Health - Medicare
Medicare Overview
Eligibility
Coverage
Appeals
Part A
Part B
Part D
Duel Status Beneficiaries
Four Costs to Consider When Choosing a Plan
Extra Help Program
Drug Coverage
Changing Plans
Disenrollment Procedures
Change in the Formulary
Medicare Overview
Medicare is designed to cover the basic medical and health care costs for eligible persons over the age of 65, as well as some disabled people under age 65. It is funded and administered through the federal government. The actual paperwork on Medicare claims is contracted out to insurance companies. Insurance companies that process Part A are known as intermediaries. Those that process Part B are usually called carriers. In Michigan there are a number of Part A intermediaries. Part A intermediaries for Michigan, as of 2006 are: United Government Services, LLC and Mutual of Omaha Insurance Co. Claims for skilled nursing care at nursing homes who are a part of a national chain may be handled out-of-state. Part B carriers also vary: Wisconsin Physicians Service handles most, but Durable Medical Equipment claims are processed by AdminaStar Federal of Indiana.
Eligibility
To be eligible for Medicare, you must be:
- Age 65 and receiving Social Security or Railroad Retirement benefits, or eligible to receive these benefits, or
- Under age 65 but receiving Social Security or Railroad Retirements disability benefits for at least 24 months, or
- A federal, state or local government retiree over the age of 65, or
- Receiving Social Security or Railroad Retirement disability benefits for less than 24 months because of end stage renal disease (kidney failure).
Coverage
There are two parts to the Medicare program: Part A and Part B. Part A insures for the medically necessary cost of hospital and related health care. Although it is known as "hospital insurance" it also provides some coverage for:
- Inpatient care in a skilled care nursing home,
- Care for a terminal illness through a certified hospice program,
- Inpatient psychiatric hospital care, and
- Home health care by a certified home health agency.
Enrollment in Part A is free if you meet the above eligibility requirements. However, there are some co-pays and deductibles that you are responsible for when services are provided.
Part B of Medicare, also known as "Supplemental Medical Insurance," is designed to cover some of the costs of:
- Medically necessary physician services (in or out of a hospital),
- Outpatient hospital services,
- Outpatient physical therapy,
- Speech pathology services,
- Home health services,
- Diagnostic tests,
- Medical equipment.
The booklet, "Medicare and You 2007," that explains the details of current Medicare coverage is available from Medicare. You can get it free by calling (800) 633-4227. This is the best source of information on ever-changing coverage issues.
A monthly premium for Part B coverage is charged to the beneficiary ($93.50 in 2007). Usually it is deducted from your monthly Social Security check. If for some reason it can't be -- you are still working and not collecting Social Security yet, but you need Medicare coverage now -- it is billed and paid quarterly. Part B coverage also has co-pays and deductibles that you are responsible for. There is a permanent penalty for enrolling in Part B after you are initially eligible. Keep this in mind if you are nearing age 65.
Appeals
Because Medicare is a huge, complex insurance program, the chance that a decision denying service or payment was wrong should be considered. Every Medicare recipient has a number of appeals available if the claim isn't handled as you expected. There are always at least two levels of appeal. The way you appeal depends on whether it was a Part A or Part B question. If you received a written denial, the steps to appeal will be provided with the denial.
Part A
Under Part A there are two tracks for appeals, depending on whether the dispute is about hospital inpatient care or another Part A issue. Inpatient hospital care appeals are handled by the Michigan Peer Review Organization (MPRO). Typical appeal issues are: whether the hospitalization was medically necessary, whether the patient's condition justifies a longer than normal hospital stay, or whether the patient should stay in the hospital while a skilled nursing home placement is being worked out. Expedited appeals are available, which can start with a phone call to MPRO at (800) 365-5899. MPRO will decide this appeal within 3 working days. The patient will continue to be covered by Medicare for 2 days after receiving a Notice of Non-coverage from the hospital. Thus, if MPRO takes 3 days to decide, the patient may be liable for 1 day's care, if MPRO upholds the non-coverage decision.
A non-emergency appeal process is also available. The first step is a Request for Reconsideration. It must be filed within 60 days of the denial. This is a review of the hospital paperwork and anything the patient provides to support her case for coverage. The next step of appeal is a hearing. A hearing request must be filed within 60 days of the Reconsideration denial and the amount still in dispute must be at least $200. The hearing is conducted by an Administrative Law Judge (ALJ). After a hearing, the next level of appeal is to the Social Security Appeals Council, and then on to Federal District Court, if more than $2,000 is still in dispute.
