Revised 11/2005
Managed Health Care
"Love doesn't make the world go round;
Love is what makes the ride worthwhile."
By Audrey Woodhall
Their Goal Is Cost Efficiency
A traditional Medigap policy fills the gaps left in the Original Medicare Plan coverage. Medigap insurance must follow all federal and state laws. Such policies are clearly marked Medicare Supplemental Insurance.
Not everyone elects to purchase the Original Medicare Plan. Medicare managed care plans and Private Fee-for-Service plans are not available in all areas, but they are popular in many areas of the United States. Under either type of plan, the participant must continue to pay the monthly Part B premiums. There is likely to also be an additional monthly premium for the plan itself. Some managed health care plans do offer premium free membership, basing their operation on the premiums they receive from Medicare Part B participation.
Some managed care plans are called Health Maintenance Organizations, or HMOs. Sometimes the cost is lower than the traditional Medigap insurance; sometimes its not. The cost will depend upon the benefits received.
Community Based Plans
An HMO or managed care plan is a community based medical service plan whose monthly prepaid premiums entitle the enrollee to a comprehensive array of services, facilities and supplies. When a Medicare beneficiary chooses a managed care plan or an HMO, Medicare will pay a set amount of money each month to the plan. The plan may provide extra benefits, such as prescription drugs. In most managed care plans, the beneficiary can only go to specified doctors and hospitals. These specified providers have agreed to the payment schedules offered by the HMO or managed care plan. In some areas, the facilities might be totally owned and operated by the managed care plan or HMO.
Primary Care Doctor
Most plans have several doctors to choose among for their primary care physician. This physician must refer their patients in order for them to see anyone else, such as a cardiologist or other specialist. The specialists are usually under contract with the HMO or managed care organization.
Point-of-Service Option
Some managed care plans and HMOs do offer a Point-of-Service option, which allows their members to go to doctors and hospitals that are not part of their plan. Usually this option costs the beneficiary more, but, of course, it also offers the patient more choices.
Managed Care Quality of Service
Opinions of managed care plans vary widely. At one time, the Health Care Financing Administration (HCFA) advocated that all Medicare beneficiaries be placed into HMOs. The HCFA felt that this would produce a savings because it would place the financial responsibility directly on the HMOs. They would then be responsible for cost control measures. Of course, this did not happen. It became obvious that requiring senior Americans to obtain their health care from certain providers would not be popular.
Managed Care programs, like HMOs, initially seemed to offer the promise of big savings to the government and consumers alike. As late as 1993, Medicare administrators were encouraging Medicare beneficiaries to join health-maintenance organizations. The hope was, as stated, that this would bring down Medicare's costs.
Even though the government found strong resistance to a required managed care membership, many senior Americans do elect to sign up. The reason most often cited is the cost. Sometimes there is no additional cost beyond the monthly Part B membership; sometimes there is additional premium required. Either way, the members generally feel that they get more for their money.
The perceived savings for Medicare does not always exist. A study conducted for the Health Care Financing Administration, which administers Medicare, found that managed care programs actually spent about 5 percent more on each Medicare patient than did private insurers. Not surprisingly, Medicare no longer encourages beneficiaries to enroll in health-maintenance organizations. Now Medicare's position is that beneficiaries deserve the privilege of private choice.
Since many agents representing private insurance companies have spent years trying to convince consumers that their care could be inferior in managed care programs, this study did do one very positive thing. It provided information, which proved this theory wrong. Those individuals enrolled in HMOs and other managed care programs generally do not get inferior care. In some areas, they may actually get better care because their care is monitored by a single individual who can prevent prescriptions that may counteract each other, services that are duplicated, and so forth. When patients seek care on their own, they often see many doctors and other specialists who may not be aware of other treatments that have been prescribed. This lack of information can actually allow treatments or prescriptions that harm the patient.
