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Medicare

Chapter 4

© 2010 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 4 2

Key Terms

• Advanced beneficiary notice (ABN) of noncoverage• Coverage gap• Crossover claim• Diagnostic services• Hospice• Initial preventive physical examination (IPPE)

• Limiting charge• Medical savings account (MSA)• Medicare• Medicare administrative contractors (MCA)• Medicare Advantage• Medicare beneficiary

Chapter 4 3

Key Terms (Continued)

• Medicare Fee Schedule (MFS)• Medicare Part A• Medicare Part B• Medicare Part C• Medicare Part D• Medicare Remittance Notice (MRN)

• Medicare Summary Notice (MSN)• Medication therapy management (MTM)• Medigap insurance• Medi-Medi beneficiary• Original Medicare Plan

Chapter 4 4

Key Terms (Continued)

• Prescription Drug Plan (PDP)• Quality Improvement Organization (QIO)• Screening service• Special needs plans (SNP)• TrOOP Facilitator

Chapter 4 5

Medicare Overview

• The federal health insurance program for people who are sixty-five and older

• Medicare also provides benefits to people with some disabilities and end-stage renal disease, which is permanent kidney failure

• A person covered by Medicare is called a Medicare beneficiary

• Medicare administrative contractors (MACs) process claims on behalf of the federal government

Chapter 4 6

Medicare Overview (Cont.)

To receive benefits, individuals must be eligible under one of six beneficiary categories:

1. Individuals age sixty-five and older2. Disabled adults3. Individuals disabled before age eighteen4. Spouses of entitled individuals5. Retired federal employees enrolled in the Civil

Service Retirement System (CSRS)6. Individuals with end-stage renal disease (ESRD)

Chapter 4 7

Medicare Part A

• Helps pay for inpatient hospital services, care in a skilled nursing facility, home health care, and hospice care

• A hospice is a public or private organization that provides services for terminally ill patients and their families

• People who are eligible for Social Security benefits are automatically enrolled in Medicare Part A

Chapter 4 8

Medicare Part B

• Helps pay for physician services, outpatient hospital services, durable medical equipment, and other services and supplies

• Part B coverage is optional• Everyone who is eligible for Part A may

choose to enroll in Part B by paying monthly premiums

Chapter 4 9

Medicare Part B (Cont.)

• Covers the following regular services:• Medical services• Clinical laboratory services• Home health care• Outpatient hospital services• Blood services• Various other supplies, devices, test,

and special services

Chapter 4 10

Medicare Part B (Cont.)

• Covers the following preventive services:• Initial preventive physical examination• Several types of screening,

measurement, and testing services• Vaccinations

• Screening services - for people who do not have symptoms, abnormal findings, or any past history of a disease

• Diagnostic services – for people diagnosed with a condition or a high probability for it

Chapter 4 11

Medicare Part C

• Became available to individuals who are eligible for Part A and enrolled in Part B in 1997 (originally called Medicare + Choice)

• In 2003, under the MMA, Medicare Advantage became the new name for Medicare + Choice plans, and certain rules were changed to give Part C enrollees better benefits and lower costs

Chapter 4 12

Medicare Part D

• Authorized under the MMA, provides voluntary Medicare prescription drug plans that are open to people who are eligible for Medicare

• All Medicare prescription drug plans are private insurance plans, and most participants pay monthly premiums to access discounted prices

Chapter 4 13

Medicare Insurance Card

• Each Medicare enrollee receives a health insurance card

• All Medicare cards list the enrollee’s:• Name• Sex• Medicare number• The effective dates for Part A and Part

B coverage

Chapter 4 14

Medicare Part B Plans

• Beneficiaries choose from several plans• Original Medicare Plan – fee-for-

service plan; must pay the premium, coinsurance, and the annual deductible

• Medicare Remittance Notice (MRN) – shows the office the amount of a patient’s medical bill that has been applied to the annual deductible

• Medicare Summary Notice (MSN) – shows a patient the same information as a MRN

Chapter 4 15

Medicare Part B Plans (Cont.)