Part A appeals for other than inpatient hospitalization are similar, but handled initially by the insurance intermediary instead of MPRO. Sometimes in Part A cases, the service provider -- a nursing home or home health care agency -- will choose not to submit the claim for services to Medicare. When this happens, the patient must request a "demand billing" of the care provider to trigger her Medicare appeal rights. With a written request for coverage, the intermediary then sends out a written response on the claim. If the claim is denied, the patient is told of the first step of appeal, the Request for Reconsideration. This request must be filed within 60 days of the Medicare denial notice, unless you can show "good cause" for being late. The Reconsideration is handled by the same intermediary through a review of the papers in the claim file. The patient has the right to turn in paper evidence with the Request for Reconsideration, to support the appeal. Sometimes hospital records or other medical evidence is missing from the Medicare file, and providing it will result in a successful appeal.
If the Request for Reconsideration is denied and the amount in dispute is at least $100, the patient can request an administrative appeal, held by a Social Security Administrative Law Judge. This request for a hearing must be filed within 60 days of the Reconsideration denial, or it won't be heard. If the Administrative Law Judge also rules against you, there is yet another appeal if the amount in dispute is at least $1,000. This is a paper review of the ALJ hearing, made by the SSA Appeals Council. Again, the appeal must be filed within 60 days of the ALJ written denial.
Part B
Under Part B, the claim for services is turned in by the provider (doctor, medical equipment company, etc.). The Medicare carrier then issues an Explanation of Medicare Benefits (EOMB). This is the trigger for the Part B appeals process.
The first step is a Request for Review, which must be sent in within 6 months of the EOMB. There is a form to use, available at SSA offices. A copy of the disputed EOMB should be attached. Copies of any other written information that supports your appeal should also be sent in, because the claim will be reviewed by re-examining the claim file. The carrier then sends out a review decision to you.
If your review is denied and the amount disputed is at least $100, you can request the next appeal level, a Part B hearing. Part B hearings are handled by Hearing Officers, hired by the carrier to conduct an informal hearing. The request for a Part B hearing must be made within 6 months of the carrier review decision. The hearing can be held in-person, as a telephone conference, or "on the record" which means again reviewing the paperwork in the file.
If the Part B hearing officer denies all or some of your appeal, an ALJ hearing can be requested within 60 days of the written denial if the amount still in dispute is at least $500. If the dispute is for $1,000 or more you have an additional right to file in Federal District Court.
The Michigan Medicare/Medicaid Assistance Program can help guide you through the complicated appeal process. Their number is listed in the Resources Section at the end of this Handbook.
Part D
In 2005, Medicare introduced a voluntary prescription drug benefit, commonly referred to as Part D. Minimum standards were set for private insurance companies to follow when creating a plan to be included in Part D. When a plan meets those standards, it is considered “credible.” There are more than 40 private insurance companies that provide plans in the state of Michigan.
All current and future Medicare beneficiaries are eligible for Part D. People who were eligible for Medicare before February 2006 were able to sign up for a Part D plan between November 15, 2005 and May 15, 2006. Those who did not sign up for a plan prior to May 15, 2006, must wait until the next open enrollment period which is November 15, 2006 though December 31, 2006. A person who was eligible for Medicare on February 1, 2006 or later is given seven months to choose and enroll in a Part D plan. The seven month period includes the three months before the month of the senior’s 65th birthday, the month of their birthday, and the three months after. If not signed up in the seven month period, the person must wait until the next open enrollment period.
There is a penalty for not signing up in the time allowed. The penalty is one percent of the average monthly premium for their state per month for every month they are late. For example, if a person is eligible and should have signed up by May 15, 2006 and does not, they cannot sign up until November 15, 2006. This creates a six month gap. If the person signs up in November, the amount they pay will increase by six percent of the average monthly premium. The average monthly premium in Michigan for 2007 is approximately $35. Therefore, the penalty will be approximately $2.10 (6 times .35). This penalty will be paid for as long as the senior is on a Part D plan.
Seniors with non-Medicare drug coverage may not have to switch. As long as the drug coverage is “as good as” Medicare standards then it is considered credible coverage. In October 2005, insurance companies had to send letters to their policy holders who were eligible for Medicare telling them whether or not the plan they were on was credible. Credible coverage means there is no penalty and no need to change plans. If the senior receives a notice saying their coverage is no longer credible, then they will be given extra time to choose a plan without facing a penalty. A senior can switch if they have credible coverage, but signing up with a different insurance company may void ALL current coverage.
