The Two Parts of Medicare

Medicare has two parts -- Hospital Insurance (Part A) and Supplementary Medical Insurance (Part B). Part A helps pay for inpatient hospital care and certain follow-up care, such as care in a skilled nursing facility. Part B helps pay for physician services and many other medical services and items.

Unless you state that you don't want it, you generally are automatically enrolled in Part B when you are enrolled in Part A. When you are enrolled in Part B, you will be required to pay a monthly premium. The premium, which is subject to change each year, was $46.10 per month in 1995. Although you do not have to purchase Part B, it is an excellent buy because the Federal Government pays about 75 percent of the program costs.

Your Medicare card shows the coverage you have [Hospital Insurance (Part A), Medical Insurance (Part B), or both] and the date your protection started. If you only have one part of Medicare, you can obtain information from any Social Security Administration office about getting the other part.

Part A and Part B have their own unique systems for paying claims (bills) for covered services and supplies provided to Medicare beneficiaries. Medicare claims and payments are handled by insurance organizations under contract to the Federal Government. The organizations that handle claims from hospitals, skilled nursing facilities, home health agencies, renal dialysis facilities and hospices are called "intermediaries." You almost never have to get involved in the Part A claims process.

Other insurance organizations handle Medicare Part B claims. They are called "carriers." There are times when you might want information about the charges appearing on a Part B claim, or about the status of your claim, and you will want to contact the carrier. The names and addresses of the carriers and the areas they serve are listed in the back of The Medicare Handbook, which may be obtained from any Social Security Administration office or by calling 1-800-638-6833.

Medicare Part B Benefits

Part B helps pay for medically necessary physician services, including surgical services, no matter where you receive them--at home, in the doctor's office, in a clinic or hospital. It also covers related medical services and supplies, medically necessary outpatient hospital services, X-rays and laboratory tests. Coverage is also provided for limited ambulance services, and the in-home use of durable medical equipment, such as wheelchairs, walkers and hospital beds.

Additionally, Part B covers physical therapy, occupational therapy, and speech pathology services in a doctor' s office, in an outpatient setting, or in your home. Mental health services are covered along with blood, mammograms and Pap smears. And if you quality for home health care but do not have Medicare Part A, then Part B pays for all covered home health visits.

While Part B generally does not cover outpatient prescription drugs, it does cover some oral anti-cancer drugs, certain drugs for hospice enrollees, and non-self administrable drugs provided as part of physician's services. Certain drugs furnished during the first year after an organ transplantation and epoetin for home dialysis patients are also covered. Medicare also helps pay for antigens, and flu, pneumococcal, and hepatitis B vaccines. Coverage is also provided for blood after you meet the 3-pint annual deductible.

Medicare's Approved Amount

Medicare's system for paying physicians is based on fee schedule. The fee schedule assigns a dollar value to each physician service based on work, the cost of running a practice, and the cost of malpractice insurance. The fees that appear on the schedule are the Medicare approved amounts for services covered by Part B. Under the Part B payment system, each time you go to a physician for covered service, the amount Medicare will recognize for that service will be the lesser of the physician's actual charge or the fee schedule amount.

Charges You Pay

When you use your Part B benefits, you are responsible for paying the first $100 each calendar year for services and supplies covered by Medicare. This is called the Part B annual deductible. The $100 must be based on the Medicare-approved amounts, not the actual charges billed by your physician if those charges exceed the Medicare-approved amounts.

After you have met the $100 deductible, Medicare starts paying a share of your medical expenses. Part B generally pays 80 percent of the Medicare-approved amount for all covered services you receive for the rest of the year. You are responsible for the other 20 percent, which is called co-insurance. You also are responsible for all permissible charges in excess of the Medicare-approved amount, and for all charges for services and supplies not covered by Medicare.

Assigned and Unassigned Claims

Each time you use the services of a physician, the physician submits your Medicare claim to the carrier either on an "assigned" or "unassigned" basis. When a claim is assigned, it means that he physician has agreed to accept the Medicare-approved amount as payment in full. The physician bills you for 20 percent of the approved amount plus any unmet portion of the Part B $100 deductible. On assigned claims, Medicare pays its share directly to the physician.

