Ask the Medi­care Spe­cial­ist

Pittsburgh Post-Gazette - - News - by: Aaron Zol­brod

QUES­TION:

Can you ex­plain the dif­fer­ence be­tween a de­ductible and the Max­i­mum Out of Pocket, co-pays vs. coin­sur­ance, and HMO’s vs. PPO’s? I chose a PPO be­cause it’s my un­der­stand­ing I can go to any doc­tor or hospi­tal. Is that cor­rect?

AN­SWER:

So many peo­ple don’t un­der­stand how the Max­i­mum Out of Pocket (MOOP) works. And in my opin­ion, it’s the sec­ond most im­por­tant fac­tor to con­sider when choos­ing an Ad­van­tage Plan HMO or PPO. Let me ex­plain and get to your other ques­tions as well.

The MOOP rep­re­sents the max­i­mum you can be billed in a cal­en­dar year. In West­ern PA plans, the MOOP can range from $3,400 to $6,700. De­ductibles dif­fer from the MOOP in the fact that when some­one uti­lizes ser­vices that are sub­ject to a de­ductible, the to­tal cost of that ser­vice is billed to the in­sured. That’s not how the MOOP works. Let me give you an ex­am­ple. Let’s say you have a plan with a MOOP of $6,700, which is very com­mon. In Jan­uary you went to see an Ortho­pe­dist due to knee pain and the co-pay for that of­fice visit was $40. The doc­tor then or­dered an MRI that had a co-pay of $250. The MRI came back, and the doc­tor ad­vised a knee re­place­ment, an in­pa­tient surgery that usu­ally re­quires two to three nights in the hospi­tal which had a co-pay on your plan of $675, let’s say. Af­ter surgery, out­pa­tient re­hab was re­quired three times a week for six weeks, a to­tal of 18 ses­sions at a co-pay of $40 per, which would come $720. The grand to­tal you were re­spon­si­ble for dur­ing the whole process was $1,685. Sub­tract that amount from $6,700 MOOP and now there’s $5,015 left of that could po­ten­tially be billed to you this year. Pay­ing all $6,700 could likely occur if you re­quired Chemo or Ra­di­a­tion, ex­pen­sive drugs like Rem­i­cade or Pro­lia that are in­fused or in­jected, a lengthy Skilled Nurs­ing stay, or mul­ti­ple hos­pi­tal­iza­tions. Please keep in mind that what you pay for pre­scrip­tion drugs does NOT count to­wards the MOOP!

This brings me to co-pays vs. coin­sur­ance. Co-pays are a set, fixed cost the in­sured pays for spe­cific ser­vices. All those I men­tioned above re­lated to the knee re­place­ment would fall into that cat­e­gory. Co-in­sur­ance on the other hand, is a per­cent­age of the bill one is re­spon­si­ble for. On vir­tu­ally ev­ery Ad­van­tage Plan there’s coin­sur­ance of 20% for Chemo­ther­apy and other “Part B” drugs, durable med­i­cal equip­ment such as oxy­gen or a wheel­chair, pros­thet­ics, and diabetic sup­plies. Rem­i­cade re­tails for around $2,000 a pop. So, some­one with an Ad­van­tage Plan would be re­spon­si­ble for $400 each time they re­ceived it, which for most peo­ple is ev­ery four to six weeks.

Most peo­ple don’t pay enough at­ten­tion to what their MOOP is. We do, and al­most never ad­vise clients to choose an Ad­van­tage Plan with a MOOP on the high end. The MOOP is one rea­son why some peo­ple choose to pay a bit more and go with a Sup­ple­ment in­stead. Sup­ple­ments have lit­tle or no out of pocket costs as­so­ci­ated with them. For ex­am­ple, a very pop­u­lar Sup­ple­ment among our clients is Plans G. A per­son who had plan G would have been billed just $185 for the same knee re­place­ment sce­nario de­scribed above and wouldn’t be billed for any other Medi­care cov­ered ser­vices the rest of the year.

Now to the last part of the ques­tion on HMO’s vs. PPO’s. Let me first say that you don’t need a re­fer­ral to see Spe­cial­ists with an HMO. HMO stands for Health Man­age­ment Or­ga­ni­za­tion, and ba­si­cally, the only dif­fer­ence from a PPO is that you must get your care from an “in net­work” provider if you want the in­sur­ance com­pany to pay claims.

PPO stands for Pre­ferred Provider Or­ga­ni­za­tion and you can get ser­vices from “out of net­work” doc­tors and hos­pi­tals. How­ever, there is a cou­ple of im­por­tant as­pects most peo­ple aren’t aware of. First, an “out of net­work” doc­tor or hospi­tal is not re­quired to ac­cept your PPO un­less it’s for emer­gency ser­vices. For ex­am­ple, the Mayo Clinic, one of the top-rated hos­pi­tals in the coun­try, doesn’t take out of state PPO’s. In ad­di­tion, all avail­able PPO plans in West­ern PA have an “in net­work” MOOP of $6,700 that in­creases to $10,000 when elected ser­vices are re­ceived “out of net­work”. And the ma­jor­ity of com­pa­nies only pay 70% “out of net­work’ which means a bill for $10,000 would be highly likely if some­one on a PPO was re­spon­si­ble for pay­ing 30% for an in­pa­tient a hospi­tal stay or surgery. Lastly, PPO’s are also gen­er­ally more ex­pen­sive, some­times priced higher than Sup­ple­ments.

An­other rea­son peo­ple go with Sup­ple­ments is they are good any­where Medi­care is ac­cepted. That means ac­cess to vir­tu­ally any doc­tor or hospi­tal in the coun­try. In ad­di­tion, claims are paid the same no mat­ter where that ser­vice is re­ceived, be that in West­ern PA, West Vir­ginia, Washington State, Washington DC, etc.

If you’re con­cerned that you may have a higher MOOP, don’t want to be in a sit­u­a­tion where you could be billed thou­sands of dol­lars, would like to have the dif­fer­ences be­tween Sup­ple­ments and Ad­van­tage Plans ex­plained in more de­tail, or would like to com­pare your plan to oth­ers on the mar­ket, you can do that any­time dur­ing the year. Even if you can’t change plans now, it’s al­ways a good idea to learn more about how your cur­rent plan works and how to make it work bet­ter for you.

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