• Medicare also offers Medicare Advantage plans, including:

• Medicare managed care plans• Medicare preferred provider plans• Medicare fee-for-service plans• Medical savings accounts

Chapter 4 16

Medicare Part B - Medicare Managed Care Plans

• Some beneficiaries choose to join managed care plans such as HMOs

• Advantages:• Low copayment, minimal paperwork,

coverage for additional services, no need for a supplemental Medigap policy

• Disadvantages:• Physician choices limited, and prior

approval is needed to see specialists

Chapter 4 17

Medicare Part B – Preferred Provider Organizations

• Patients are given a financial incentive to use doctors within a network, but they may choose to go outside the network

• Visits outside this network of providers incur additional costs, which may include higher copayments or higher coinsurance

• Unlike HMOs, many PPOs do not require patients to select primary care physicians

Chapter 4 18

Medicare Part B – Private Fee-for-Service

• Patients receive services from any Medicare-approved providers or facilities they choose

• Operated by a private insurance company that contracts with Medicare to provide services to beneficiaries

• Patients may pay rates that are higher or lower than the rates on the Medicare Fee Schedule

Chapter 4 19

Medicare Part B – Medical Savings Accounts

• Combines a high-deductible fee-for-service plan with a tax-exempt trust to pay for qualified medical expenses

• CMS pays premiums for the insurance policies and makes a contribution to the MSA

• The only beneficiary premium is for supplemental benefits that may be offered by the plan

Chapter 4 20

Medicare Fee Schedule (MFS)

• The basis for payments for all Original Medicare Plan services

• This national system is based on the resource-based relative value scale (RBRVS) system, using cost factors that represent the physician’s time and how much it costs to run a practice

Chapter 4 21

Medicare Part B – Participation

• Annually, providers choose whether they want to participate in the Medicare program

• Participating physicians agree to accept assignment for all Medicare claims and to accept Medicare's allowed charge according to the MFS as payment in full for services

• The provider may bill the patient for services not covered by Medicare

Chapter 4 22

Medicare Part B – Nonparticipation

• Nonparticipating providers decide whether to accept assignment on a claim-by-claim basis

• NonPAR providers who do not accept assignment are subject to Medicare's charge limits

• NonPAR providers are subjected to a limiting charge, which is 115 percent of the fee listed in the nonPAR MFS

Chapter 4 23

Medicare Part B – Excluded Services

• Services that are not covered under any circumstances

• These services change from year to year• Before the excluded service is provided,

the patient may be given written notification that Medicare does not pay for it and an estimate of how much they may have to pay

Chapter 4 24

Medicare Part B – Medically Unnecessary Services

• Services that the Medicare program does not consider generally medically necessary are not covered in most cases

• To be considered medically necessary, a treatment must be:

• Appropriate or essential • Not elective or experimental• Delivered at the appropriate level

Chapter 4 25

Medicare Part B – Medically Unnecessary Services (Cont.)

• Several common categories of medical necessity denials include:

• Improper linkage between the diagnosis and the service

• Too many services in a brief period of time

• Level of service denials

Chapter 4 26

Medicare Part B – The Advance Beneficiary Notice (ABN) of Noncoverage

• Given to a patient prior to treatment by a provider who thinks that a procedure will not be covered by Medicare because it will be deemed not reasonable and necessary

• The ABN form is designed to:• Identify the service or item that Medicare is

unlikely to pay for• State the reason Medicare is unlikely to pay• Estimate the cost of the service if Medicare

does not pay

Chapter 4 27

Who Pays First?

• Many beneficiaries choose to buy Medigap insurance policies from federally approved private insurance carriers to fill gaps in Medicare coverage

• If a beneficiary has Medigap insurance, Medicare is the primary payer

• The claim is filed with Medicare first

Chapter 4 28

Who Pays First? (Cont.)