When a claim is unassigned, it means that the physician has not agreed to accept the Medicare approved amount as full payment and can charge more than the Medicare-approved amount, but not more than the limiting charge (see Limits on Physician Charges). The physician bills you for the full amount and files your claim with the carrier. Medicare than reimburses you its share of the charges. Because you cannot always tell in advance whether the Medicare-approved amount and the actual charge for covered services and supplies will be the same, ask your physicians and medical suppliers whether they accept assignment of Medicare claims.

Participating Physicians & Suppliers

While some physicians and medical suppliers accept assignment on a case-by-case basis or not at all, others sign Medicare participation agreements that require them to accept assignments on all Medicare claims. These physicians and suppliers are called participating physicians and suppliers and their names and addresses are listed in the Medicare Participating Physician/Supplier Directory for your area. The directory is distributed to senior citizen organizations, all Social Security Administration and Railroad Retirement Broad offices, all hospitals and all State and area offices of the Administration on Aging. The directory may also be obtained free of charge from the insurance carrier that processes Medicare Part B claims in your area, or you can call the carrier to find out which doctors and suppliers are Medicare participants.

Required Assignment

There are occasions when healthcare providers do not participate in Medicare claims. For instance, all physicians and qualified laboratories must accept assignment from clinical diagnostic laboratory tests covered by Medicare. Physicians and certain other practitioners and suppliers must take assignment on all claims for services furnished to Medicare beneficiaries who are eligible for medical assistance through their state Medicaid program, including beneficiaries enrolled in the Qualified Medicare Beneficiary program.

Limits On Physician Charges

While physicians who do not accept assignment of a Medicare claim can charge more than physicians who do, there is a limit to the amount they can charge for services covered by Medicare. They are permitted to charge you only 15 percent more than the Medicare-approved amount, and you must pay that extra amount. This is called the "limiting charge" and you do not have to pay more than this amount.

To determine the limiting charge for a particular service, contact the Medicare carrier for your area. Limiting charge information also appears on the Explanation of Medicare Part B Benefits (EOMB) form generally sent to you by the carrier after you receive a Medicare-covered service. If your physician has exceeded the charge limit, contact the physician and ask for a reduction in the charge, or a refund if you have paid the bill. If you cannot resolve the issue with the physicians, call your Medicare carrier. Medicare carriers are required to screen physician bills for overcharged and notify the physician and the patient within 30 days of any overcharge. The physician is then required to refund the overcharge within 30 days or credit your account for it. Physicians who knowingly, willfully and repeatedly charge more than the legal limit are subject to sanctions.

Medicare law further requires physicians who do not take assignment for elective surgery to give you a written estimate of your costs before the surgery if the total charge will be $500 or more. If you are not given a written estimate, you are entitled to a refund of any amount you paid in excess of the Medicare-approved amount for the surgery.

Some states have also enacted charge limit laws. Currently, Connecticut, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Rhode Island and Vermont have such laws. If you live in one of these states, or if you want to find out whether your state has a law limiting physician charges, contact your state insurance department counseling program or office on aging.

Here's a comparison of your share of the cost for the same service provided by a participating physician and by a nonparticipating physician who did not accept assignment:

If you went to a participating physician for a service for which the fee schedule amount was $100, the physician would accept that amount in full. Medicare would pay $80 and you would be responsible for $20, assuming you had already met the Part B $100 annual deductible.

For the same service furnished by a nonparticipating physician, the fee schedule amount would be $95 (Nonparticipating physicians are reimbursed at 95 percent of the fee schedule amount for participating physicians). Medicare would pay $76, or 80 percent, leaving you with a balance of $19 to cover the remaining 20 percent of the fee schedule amount. However, since nonparticipating physicians who do not accept assignment can legally charge 15 percent more that the fee schedule amount, another $14.25 could be added to the bill, bringing your out-of-pocket cost to $33.25, assuming you had already met the Part B deductible. You would not have to pay any charges over $33.25.

Medically Unnecessary Services

You should also be aware that any physician who provides you with services that he or she knows or believes Medicare will determine to be medically unnecessary and thus will not pay for is required to notify you in writing before performing the service. If written notice is not given, and you did not know that Medicare would not pay, you cannot be held liable to pay. However, if you did receive written notice and signed an agreement to pay for the service yourself, you will be held liable to pay.