Occasional Financial Hardships
Managed care plans and HMOs have had their share of financial hardships. Some states, such as Florida, have experienced widespread HMO failures. Some HMOs have had difficulty keeping skilled physicians and nurses due to lower pay. Premium rates, in some areas, are as high as comprehensive insurance coverage.
Despite any problems experienced by managed health care plans and their subscribers, joining such a plan can be an attractive concept. By paying hospitals and doctors under yearly contracts rather than by fees per patient, HMOs can provide economical health care. In return, the patient gives up one main thing: their unlimited choice of doctors and hospitals.
Managed Care Plans May Cost Less
HMOs do generally save the beneficiary premium. The savings can be as much as 28 percent compared to traditional health insurance plans. The actual premium is generally the same; the savings often lies in the benefits received. HMOs tend to cover virtually all costs while traditional insurance does not. Traditional Medigap policies now must conform to one of twelve standardized plans, so shopping for insurance benefits is intended to be easier for the consumer. If the HMO is designed to be a traditional Medicare supplement, called an Original Medicare Plan, it will also need to conform to one of the standardized plans.
For managed care plans to remain financially stable, they must contain costs. That might mean waiting longer for an appointment with a doctor; it might mean the plan will discourage a beneficiary from entering a hospital; it might mean a limit to the number of tests that are performed.
Inferior Care?
Probably due to their cost saving measures, it is sometimes charged that managed care plans offer inferior care. As the study compiled for the Health Care Financing Administration showed, this was not backed up by their research. In fact, studies done by the Rand Corporation, a Santa Monica, California think tank and Hewitt Associates, an employee-benefits consulting firm in Chicago, show that subscribers generally receive high-quality care and are generally content with the services received. In fact, as far back as 1986, Harvard researchers found that non-HMO doctors tend to over-prescribe medical services by as much as fifty percent.
Of course, it is possible to receive poor care anywhere, and managed care organizations are no exception. Overall, however, there has been no evidence that managed care organizations have performed with any more mismanagement of health care services than have privately paid doctors and medical providers.
The Most Successful Managed Care Plans
The managed care plans that tend to be most successful financially employ only or primarily salaried staff doctors who work together under one roof. The early managed care plans always operated in this fashion. The later managed care plans and HMOs adopted the practice of signing on independent practice associations, which is now the format of the majority of these plans. In this type, doctors in private practice agree to treat managed care members in the doctors own offices along with their regular fee-paying patients. The catch is that doctors in private practice have a weak incentive to control costs since their reimbursement from the managed care plans is usually a small portion of their overall practice and income.
Until the mid-1980s, failures to control costs and what medications doctors prescribed were covered by enrolling new members. Then, as the market became saturated, the red ink began to appear with no prospect of returning to the black.
For many managed care plans and HMOs, this meant financial failure, which left members without coverage. For those members in the middle of a serious illness, the loss of their medical coverage was a terrifying experience. Federal law provided only slim protection. Newly defunct organizations had to continue to provide coverage for six months for Medicare recipients, but only one month for those members who were under the age of 65 and not on Medicare. Some members were simply not insurable due to health conditions.
There is financially sound managed care plans, which are ran effectively. Here are some guidelines to use when selecting a health-maintenance organization:
1. Find out how long the managed care plan has been in business. Considering the ills of the industry, experience in running the company is absolutely vital. Two or three years should be the very minimum.
2. Ask for a list of doctors who participate in the managed care plan. Find out how long they have participated with the plan. If available, the medical staff turnover is also helpful. Call the participating doctors to find out how happy they are with the company. You may wish to check with the participating hospitals also. If you know of someone who is a subscriber, ask his or her opinion of the service given.
3. Ask for the percent of subscriber turnover each year. Anything higher than 30 percent is probably a sign of trouble. If you are told that such statistics are not kept or are not available, do not join that particular managed care plan. Either the company wants to hide their figures or, if they actually do not keep these figures, it is a poorly ran business. Either way, it is not a consumer friendly company.