• A Medi-Medi beneficiary is eligible for both Medicaid and Medicare

• Claims for these patients are first submitted to Medicare

• Then they are sent to Medicaid along with the Medicare Remittance Notice

• Most Medicare carriers automatically transmit these crossover claims to the state Medicaid payer

Chapter 4 29

Who Pays First? (Cont.)

• Medicare is sometimes the secondary payer, generally in cases of accidents or job-related illnesses or injuries

• Medicare is a secondary payer when:• The patient is covered by an employer’s

group health plan• Workers’ compensation is involved• No-fault insurance or liability

insurance covers the services

Chapter 4 30

Medicare Part D

• Upon the passage of the Medicare prescription benefit in 2006, beneficiaries quickly took advantage of the savings

• Over 25 million people are already enrolled in Medicare Advantage plans with drug benefits or in independent prescription drug plans

• Nearly all retail pharmacies participate in at least one prescription drug plan

Chapter 4 31

Medicare Part D – The Plans

• Medicare offers two basic options for prescription drug coverage:

1. Prescription Drug Plan (PDP) – can be chosen by beneficiaries; available under the Original Medicare Plan

2. Medicare Advantage Plan – beneficiaries can select a plan that include drug coverage

Chapter 4 32

Medicare Prescription Drug Plans (PDPs)

• Run by insurance companies and other private companies that have been approved by Medicare

• Provide coverage for prescription drugs only and may be used with the Original Medicare Plan, medical savings accounts, and with Medicare Cost Plans

• They may be used with some PFFS plans that do not include the Medicare prescription drug benefit

Chapter 4 33

Medicare Advantage Drug Plans

• An alternative method for getting Medicare benefits

• These plans combine coverage for doctor and hospital benefits (from Medicare Parts A and B) with coverage for prescription drugs under Part D in one plan provided through a private insurance company

• Both HMO and PPO plans may fall under this category

Chapter 4 34

Medicare Special Needs Plans (SNPs)

• Third type of plan that some patients with specific needs have

• SNPs serve people who:• Live in certain institutions (such as

nursing homes) or who require nursing care at home

• Are eligible under both Medicare and Medicaid

• Have at least one specific chronic or disabling condition

Chapter 4 35

Sponsoring Companies

• Health care companies compete to offer Medicare prescription drug coverage

• Contract with pharmacies to create pharmacy networks that provide covered drugs to beneficiaries

• Plans may vary on points, such as:• Service area – where they are available• Cost – monthly premiums, yearly

deductibles, and prescription costs• Coverage – whether or not there is a gap

Chapter 4 36

Beneficiary Eligibility and Enrollment

• All people who are enrolled in Medicare are eligible for coverage under Medicare Part D

• Drug plans are available from private collaborating companies

• Enrollment lasts from November 15 to December 31, with coverage beginning on January 1, and generally lasting one year

• Late enrollment options are often available

Chapter 4 37

Beneficiary Eligibility and Enrollment (Cont.)

• A person may join a drug plan by one of the following methods:

• Paper application• Online registration• Over the phone• Online through Medicare• Over the phone through Medicare

Chapter 4 38

Beneficiary Eligibility and Enrollment (Cont.)

• The following information is required for someone to enroll in a Medicare drug plan:

• Personal identification information• Permanent street address• The information found on the person’s

Medicare card

Chapter 4 39

Benefit Structure

• Benefits patients receive through Medicare vary depending on the plans selected

• Generally, the patient and the plan each pay part of the costs for the prescription drug coverage

• Plans also generally have monthly premiums that patients pay and a set deductible that must be paid prior to the start of cost-sharing with the drug plan

Chapter 4 40

Benefit Structure (Cont.)