Medicare Payment Notice

Regardless of whether your physicians or medical suppliers accept assignment of a claim, they are required by law to submit the claim for you within a year after providing a service. The claim is submitted to the carrier that serves the area where the covered service or supply was provided, not necessarily the carrier for your area. If for some reason the claim is not filed as required, you can still send it to the carrier as long as you do so before the close of the calendar year following the year in which the service was furnished. If the service was furnished in the last quarter of the year, you have until the close of the second year following the year in which the services were furnished to submit the claim.

After your physician or supplier submits your Part B claim, the Medicare carrier will usually send you an Explanation of Medicare Part B Benefits statement. It details the action taken on the claim. For physician services, the notice shows what services were covered, what charges were approved, how much was credited toward your $100 annual deductible and the amount Medicare paid. For other Part B services, the notice shows similar information. If you believe payment was made for service or supply you didn't receive, or the payment is otherwise questionable, you should call or write the carrier that handled your claim.

Your Right To Appeal

You have a right to challenge Medicare payment decisions with which you disagree. Your Explanation of Medicare Part B Benefits form indicates why your claim was denied or not paid in full, and it also tells you exactly what appeal steps you can take. If you decide to file an appeal, ask your physician or medical provider for any additional information related to the claim that might be helpful to you in challenging the payment decision.

A request for review along with any additional information must be filed with the carrier within six months of the date payment was denied. After the request is filed, the carrier will review the payment decision and provide you with a written explanation of the review determination. If you again disagree and the amount remaining in question is $100 or more, you have six months from the date of the review determination to request a hearing before a carrier hearing officer. If you disagree with the carrier hearing officer's decision and the amount remaining in question is $500 or more, you have 60 days from the date you receive the decision to request a hearing before a Administrative law Judge. Cases involving $1000 or more can eventually be appealed to a Federal court.

Managed Care Plans

The preceding sections explain how Medicare Part B works if you receive your benefits through the traditional fee-for-services (pay-as-you-go) delivery system. As a Medicare beneficiary, you also have the option of receiving physician and other health care services though managed care plans that have contracts with Medicare, such as health maintenance organizations (HMOs) and competitive medical plans (CMPs).

In a managed care plan, a network of health care providers (physicians, hospitals, skilled nursing facilities, etc.) generally offers medical services to plan members on a prepaid basis. Services usually must be obtained from the professionals and facilities that are part of the plan. If you enroll in a plan that has a contract with Medicare, a Medicare claim will seldom need to be submitted on your behalf. Medicare pays the plan a set amount that the plan provides you with medical care. Additionally, instead of paying Medicare's deductible and coinsurance as you would under fee-for-service care, manage care plans generally charge enrollees a monthly premium and nominal co-payments as you use the service.

Most plans serving Medicare beneficiaries are required to offer all Medicare hospital and medical benefits available in the plan's service area. Some plans also provide benefits beyond what Medicare pay for, such as preventive care, prescription drugs, dental care, hearing aids and eyeglasses. For more information about managed care plans request a copy of the leaflet Medicare and Managed Care Plans from any Social Security Administration office or by calling 1-800-638-6833.

When Other Insurance Pays Before Medicare

Some people who have Medicare also have group health or other types of coverage that may make Medicare a secondary payer on their health care claims. Medicare is sometimes the secondary payer for individuals who are:

• Age 65 or older, with employment status, (or whose spouse has employment status) with coverage under a group health plan.
• Under age 65, disabled but with employment status, (or whose family member has employment status) with coverage under a large group health plan.
• Have permanent kidney failure, and are covered under a group health plan through current or former employment or through the current or former employment of a parent or spouse.

Medicare is generally the secondary payer to automobile or non-automobile liability or no fault insurance; to Workers' Compensation; and to Black Lung benefits. If one of these insurers does pay first on your bills, be sure to tell your doctor and other health professionals so your bills can be sent to the correct payer first and delays can be avoided. Medicare, as the secondary payer, may pay some or all of the charges for services covered by Medicare that are not fully paid by the primary payer.

Insurance That Supplements Medicare