Medicare Advantage Can Be Complex for Patients and Providers

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By Claire Freeman

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Medicare is a federally funded entitlement program for health insurance for people who are age 65 and older, and for some who are under 65 and meet certain criteria.  Since its implementation in 1966, the number of enrollees in Medicare has grown exponentially.  The program has evolved to include more managed care options including Health Maintenance Organization (HMO) plans.  The percentage of enrollees choosing managed care instead of “standard Medicare” has also increased in recent years. This increase in managed care enrollees has changed processes for health care providers’ offices, resulting in a need to educate beneficiaries on the consequences of failing to follow the processes of the managed care plans they are enrolled in.

Brief History of Medicare

President Lyndon B. Johnson signed Medicare into law on July 30, 1965, when he signed the Social Security Act Amendment, and the act was implemented on July 1, 1966.  In 1973, Health Maintenance Organization (HMO) plans that met federal standards were offered to beneficiaries in addition to the standard, original Medicare fee-for-service plans.  With the Balanced Budget Act of 1997, Medicare changed again to include more managed care options.  President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law in 2003.  This expansion of the Medicare program created a drug discount card and included new competition among health plans, expanding choice further into managed care options.  The choices range from commercial Preferred Provider Organizations (PPO) to HMOs and became known as Medicare Advantage.

Medicare by the Numbers

In the time since Medicare’s implementation in 1966, the number of enrollees has steadily increased from 19.1 million to 50.83 million in 2012, an increase of 166% over 47 years.  During that time, Medicare evolved from solely a fee-for-service model — or paying for services based on the activity or service provided — to the vast range of choices enrollees have today.  In the Medicare Advantage model, Medicare contracts with commercial carriers to manage both Part A (hospital insurance) and Part B (outpatient services insurance).  Many Medicare Advantage plans also include Part D (drug coverage), and other services that the Medicare program does not cover, such as  vision coverage, to entice new enrollees.

When looking at the period from 2008 to 2012, the number of enrollees grew from 45.42 million to 50.83 million, an increase of 14.83%.  In 2008, the fee-for-service program was selected by 78% of the total enrollees, and by 2013, that percentage dropped to 73%.  At the same time, managed care enrollees went from 22% of the total enrollees to 27%.  There has been a clear shift to managed care, better known as Medicare Advantage.

Impact on Providers and Patients

In 2012, 13.6 million enrollees chose Medicare Advantage over Original Medicare.  Therefore, health care providers are much more likely to encounter Medicare Advantage beneficiaries.  The impact of this shift has changed the long-held presumption that anyone walking into the doctor’s office with a Medicare card must have Original Medicare.  Verifying patients’ health care coverage is an important process for the health care provider’s office staff that should not be overlooked. Failing to perform this task may lead to denied health claims for the health care provider and a potential financial burden for a Medicare Advantage patient.

Medicare Advantage HMO beneficiaries must see providers only found in their HMO network. If they don’t, the HMO may deny their claims,  and they may be financially responsible. In addition, most HMOs require prior authorization for most medical services, and in most cases, prior authorization is coordinated by the patient’s primary care physician and/or medical group.

Medicare Action Plan

Beneficiaries and their caregivers can eliminate the financial risk of accidentally going outside of network or seeing a provider without authorization by doing three things:

1. Verify the plan

When enrolling in a managed care plan (i.e., Medicare Advantage), verify what type of plan it is (i.e., PPO, HMO, POS, PACE, etc).  This step will determine if the prior authorization process is needed. Patients must make sure their provider is following the steps. Providers must verify the patient’s plan before administering service — barring emergency situations — and follow the steps required by the plan.

2. Choose a primary care physician

Choose a Primary Care Physician (PCP) and/or a Primary Medical Group (PMG) (also called an IPA: Independent Physician/ Provider Association) as soon as possible.  If you do not choose one right away, a PCP or a PMG may be assigned.  If the patient is currently seeing a specific specialist, verify the specialist is participating with the Primary Medical Group and the HMO.  This will avoid headaches, such as a potential financial burden or the possibility of switching providers,  in the future.

3. Make sure specialists are in-network

Before seeing a new specialist, contact your PCP or PMG to verify that the specialist is in the network, and request prior authorization.  As the term “prior authorization” implies, seek this authorization before the service is provided.

The Medicare program has expanded greatly in the last 47 years, and the number of people it serves continues to increase.  Managed care (Medicare Advantage) has become a viable option for many enrollees, and more people are choosing it over Original Medicare.  As a result of the increase in beneficiaries and choices, doctors and patients must look at health coverage much more closely to make sure patients are able to access the health care services they need without creating an unnecessary financial burden.