Generally speaking, Medicare is a federally funded health insurance program that provides benefits for people who are 65 or older; people with disabilities; and people with end-stage renal disease. Each part of Medicare—A, B, C, and D—covers a distinct set of services and benefits. Then, there are Supplement Plans that fill in some of the gaps. Not sure how Part C differs from Part A—or what gaps a Supplement Plan could possibly fill? How about Original Medicare versus Medicare Advantage? Keep reading, because we’ve compiled a breakdown of each:
Original Medicare (Medicare Parts A and B)
According to HHS, Medicare’s Part A hospital insurance and Part B supplementary medical insurance together go by the moniker “Original Medicare.” Part A provides benefits for inpatient hospital and skilled nursing facility care, home health care, and hospice care. Part B provides benefits for doctor’s services, physical therapy services, and other medical care and supplies not covered under Part A. If you’re a private practice PT, OT, or SLP who sees Medicare patients in your office, then chances are good you work mostly with Part B beneficiaries. As a side note, Medicare will not pay for Part B services while a patient is actively receiving Part A services. So, it’s always a good idea to ask your patients about the other types of care they are receiving.
Under Original Medicare, patients are usually able to choose any doctor, hospital, or provider (including a specialist) who is enrolled in Medicare—and accepting new patients. Part B premiums vary depending on income level and Social Security benefits (the standard premium in 2018 is $134). Once a patient hits the annual deductible (for 2018, it’s $183), then that patient will “typically pay 20% of the Medicare approved amount for most doctor services….outpatient therapy, and durable medical equipment (DME).” While most patients don’t pay a monthly premium for Part A services, some do—and for 2018, that number ranges from $232 to $422 per month depending on the number of quarters the patient paid Medicare tax. Most patients pay a deductible and a coinsurance when they access Part A and B services.
To bill Medicare for outpatient therapy services, the practice and individual therapists need to be credentialed with Medicare Part B by completing the appropriate sections of the Medicare 855 form.
Billing Tip: Medicare Part B services are paid according to the Medicare Physician Fee Schedule, which is updated every January. When billing for services provided to a patient with Original Medicare, rehab therapists should bill Medicare first—and adhere to all Medicare rules and regulations.
Medicare Supplement Insurance—a.k.a. Medigap—is a private insurance policy that helps pay for some healthcare costs that Original Medicare doesn’t, including deductibles, copays, coinsurances, and, in some cases, healthcare expenses incurred outside of the US. That being said, supplement plans don’t usually cover long-term care, vision care, dental care, or private nursing. Plans issued after 2005 also do not include prescription drug coverage.
If your patient has a Medicare Supplement policy, Original Medicare will pay its portion of the costs first—before the supplement plan will pick up its share. Here are several more things to know about Medigap plans:
- Patients must have Medicare Part A and B before they can purchase a supplement plan.
- Patients are responsible for paying the supplement plan monthly premium in addition to their Original Medicare premium.
- Supplement policies only cover one individual; so, a husband and wife who have supplement insurance will have two different policy numbers.
- It is illegal to sell a Medicare Supplement plan to a patient with a Medicare Advantage plan.
- Medigap policies are standardized—and in most states labeled consistently (with letters A–N)—so benefits remain the same regardless of the company that is providing them.
Billing Tip: When billing for services provided to a patient with a Medicare Supplement policy, rehab therapists should bill Medicare first—before billing the patient’s Supplement Plan company—and adhere to all Medicare rules and regulations.
Medicare Advantage (Medicare Part C)
Medicare Advantage (MA) Plans—a.k.a. Medicare Part C—are issued by private companies that Medicare has approved to provide all-in-one hospital and medical insurance (as well as prescription benefit coverage in most cases) in the form of a:
- Health Maintenance Organization (HMO) plan
- Preferred Provider Organization (PPO) plan
- Private Fee-for Service (PFFS) plan
- Special Needs Plan (SNP)
- HMO Point-of-Service (HMOPOS) plan
- Medicare Savings Account (MSA) plan
MA plan premiums usually include the standard Part B premium mentioned above plus a specific MA premium—although some plans subsidize the Part B premium for their beneficiaries. As with Original Medicare, patients are often responsible for copays and coinsurances for covered services. However, many MA plans also cover vision, hearing, and dental care. According to this Medicare resource, MA plans have a yearly out-of-pocket cost limit. In other words, once a patient reaches his or her limit, he or she won’t pay out of pocket for additional services that year. As a result, some MA patients may have lower out-of-pocket costs than they would with Original Medicare.
Medicare pays each MA company a set amount of money each month for each patient’s care—and the MA company pays providers based on the claims it receives. Decisions regarding referrals and out-of-pocket costs are up to the MA company. Therefore, if you have questions regarding a patient’s MA benefits, it’s best to contact the providing company to learn more.
Billing Tip: When billing for services provided to a patient with Medicare Advantage, rehab therapists should bill the Medicare Advantage Plan company directly. While most private insurance companies follow Medicare’s rules and regulations, it’s best to reach out to the payer directly to learn its requirements.
Prescription Drug Coverage (Medicare Part D)
If a patient has Original Medicare, then he or she may opt in to a Medicare Prescription Drug Plan—a.k.a Medicare Part D—run by a private Medicare-approved company for a monthly premium. If a patient has a Medicare Advantage Plan—and the plan offers prescription drug benefits—then that patient usually must receive his or her prescription drug coverage through the MA Plan. Premiums for Medicare Part D vary by plan—and higher-income individuals usually pay more.
There you have it: everything PTs need to know about Medicare Original, Advantage, and Supplement Plans. If your patients have questions regarding their 2019 Medicare benefits, you can direct them to the Official US Government Medicare Handbook. For help with explaining copays, coinsurance, and deductibles, check out this guide.