Medicare+Choice

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	More Choice in Medicare Personal Finance Advisor by Deloitte & Touche OnLine Sept. 21, 1998

Medicare+Choice will provide more options in health care.

Medicare+Choice, a product of the Balanced Budget Act of 1997, will result in important changes to the Medicare program effective Jan. 1, 1999. It promises to provide expanded health care options, new preventive health benefits, and new patient protection.

Health Care Options: Medicare+Choice will expand the number of health insurance plans from those presently available. New choices are expected to include:

Coordinated Care Plans.
Private Fee-for-Service Plans.
Medical Savings Accounts.

Each year Medicare beneficiaries will be given the opportunity to choose the type of plan in which to participate. Those already enrolled in a plan are not required to change coverage if they are satisfied with their current plan. (Existing plans include: the original Medicare plan, the original Medicare plan with a supplemental insurance policy, and plans of managed care organizations that have contracts with Medicare.) A brief description of the new array of plans follows:

Coordinated Care Plans: These managed care plans include Health Maintenance Organizations (HMOs), HMOs with Point-of-Service (POS) options, Provider Sponsored Organizations (PSOs), and Preferred Provider Organizations (PPOs). Beneficiaries’ choices of doctors and hospitals will vary by the type of Medicare Managed Care Plan chosen. HMOs and PSOs are usually more restrictive -- participants must use the plans’ doctors and hospitals. The less restrictive PPOs and HMOs with POS options allow participants to use doctors and hospitals outside of the plans, but for an additional cost.

Private Fee-for-Service Plans: These plans allow participants to select their own doctors and hospitals, but the insurance plans, not the Medicare program, decide how much to pay for services. As a result, the fees for coverage may be higher than other plans offered in the traditional Medicare program. Providers are allowed to bill beyond what the plans pay, and participants will be responsible for paying whatever amounts the plans do not cover.

Medical Savings Accounts (MSAs): During a test period, a limited number of individuals will be able to use a Medicare MSA plan. MSA participants are required to purchase a high deductible health insurance plan. Medicare contributes a prescribed amount to the MSA to be applied to the premium, and any excess remains in the MSA. Generally, money in the MSA can be used, tax-free, for any medical expenses. Any surplus in the MSA is added to the next year’s deposit. Withdrawals can be made from a Medicare MSA for nonmedical expenses, but such withdrawals will be taxed, and penalties may apply.

Coverages under all of these plans vary widely and must be carefully reviewed. There are a number of trade-offs between provider choice, services covered, and cost. For example, HMOs usually allow for lower cost to the participant, but their cost containment policies generally mandate less choice and more limited services. Participants may disenroll from a Medicare Managed Care Plan or Private Fee-for-Service Plan for any reason. Beginning Jan. 1, 2002, however, disenrollment opportunities will be limited.

Preventive Health Benefits: Medicare+Choice promises to provide health benefits previously not available to Medicare beneficiaries. These include:

A general health assessment must be performed by the health plan within 90 days of enrollment, and a treatment protocol must be developed and implemented for any existing medical condition.
A women’s health care specialist must be made available for routine and preventive services.
Emergency services must be covered outside a participant’s health plan area, without prior approval by the plan. The maximum out-of-pocket cost to the participant will be limited to the lesser of $50 or what the plan would have charged.

Patient Protection: Medicare+Choice is expected to provide a significantly expanded patient’s "bill of rights." New protections are to include:

Prohibition of any enrollment discrimination that denies, limits, or conditions benefits based on health factors (for example, mental or physical illness, disability, genetic information).
A requirement that a plan’s response to an appeal be made within 14 days of an initial request or within three days if the appeal is for a life-threatening condition. (Currently it can take up to 60 days to get a response.)

Additional information about a plan also will be required. At present, health plans must provide information on matters such as access to care, coverage for services, and the appeal process. Under Medicare+Choice, insurance providers may be expected to provide information about:

Financial condition of the plan.
Limitations on health services and expenditures.
Complaints or grievances that have been filed against the insurance company or care provider.
Financial interest of doctors in a health care facility (for example, laboratory).
Incentives received by doctors for limiting tests and treatments.
Payment methods for doctors, and
Termination of a doctor’s employment.

These are some thoughts to consider about Medicare choices. Your financial advisor can provide additional information and should be consulted before any action is taken.