Duel Status Beneficiaries
Seniors with both Medicare and Medicaid are called Duel Status Beneficiaries and are automatically placed into a Part D plan. They automatically qualify for Extra Help which is a special form of assistance to pay their monthly premium. A senior not happy with the plan that Medicare chose for them can switch at any time.
Four Costs to Consider When Choosing a Plan
There are four costs to consider when choosing from the many Part D plans available:
- Estimated Annual Cost: This cost includes the monthly premium, yearly deductible, and co-pays for the prescriptions entered into the system. This gives the senior an idea of how much they will spend in a year and whether or not they will ever reach a gap in their coverage—what is called the “donut hole.” In most plans, the donut hole occurs when the senior’s out of pocket costs reach $2,250. At this point the senior becomes responsible for the majority of the prescription drug costs until their out of pocket costs reach $3,600; then the catastrophic coverage kicks in. Once in the catastrophic coverage stage, the insurance company will pay for approximately 95% of prescription drug costs.
- Annual Deductible: An annual deductible is the amount the senior will have to pay before the insurance company begins to cover the prescriptions. The average annual deductible is $250. Counting towards that amount is the monthly premium and the costs of any prescriptions at the full rate under the plan.
- Monthly Premium: The monthly premium is the amount the senior must pay each month to stay enrolled and varies from plan to plan. The average premium in the state of Michigan for 2007 is approximately $35. The amount of the premium depends on which plan will work the best for the senior and can be deducted from their social security check.
- Co-pay/Co-Insurance: The amount the participant will pay for their prescription from the pharmacy is called the co-pay. This varies according to each plan and will be lower for generic prescriptions than for brand name.
Extra Help Program
The Extra Help Program provides financial assistance to seniors for paying monthly premiums, annual deductibles and reduces co-pays based on financial need. There are two levels of assistance: full and partial. To qualify, an application must be filled out and submitted to Social Security. A Dual Status Beneficiary is automatically eligible for full assistance.
In order to qualify for full assistance, both the income and assets of the senior are considered. Assets include things like real estate (other than a homestead) and savings and checking accounts. A single person must have less than $7,500 in assets and income less than $12,919 a year. If married, a couple’s joint assets must be less than $12,000 and annual income less than $17,320. If the senior qualifies for full assistance they will not have to pay a yearly deductible, monthly premium, and their co-pays for prescriptions will range from $0 to $5.
Partial assistance is also dependent on income and assets. A single senior must have assets less than $11,500 and annual income less than $14,355. If married, the couple’s joint assets must be less than $23,000 and income less than $19,245 a year. Partial assistance means the yearly deductible will not exceed $50 and premiums will range between $0 and $37. Co-pays for prescriptions are also reduced.
Drug Coverage
Most drugs that are available by prescription, both generic and brand name, including insulin and medical supplies associated with injecting insulin, are covered.
- Drugs NOT Covered:
- Benzodiazepines;
- Barbiturates;
- Drugs used for weight gain or weight loss;
- Over the counter prescriptions; and
- Those covered by Medicare Part A or Part B (coverage continues under these plans).
Changing Plans
A senior who signed up for a plan before May 15, 2006 was allowed to switch once at any time before May 15, 2006. After May 15, 2006 an enrollee must wait until the next open enrollment period to switch plans. Open enrollment goes from November 15 through December 31.
There are Special Enrollment Periods (SEPs) in different situations which allow a switch before open enrollment. SEPs are allowed for:
- Changes in residences;
- Duel Status Beneficiaries;
- Contract violations;
- Involuntary loss of “credible” coverage; and
- Exceptional conditions.
Disenrollment Procedures
A senior may disenroll from their current Part D plan during the open enrollment period or during a SEP. Disenrollment can be accomplished in various ways. A written notice can be sent to the private insurance company. Verbal notice is acceptable, but sending it in writing ensures a record of the contact. A request to disenroll can be made by calling 1-800-MEDICARE. Another method of disenrollment is to simply sign up for a plan with a different company.
Change in the Formulary
Private insurance companies must provide 60 days notice of a change in the list of medications they are covering, called a formulary. If this occurs, the senior must call their doctor to see if they can switch to a medication that is covered. If not, the senior must go through the exception process. Their doctor will need to contact the insurance company and explain why the senior is not able to switch medications. If the insurance company does not grant the exception, the senior will be guided through the appeal process in a timely manner to get their medication covered. During this 60 day period, their medication will be covered under the Part D plan.
