistance.
Medicare Reimbursement
Doctors can choose to opt out of the Medicare program and accept only patients with private insurance coverage or patients able to self-pay for medical care. Since 1992, Medicare has prepared a physician fee schedule that dictates how much each procedure or exam is worth. When doctors agree to “accept assignment” for Medicare claims, they are willing to take the amount Medicare approves for a payment in full. Again, Medicare usually covers 80% of the amount, and the patient or Medigap plan pays the remaining 20%. If a doctor does not accept assignment, federal law mandates that he/she can only charge up to 15% over the amount Medicare approves. The patient or Medigap plan would then be responsible for payment of the fee.
General Principles
• Every American over age 65 has access to Medicare coverage.
• Medicare Part A covers inpatient care and is universal.
• Medicare Part B covers outpatient care. Patients who opt for this coverage must pay a monthly fee.
• Medicare Part C, formerly known as Medicare + Choice, is now known as Medicare Advantage and provides the option for coordi- nated care plans and medical saving accounts.
• Medicare Part D is the Medicare Drug Prescription Plan and has a
$35-per-month premium.
• Medicaid is an insurance program for the poor. Medicare patients can qualify for Medicaid if they meet the income requirement. Medicaid provides coverage for prescription medications. Medicare does not.
• Medicare HMOs are private companies paid by the federal govern- ment to provide Medicare-covered health care. Medicare HMOs are not available in all geographic locations and may vary in cost and extent of services provided.
Suggested Readings
Center for Medicare and Medicaid Services web page: http://www.cms.gov. This Web site answers all questions regarding both Medicare and Medicaid. The site is divided into sections for the public and for providers.
Gallagher P, Smith S. Medicare: The Physician’s Guide, 2002. Chicago: American Medical Association, 2002. An excellent resource for the practicing physician, this guide offers detailed explanations of the billing and reimbursement process.
Vladeck BC. Sounding board: plenty of nothing—a report from the Medicare Commission. N Engl J Med 1999;340:1503–1506.
Vladeck BC. The storm before the calm before the storm: Medicare home care in the wake of the Balanced Budget Act. Care Manage J 2000;2(4):232–237.
Vladeck BC. Mechanisms of paying for health care. In: Cassel CK, Leipzig RM, Cohen HJ, et al., eds. Geriatric Medicine, 4th ed. New York: Springer, 2003:
1201–1212.
References
1. Medicare Payment Advisory Commission. Report to the Congress: Medicare Payment Policy. Washington, DC: Government Printing Offi ce, March 2000.
2. Manton KG, Vaupel JW. Survival after the age of 80 in the United States, Sweden, France, England and Japan. N Engl J Med 1995;333(18):1232–1235.
3. Medicare Payment Advisory Commission. Report to the Congress: Selected Medicare Issues. Washington: Government Printing Offi ce, June 2000.
4. Medicare Payment Advisory Commission. Health Care Spending and the Medicare Program: A Data Book. Washington: MedPAC, July 1998.
5. Physician Payment Review Commission. Annual Report to the Congress.
Washington, DC: Government Printing Offi ce, 1997.
6. Iezzoni LI. The demand for documentation for Medicare payment. N Engl J Med 1999;341(5):365–367.
7. The Medicare Program: Medicare and Prescription Drugs. Henry J. Kaiser Family Foundation, April 2003 Menlo Park, CA.
8. Luft HS. Medicare and managed care. Annu Rev Public Health 1998;19:
459–475.
9. Medicare 2000: 35 years of Improving Americans’ Health and Security.
Washington: Health Care Financing Administration, July 2000.
10. Physician Payment Review Commission. Annual Report to the Congress.
Washington: Government Printing Offi ce, 1997.
11. Annual Report of the Board of Trustees of the Federal Hospital Insurance Trust Fund. Washington, DC: Government Printing Offi ce, April 24, 1997.
12. Annual Report of The Board of Trustees of the Federal Hospital Insurance Trust Fund (corrected). Washington, DC: Government Printing Offi ce, April 20, 2000.
