We all can acknowledge that it sometimes seems men and women are from different planets. In general, each person sees the world differently. I think that everyone on the provider side, regardless of gender, can agree that Medicare sometimes seems alien and has become even more confusing in the past year. The following is my attempt to demystify the Medicare universe in response to recent provider inquiries:

Traditional Medicare
Established in 1965 by the Social Security Act, it is administered by the federal government through the Centers for Medicare and Medicaid Services (CMS). Traditional Medicare is divided into two parts. Part A is basically coverage for inpatient hospital expenses. Typically no premium is charged to the member for Part A. Part B helps provide coverage for outpatient hospital care, doctors’ services, some physical and occupational therapy services, and some home health coverage. The member is charged a monthly premium for Part B coverage. Traditional Medicare does not provide complete coverage. Members are responsible for deductibles and co-payments for hospital stays, and a deductible and co-insurance for part B services all of which can be quite costly for someone on a fixed income.
Because traditional Medicare does not cover the full cost of healthcare, many people look for options to limit their out of pocket expenses by supplementing their Medicare coverage.

Medigap Plans
Medigap policies provide coverage to “fill in the gaps” left by traditional Medicare. Medigap plans are sold by private insurance companies, but must follow federal and state regulations. A person can only purchase a Medigap policy if they have both Part A and Part B traditional Medicare coverage. Members must pay a monthly premium that may vary depending on insurance company and service area.

Medicare Advantage Plans
There are several types of Medicare Advantage Plans (formerly Medicare + Choice plans) that members can choose as an alternative to traditional Medicare. Members who are eligible for traditional Medicare Part A and B can select a Medicare Advantage Plan. Medicare Advantage plans must also follow specific rules and regulations established by state and federal governments. The concept of a Medicare Advantage plan is this: Medicare pays a set amount of money to the private health plan each month to manage the member’s healthcare. Many plans offer benefits that are above what would be included in traditional Medicare to make themselves more attractive to members.

Medicare Managed Care Plans (HMO)
Medicare HMO plans require the member to have all their care coordinated through a primary physician. The member must receive care from a provider who is part of the Medicare HMO network. Medicare HMOs are required to provide the same benefits as traditional Medicare as well as additional benefits with no additional charge to the member. The additional benefits are typically in the form of a reduction in the deductible, co-insurance, and/or monthly premium typically charged under traditional Medicare.

Medicare Managed Care Preferred Provider Organization (PPO) Plans
Local Medicare PPO options have been around since 2003. In January 2006, members will have increased access to Medicare PPO plans when several Regional PPO plans will begin being offered. Members are not required to select a primary care physician and are not required to have a referral for specialist. Members can select any provider who is part of the Medicare PPO network. If a member selects a provider who is not part of the Medicare PPO network they will more than likely be required to pay an additional amount. Medicare PPOs are required to provide the same benefits as traditional Medicare as well as additional benefits, although there may be an additional monthly premium amount.

Medicare Private Fee-for-Service (PFFS) Plans
Members are not required to select from a network of providers, and are not required to obtain a referral for a specialist. A member can seek treatment from any provider who is licensed and has a Medicare billing number, or is eligible to obtain one. These plans are not required to follow the traditional Medicare fee limitations. The insurance company can charge the member an amount that is higher than the traditional Medicare Part B premium and deductible and coinsurance amounts that are different from the traditional Medicare plan. Benefits beyond those covered under traditional Medicare are often included.
Providers are not put at financial risk, and are paid on a fee-for-services basis at an amount that is established by the plan. As a provider, it is not necessary to have a contract with these plans. The plans are not lawfully allowed to restrict the selection of providers who provide covered services as long as the provider complies with the plan terms. The plan is required to make the terms and provider participation conditions reasonably available to providers from whom a member is seeking treatment. This means terms are typically available on a website or available upon request. Once the provider is aware the member is part of a PFFS, it is up to the provider to seek information on the terms.

Medicare Specialty Plans
These plans target specific groups of people with certain medical conditions. Some plans are for people who qualify for both Medicare and Medicaid or who are in long-term care facilities.

Medicare Medical Savings Account (MSA) Plan
This is a test program that was established in 1998 for up to 390,000 Medicare members. This is a medical savings account paired with a high deductible health plan. Medicare makes a deposit into the member’s MSA. Members are still responsible for a monthly premium. The member uses the money deposited in the Medicare MSA to pay for medical expenses. If the money is not spent it will continue to accumulate. Money can be withdrawn from a Medicare MSA for non-medical expenses, but that money will be taxed. Providers are not limited on the amount they can charge members. The member is responsible for expenses until they meet the Medicare MSA Plan deductible, which is probably considerably higher than other Medicare plan deductibles. Depending on the plan, members may be able to see any provider, or may be required to select from a network of contracted providers.