Healthcare Systems: Lecture 6 (Medicare 2)

What is “Assignment”?

Refers to a payment agreement between enrollee, provider and Medicare (Part B). By accepting assignment, providers must accept the amount Medicare approves for a Part B service as payment in full. The beneficiary’s responsibility is then limited to 20% of the Medicare-approved charges.

Are Providers obligated to accept an assignment? What can they do?

No.

Providers can:

1. Not take Medicare patients.

2. Accept Medicare patients but not agree to the Medicare fee schedule (excess charges, or a sum more than the Medicare-approved amount but limited to a 15% surcharge).

Enrollment Mechanics

Apply through a Social Security Administration (local office in Albany, OR, online or by telephone).

Individuals can enroll in Medicare without starting Social Security. However, collecting Social Security impacts how the Part B monthly premium is paid (ie. deduction from monthly Social Security payment vs. quarterly billing), as well as financial assistance eligibility.

Can you enroll for Medicare through Medicare.gov?

You CANNOT enroll for Medicare on Medicare.gov!

What is an Initial Enrollment Period?

7-month period when an individual is first eligible for Medicare.

1-3 months before birth month: Begins on birth month.

1-3 months after birth month or on birth month: Month following enrollment.

General Enrollment Period

Individuals who miss their IEP and do not qualify for a SEP can enroll in parts A and/or B from January to March each calendar year. Penalties may apply.

Effective date: Month following enrollment.

Penalties

Part A Penalty: 10% of the Individual’s Part A Premium for each 12 month period where the individual could have been enrolled in Medicare Part A (eg., 2 years = 20%). Paid for twice the number of years of the gap (eg., 2-year gap = 4-year penalty duration).

Part B Penalty: 10% of the standard Part B Premium for each 12-month period where the individual could have been enrolled in Medicare Part B. Paid indefinitely.

Delaying Enrollment for Medicare

If an individual or their spouse is actively working at age 65 and covered by an EGHP that provides comparable medical/prescription drug coverage, then they can defer enrolling in Part B and D until retirement. Loss of EGHP at retirement would then trigger a special enrollment period (SEP) into Medicare. For those working, it is generally recommended to start Part A and defer Part B. There are some exceptions like HRAs, small employers.

Sources of coverage that would NOT be acceptable to delay enrollment in Part B:

1. EGHP continued via COBRA or a long-term disability policy (as this is not active work).

2. Private insurance obtained through the ACA insurance exchanges. Transition to Medicare is required unless someone does not qualify for premium-free Part A.

3. Enrolled in a state Medicaid program.

4. Coverage through the VHA.

5. Incarceration if released before January 1st, 2023.

Medigap (Supplemental) Plans

Supplemental insurance plans offered by private companies to help individuals pay for the cost sharing of Original Medicare. As a secondary payer, Medigap can do medical underwriting (change premiums based on underlying health conditions). Medicare pays its share of the Medicare-approved amount and then the supplemental plan pays all or some of the remaining balance (deductibles, copayments, coinsurances).

Most comprehensive Medigap Plans:

Medigap coverage has many different plans denoted by letters. Plan F has historically been the most comprehensive, followed by Plans C and G. However, Plans F and C are being phased out and are no longer available for newly eligible beneficiaries as of Jan. 1st, 2020.

Medigap “Alphabet” Plan Overview Chart:

Medigap Premium Underwriting Determination:

Medigap premiums depend on age, smoking status, gender, and zip code. There can be big differences in premium for the same coverage. Premiums generally increase once annually, but they can increase twice annually every 5 years in “attained age” policies.

Price example for a 65 year old:

Plan A: $72-$200 per month

Plan G: $125-$196

Enrollment into Medigap Plans:

Initial Enrollment Period: OPE with “guaranteed issue” (GI) during the first 6 months of Part B regardless of age. This is a consumer protection where the 3rd-party payer cannot deny coverage or adjust the monthly premium based on actual or projected health status. Once outside of this 6-month period, payers may still sell a Medigap policy, but GI protections often no longer apply, although there are exceptions.

GI Protections:

Special Enrollment Period: 64-day GI period from the plan’s end date if the plan is ending due to no fault of the member.

Oregon Birthday Rule (SEP): For individuals with a Medigap policy, they can switch to some plans with GI protection. Can change to plans with equivalent or less coverage. Cannot change to plans with better coverage. 30-day period that begins on the individual’s birthday.

Oregon Birthday Rule

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Concept of Payer “Look-Back” and Waiting Periods

If there is no GI protection, payers may implement waiting periods (3-6 months) for pre-existing conditions and “Look-Back”, or limited underwriting process that allows the payer to obtain a potential subscriber’s medical history for a period prior to the effective date of the policy.

Medicare Advantage

Private companies paid by CMS to manage an individual’s Medicare benefits that reside in a specific geographic area. Individuals generally pay a lower monthly premium, but then they also “pay as they go” through copayments and coinsurances to an out-of-pocket maximum. From the patient perspective, they function similar to an EGHP.