Is it troublesome to do this kind of research before selecting a managed care plan or HMO? Yes, it is. Says Erling Hansen, general counsel to the Group Health Association of America, the managed care trade organization, "You measure what you care about."
Managed Care Plan Advantages
As with all things, there are both advantages and disadvantages to joining an HMO or managed care plan.
The advantages include:
1. Predictability of monthly health care costs
2. No Medicare "assignment" problems
3. Little or no paperwork because it is not necessary to file claims
4. Emphasis on preventative medical care
5. Few, if any, coinsurance features
Managed Care Plan Disadvantages
The disadvantages include:
1. Limited access to providers not affiliated with the HMO
2. Only emergency or urgently needed services are provided outside of the HMO defined service area
3. Most HMOs exclude coverage altogether if you travel outside the service area for more than 90 consecutive days
Even though coverage through a managed plan provider is an alternative to the traditional Medicare and Medigap coverage (Original Medicare Plan), the beneficiary must continue to participate in both Parts A and B of Medicare. That includes continuing to pay the Part B premium. The beneficiary must also usually live in the managed care service organization area, must not have end stage kidney (renal) disease and must complete an application for the HMO membership. Of course, the HMO must also grant the beneficiary membership within the HMO. In other words, the beneficiary must qualify for membership.
Who Can Join a Managed Care Plan?
Those on Medicare can join either a managed care plan or a Private-Fee-for-Service plan if:
1. The participant has both Part A and Part B of Medicare.
2. The participant lives in the service area of the plan. The service area is where the plan accepts its members. It would also be where the services are provided.
3. The participant does not have End-Stage Renal Disease, which is permanent kidney failure requiring dialysis or a kidney transplant.
When a beneficiary decides to join a managed care plan or an HMO, they are still in the Medicare program, even if they must sign over their care, releasing Medicare from other payment options. Because they are still in the Medicare program, they must continue to pay the monthly Medicare Part B premiums. The participant retains all of their rights and protections under Medicare.
Managed Care Premium Costs
What amount of money the participant will pay in a managed care plan will depend upon the plan itself. Some plans will charge a monthly membership fee, while others operate solely on the Part B payments that are made through Medicare. Some plans will require a co-payment for each visit made, such as $15 per visit. There may be charges for extra services. Each participant will want to completely read the plan guidelines prior to joining.
Health maintenance organizations offer these tips to ensure the beneficiary minimizes any problems associated with using HMO or managed care plan services:
EMERGENCY CARE:
If a member requires emergency or urgently needed medical care and it is not possible to seek these services at their local health care facility or clinic, the member may then seek that care from a facility or doctor near by. It is necessary to then contact the managed care plan or HMO doctor or clinic about that emergency, generally within 24 hours of treatment. Some managed care plans give as long as 72 hours. Continued care will then depend upon the managed care plan doctor's approval.
LOCK-IN BENEFITS:
Most managed care plans have what is referred to as lock-in benefits. The lock-in feature provides that if the member seeks treatment somewhere other than through the primary care physician and turns in claims to Medicare, Medicare will deny payment of those benefits.
PRIMARY CARE PHYSICIAN:
The physician selected by the managed care plan member from the list of doctors participating in the program will become the member's PCP and will be in charge of managing that member's health care needs. Each member should approve of the physician that has been selected. Most organizations allow their members to request changes. Any time a patient is not happy with their primary care physician (PCP), a request to change doctors should be made.
SERVICE AREA:
Most health care plans offer coverage within certain geographically defined service areas. A service area is defined by various means. It may be a zip code area, county lines or some other factor. To belong to the organization the enrollee must live within the lines or area that has been defined by the managed care organization. Anyone living outside of the designated area would not be eligible for membership.
Joining the Managed Care Plan
Joining an HMO or a managed care plan is usually as simple as a telephone call. The individual can call the company and request an enrollment form be mailed to them. Once received, it must be completely filled out and returned to the organization for approval. Some companies have specific people who enroll new members. If that is the case, a person will be assigned to the new enrollee.
An individual may only join one managed care program at a time.