• There may be different tiers with different costs, and payments may vary based on whether drugs are brand name or generics

• Another benefit factor is the coverage gap or “doughnut hole”

• Occurs when a patient and the drug plan have spent a predetermined amount of money for covered drugs and the patient is responsible for all costs of the drugs

Chapter 4 41

Formulary Administration

• Medicare Part D has a formulary, which is selected with the help of a team of health care providers and includes both brand-name and generic drugs

• The formulary is required to include at least two drugs in each category, although the plan can choose the specific drugs to cover

Chapter 4 42

Formulary Administration (Cont.)

• Plans often divides formularies into different tiers that vary in terms of the patient’s payment and the coverage

• Example of a tiered system:• Tier 1 – lowest copay; most generic drugs• Tier 2 – medium copay; less expensive brand-

name prescription drugs • Tier 3 – higher copay; typical brand-name

prescription drugs• Specialty Tier – highest copay; unique, very

high-cost drugs

Chapter 4 43

Covered Drugs

• Medicare Part D drug plans typically cover all drugs listed in their formularies

• Drug plans are required to cover almost all drugs that fall in the following six classes:

1. Anti-pyschotics2. Anti-depressants3. Anti-convulsants4. Immunosuppressants5. Cancer drugs6. HIV/AIDS drugs

Chapter 4 44

Electronic Prescribing

• Entities that choose to offer this service must comply with new standards for Part D covered drugs effective April 1, 2009

• The final rule sets new standards for four types of information:

1. Formulary and benefits2. Medication history3. Fill status notification4. Provider identifier

Chapter 4 45

Pharmacy Enrollment

• When a patient enrolls in a Medicare drug plan and presents prescriptions at the pharmacy, the patient’s information must be verified

• The technician should first request the patient’s Medicare Part D plan ID card

• Some Medicare beneficiaries will be issued Rx cards by their drug plans

Chapter 4 46

Pharmacy Enrollment (Cont.)

• Patients who do not have an ID card may have a plan enrollment “acknowledgement letter” or “confirmation letter” that should contain the following four pieces of data:

1. Bank identification number (BIN)2. Processor control number (PCN)3. Group ID for the patient’s specific plan

(GROUP)4. Member ID information

Chapter 4 47

Quality Improvement Organizations (QIO)

• Groups of practicing doctors and other health care experts paid by the federal government to check and improve the care given to Medicare beneficiaries

• Local branches may be contacted with complaints about the quality of care

• The Part D plan is required to cooperate with the QIO in order to resolve the complaints

Chapter 4 48

Retiree Prescription Drug Coverage

• Retired patients must consider how existing drug coverage from their previous employer works in conjunction with Medicare Part D

• When electing whether to enroll in Medicare Part D, retirees examine whether it is beneficial, since the prescription drug coverage offered by their former employer or union may be better

Chapter 4 49

Medication Therapy Management (MTM)

• Provision of the MMA designed to address the growing problem of medication mismanagement in the United States

• MTM offers pharmacists free education to improve medication use and reduce the number of adverse drug events and also pays pharmacists for their expert services

• MTM is a service or group of services that increases the likelihood of positive therapeutic outcomes for patients

Chapter 4 50

MTM Objectives

• The primary goals of MTM are to:• Optimize therapeutic outcomes through

quality medication use• Reduce the risk of adverse drug events• Improve health outcomes and cost

reduction• Encourage further participation in

MTM programs

Chapter 4 51

MTM Eligibility

• Not all Medicare members covered by Medicare Part D are eligible for MTM

• Among the common reasons Medicare members will be eligible for MTM are:

• Are referred for MTM by a provider• Meet medication-taking qualifications• Have specific conditions or reactions to

treatment and drugs• Have at least one chronic disease

Chapter 4 52

MTM Services

• Licensed health care professionals, such as nurses, pharmacists, and physicians, provide the MTM services

• All MTM services document information relating to medication therapy reviews, personal medication records, medication action plans, interventions and referrals, and follow-up visits

• Documentation of MTM services must include specific information