Ask the Medicare Specialist

QUESTION:

How do I find out what Medicare covers? What about Supplements and Advantage Plans? Is there anything one covers the other doesn’t?

ANSWER:

There are very few medical services or treatments Medicare or Advantage Plans don’t cover, although the way services are approved, claims paid, and what the insured’s financial responsibility is varies between the two types of plans.

Let’s start with Supplements, aka Medigap, which are highly Federally regulated. One of the regulations is when Medicare covers a treatment, service, medical device, etc., the Supplement company must pay their share, which generally is the balance of what Medicare doesn’t. The Supplement company has zero say in what’s covered. If Medicare pays, the Supplement pays. Period. This to me is one of the best benefits of having a Supplement because as I like to say, “Medicare lets the doctor steer the ship.” If a doctor thinks something is medically necessary such as an MRI, CT Scan, an extra day or two in the hospital, Medicare and the Supplement pay the bill in full without asking any questions. If you were visiting an orthopedic surgeon for example, he or she could tell you to go get an MRI the same day with no fear or concern of that claim being denied. With the exception of only a handful of medical services, Medicare does not employ people to deny or preauthorize claims like private health insurance companies, which include Advantage Plans, who can dictate to a doctor, hospital, and patient what is going to be covered, or not. We’ll discuss that momentarily.

There is a problem with Medicare being so liberal paying claims because they basically pay first and ask questions later, if ever. This results in tremendous waste, fraud, and abuse. It’s been estimated that 10% of the total Medicare budget, over $60 billion dollars a year, is paid out in fraudulent charges! This kind of criminal activity is a burden on all taxpayers and ultimately contributes to higher premiums for both Medicare Part B and Supplements.

As I previously stated, Advantage Plans HMO’s and PPO’s can deny claims or make the insured wait to get a medical service or device. There are also many that need prior authorizations, meaning before you can receive services such as an MRI, CT Scan, Outpatient Surgery, Home Health Care, and others, the insurance company needs to give it the “okay.” There’s both a positive and negative to this situation. Private health insurance companies pay much more attention to assure they’re not paying bogus claims for services that were never administered, over prescribed, etc. They do a much better job keeping fraud to a minimum and ultimately premiums down than Medicare in my opinion. And when it comes to the lower priced HMO and PPO Advantage Plans, Western PA companies have done a very nice job of that. $0 and other low-cost plans have been available since their inception in 2004 with minimal premium increases. Although some of the higher cost plans have increased as much as 500% since I started in the business back in 2008. We keep our clients away from those plans and almost never advise anyone to choose an HMO or PPO that has a premium over $60/month.

The negatives of Advantage Plan companies being able to call the shots, so to speak, are obvious. You can have a claim denied or be told that the insurance company is refusing to pay for additional days in the hospital or Skilled Nursing Facility, although I must say that’s become a rare occurrence in the past few years. It can also be an inconvenient to have to wait for something as common as an MRI to be authorized. Keep in mind there are appeals processes when someone is denied a service. If you have questions regarding that, feel free to reach out to us.

As far as if there’s anything covered by Medicare and a Supplement vs an Advantage Plan, the answer is yes. Almost all Advantage Plans cover Part D prescriptions while Supplements do not. Generally, a separate prescription plan needs to be purchased if you choose a Supplement and many of them have a deductible as high as $435. No Western PA Advantage Plans have a prescription deductible.

Unlike Supplements, Advantage Plans can also provide some “ancillary benefits” such as dental, vision, no cost gym access, Over the Counter (OTC) benefits, and others, which together, can offer significant value. Be advised that some plans provide more comprehensive programs than others, especially when it comes to dental and OTC benefits. We don’t recommend making a decision based on these benefits alone, which I often refer to as “sizzle.” Premium cost, co-pays for a hospital stay, the Maximum Out of Pocket, and access to doctors and hospitals are the most important factors to consider in my opinion.

When it comes to what medical services are covered, Advantage Plans are regulated as well and must cover everything as good or better than Original Medicare. There are a couple of caveats, however. One I already discussed. Advantage Plans can deny claims or advise the hospital they will not pay for any additional days as an inpatient. Again, you can appeal those decisions. Secondly, even though the same services are covered, what you pay for them can be very different. Those on Supplements pay little or no bills, while those on Advantage Plans are exposed to between $3,400 to $6,700 per year. And even plan to plan and company to company what you pay for the same exact medical service can be much higher or lower. I often use a 5-day or longer hospital co-pay differences as an example. There are plans that have premiums from over $60 to almost $200/month where a 5-day or longer hospital stay would have a co-pay of $1,000 to $1,400. On a select few plans that cost $0 to $60 per month, the co-pay for the same exact hospitalization would have a co-pay of $300 or less! That’s a very significant difference.

Please feel free to email me personally with any questions regarding this or any other Medicare topic or if you would like to submit a question for future columns. Aaron@getyourbestplan.com.