Recipients of Medicare, should have an understanding of how the system pays hospitals for an impatient claims. Understanding how Medicare works can demystify the process.
Here is an overview of Traditional Medicare. Traditional Medicare came into being in 1965 through the federal government. It covered approximately two-thirds of adult Americans over 65. Traditional Medicare was never created to and was never intended to cover all heath care expenses.
In 1997 the Balanced Budget Act created the Managed Medicare/Medicare Advantage option, meaning commercial insurance agencies sold traditional Medicare but with possible added services specific only to each insurance company selling them. Then in 1982, Congress changed how hospitals received reimbursement when a beneficiary was an inpatient.
With traditional Medicare, the hospital is paid based on the diagnosis of the patient treated during a stay as an inpatient. In other words, invoices indicating total time spent are submitted, but the hospital is paid for the diagnosis – not the charges. Furthermore, the payment system is different for every insurance plan, Medicaid (on a per state basis), traditional Medicare and managed Medicare Advantage.
Below is a hypothetical example:
Jane spent two weeks in ICU. The final bill was $130,000. Jane has traditional Medicare and a supplemental insurance plan that pays the inpatient deductible. (For 2017, the deductible is $1,316)
The hospital is paid one sum for the aggregate diagnosis. That one payment is referred to as a diagnosis-related group (DRG) payment.
The total hospital bill for Jane is $130,000
The diagnosis-related group payment from Medicare is $12,000
Medicare holds on to the deductible, which is $1,316 (due either from patient or supplemental insurance)
Total Medicare payment is $10,684
Anyone receiving that kind of a bill would likely have trouble finding the funds to pay it. However, here is the twist to this example. The “hospital” must write off the difference between the $130,000 ICU cost and the diagnosis-related group single payment of $12,000. That means there is no additional amount billed out to the patient other than the inpatient deductible.
Posted on Tuesday, October 31st, 2017. Filed under Medicare
When enrolling in Medicare insurance it is important to do it on time. The enrollment period is individually based. Open-enrollment occurs three months prior and three months after an individual’s 65 birthday. If you miss the enrollment deadline you could end up paying higher premiums.
The first decision to make when enrolling in Medicare whether to choose Original Medicare or Medicare Advantage. Original Medicare, which is Part A and Part B, covers hospital expenses, some non-hospital costs including supplies, outpatient care and certain kinds of medical appointments. Medicare plans are offered by the federal government and permit beneficiaries to use any health care professional that accepts Medicare.
On the other hand, Medical Advantage offers beneficiaries a variety of health insurance plans from private insurance companies, which are typically PPOs, HMOs and EPOs. Most of these offerings charge a monthly premium in addition to the basic Part B premium. These plans may also a greater range of coverage choices.
There is no right or wrong when choosing the plan that best suits you and your circumstances. However, it is important that you make the right choice that suits you when you enroll, otherwise you stand to lose access to some options once open enrollment ceases. During open enrollment for Medicare Advantage, plans offered are not allowed to decline health insurance coverage. If you miss open enrollment health insurance providers could decline to issue health insurance to you.
For those choosing to go with Original Medicare, they might want to consider basic coverage with a Medigap plan. These plans are sold by private insurance companies and offer coverage for health care expenditures that do not fall under Part A or Part B. Once the decision is made to purchase a Medigap plan, you need to consider which type to get. There are 10 different standardized options (the same coverage is available no matter where you live or who is selling it).
The vast majority of beneficiaries new to Medicare choose Medicare Part D, which offers prescription drug coverage. However, this is optional, depending on what other Medicare plans you have selected. Original Medicare and Medigap do not offer prescription drug coverage, so it is recommended to choose Part D.
There are some Medicare Advantage plans offering drug coverage as a component of the basic plan but you need to ask about it during enrollment. If your Medicare Advantage plan does have good drug coverage, then you could skip Part D.
In general, always ask questions when making health care insurance choices because if you do not you may find that you are not covered for a certain procedure.
Posted on Monday, October 16th, 2017. Filed under Medicare