Private Fee-for-Service Plans (PFFS)
Private Fee-for-Service plans are similar to managed care plans. They are a new type of health care plan, available in some areas, though not necessarily everywhere. A Private Fee-for-Service plan is a Medicare health plan offered by private insurance companies. It is not the same as the Original Medicare Plan, which is offered by the federal government.
|
Private Fee-for-Service plans are not the same as the Original Medicare Plan, which is offered by the federal government. |
How Does a Private Fee-for-Service Plan Work?
When the options for Medicare beneficiaries broadened, new terms came into effect. One of the terms was the Original Medicare Plan, which refers to the traditional Medicare plan supplemented with a Medigap insurance policy. Another newer term now used is the Private Fee-for-Service Plan. Under this plan, Medicare pays a set amount of money every month to the private insurance company that runs the Fee-for-Service plan. The insurance company then provides health care coverage to people with Medicare benefits who have elected to join this plan. Typically, both the insurance company and the enrollee pays a fee to the doctor for each visit or each service provided.
It is the insurance company, rather than Medicare that decides how much will be paid for each service received. The patient may go to any doctor or hospital that accepts the plans payment. Many of these plans offer more services than generally received under the Original Medicare Plan. Even so, it is important that the enrollee understands how this plan works. Otherwise, he or she could end up paying more than they anticipated. It is especially important to find out if the plan has any pre-notification requirements. This clause would require the enrollee to notify the plan of any planned inpatient admissions. The patients doctor will often handle this for them, if they are aware of the requirement.
Enrolling In a Private Fee-for-Service Plan (PFFS)
Requirements for enrolling in a Private Fee-for-Service Plan (PFFS) work the same as enrolling in a managed care program. The individual must be enrolled in Medicare having both Parts A and B. The individual must live in the service area, and the individual may not have End-Stage Renal Disease, which is permanent kidney failure requiring dialysis or a kidney transplant.
Like the managed care plans, the enrollee is still part of the Medicare program and must continue to pay the monthly Medicare Part B premium. All the regular Medicare covered services apply, as do the enrollees Medicare rights and protections.
Costs in a Private Fee-for-Service Plan
Like the managed care plans, costs will vary depending upon the plan the individual has joined. There may or may not be a monthly premium in addition to the amount paid through Social Security for Medicares Part B benefits. If there is an additional fee and the enrollee does not pay it, it is likely that they will be returned to the Original Medicare Plan automatically.
The plan itself will determine whether there are co-payments due to the providers of medical care. It is common, for example, to have a $10 or $15 co-payment when visiting the doctor. Private Fee-for-Service plans may pay more if the plan lets doctors, hospitals, and other providers bill the enrollee more than the plan itself pays for the services. If this is allowed, there may be a limit as to what the medical providers may charge. The enrollee will pay the difference between what the plan pays and what the doctor charges.
Enrollment Periods
Some plans have specific times when they accept new members, although most plans will accept new members at any time. During the month of November, Medicare health plans must accept new members. When an individual on Medicare joins either a managed care plan or a Private Fee-for Service plan, they will be given a membership card with the name of the plan on it.
As in managed care plans, an individual may only join one plan at a time. If an individual attempts to join more than one, they may end up enrolled in a plan they did not wish to join. How would this happen? If an individual filled out enrollment papers in one plan, changed their mind and also enrolled in a second plan, the actual enrollment may only apply to the one who completed the forms first.
Leaving A Managed Care Plan
It is not unusual for an enrollee in a managed care plan or a Private Fee-for Service to decide to discontinue their membership. Until 2002, an individual may leave a plan at any time for any reason. The enrollee should write to the plan or to the Social Security Administration stating they wish to leave the plan. The enrollee should then receive a letter with the date the plan coverage will end. Once the enrollee terminates their membership, they are automatically returned to the Original Medicare Plan, unless they join a different managed care plan or Private Fee-for Service plan.
Beginning in the year 2002, an individual may be able to leave a plan only at specified times. An enrollee should call Medicare at 1-800-633-4227 for details on this possibility.
Notification When Leaving A Plan
When an individual decides to leave a plan, or changes their mind about joining one, it is usually necessary to put the decision in writing. The enrollee should immediately write the plan and tell them that they wish to cancel their application or membership. If the new plan has not yet processed the enrollment application, then the person will simply remain where they previously were. If they were already enrolled, unless otherwise instructed, they will be returned to the Original Medicare Plan.
If enrollment in a previous managed care plan or Private Fee-for-Service plan was already canceled, then it will be necessary to re-enroll. If the previous enrollment was in the Original Medicare Plan, no re-enrollment is necessary, as the individual will automatically be returned to it.
Where Plans Are Available
Private companies offer Medicare managed care plans and Private Fee-for-Service plans. The government never operates them. Each company decides where their plan will be available. Each company also decides how many types of plans they will offer. Each plan may have different benefits as well as different costs to the consumer.
When Medicare health plans sign a contract with Medicare, they agree to stay in Medicare for at least one year, based on January 1st through December 31st. It is always private companies that offer managed care plans and Private Fee-for-Service plans. Each year the private companies must make the decision to either renew their contract with the Medicare program or leave it. If they decide to stay with the Medicare program, they do have the option of changing their costs and benefits offered.
When a plan decides to leave the Medicare program, they must notify their subscribers before the plan coverage actually ends. The notice must include a list of other Medicare health plans that are offered in the area (if any). The notice must also include a list of the enrollees protections under law.
A plan can also be asked to leave the Medicare program if it is determined that their plans health services are inadequate, or if the company commits fraud. They can be asked to leave at any time throughout the year. Should this happen, the subscribers would receive notice with information about other plans that are available and their protections under law.
Before any individual on Medicare joins any type of plan or Private Fee-for-Service plan, it is wise to investigate. These plans are typically compared for the consumer on a chart by their state insurance department.
Keeping A Medigap Policy
It is possible to keep a Medigap insurance policy and enroll in a managed care plan or a Private Fee-for-Service plan. This is not something that is recommended, but it is possible. The reason it is not recommended is simple: cost. There would be little reason to pay for both.
Even though, due to the cost factor, it is not generally recommended to have both a Medigap insurance policy and a managed care plan, there may be a reason to do so temporarily. A person enrolling in a managed care plan may want to be sure they like it before dropping their Medigap policy. Once the policy is dropped, there is no guarantee that the individual may re-qualify for it again.
Some situations do allow a person to purchase a Medigap policy after the Medigap open enrollment period ends. These are referred to as Medigap protections because insurance companies are required by law to issue a policy. These protections include:
The Medicare managed care plan or Private Fee-for-Service plan is leaving the Medicare program or stops giving care in a specific area.
The enrollee moves outside of their previous Medicare managed care plan or Private Fee-for-Service plans service area.
The enrollee leaves their managed care plan or Private Fee-for-Service plan (PFFS) because it failed to meet its contract obligations. This might happen if the enrollee felt the marketing material had been misleading, for example.
The enrollee is in an employer group health plan that supplements or pays some of the costs not paid by Medicare, and the plan ends the coverage.
The enrollees health care coverage ends through no fault of theirs. This might be due to bankruptcy or any event that terminates the plan.
The enrollee dropped their Medigap policy in order to join a Medicare managed care plan or Private Fee-for-Service plan (PFFS), or to buy a Medicare SELECT policy for the first time, but then leave that plan or policy within one year after joining.
The enrollee joined a Medicare health plan, such as a managed care plan, when he or she first became eligible for Medicare at the age of 65. Within one year of joining, he or she decides to leave that particular plan. When this happens within that first year, the Medigap insurance company cannot deny the individual insurance, place conditions on the policy, or charge more for the policy because of past or present health conditions. Even so, it is important to make sure the policy will be issued before terminating any existing coverage.
End of Chapter 12