Merritt Personal Lines Manual: Mechanics of Medicare Managed Care
There are two classes of Medicare managed care benefits, according to HCFA's definitions: Basic benefits and supplemental benefits.
Basic benefits include all Medicare-covered benefits except hospice care. Medicare managed care plans must provide at a minimum all original Medicare basic benefits and what HCFA refers to as "additional benefits." The MedicareAdvantage plan may be required to offer additional benefits without additional charge to enrollees when HCFA's average payment rate would produce excessive profits. By enriching covered benefits, enrollees gain economic advantage, health plans increase market appeal and HCFA secures more managed care enrollment.
MedicareAdvantage plans can choose to offer supplemental benefits or health care items and services beyond basic/additional benefits. Supplemental benefits may be mandatory or optional. Mandatory supplemental benefits must be purchased by all enrollees. Optional benefits, as the name implies, may be purchased by an enrollee at his or her option.
Each MedicareAdvantage coordinated care plan is approved for a specified service area. In establishing the approved service area, HCFA considers where people obtain medical care in the community, the types of providers available in the community and reasonable travel times to obtain care. Counties and ZIP codes are used to delineate the approved service area. The plans may not enroll individuals who reside outside the approved service area.
Many Medicare beneficiaries look forward to extensive travel during retirement years. As a result, some seniors enrolled in Medicare managed care plans will need medical treatment outside the plan's defined service area. Generally, emergency care services can be obtained out of the area from any medical provider without any reimbursement penalty - but this is an issue that needs to be raised specifically before you join a Medicare HMO.
MedicareAdvantage plans must reimburse for "urgent" but nonemergency services received outside the health plan's service area when services are immediately required because of unforeseen illness, injury or condition. On the other hand, routine medical care received outside an HMO or POS service area will likely be denied. In these cases, you should check with your plan before undergoing significant medical treatment.
The biggest worry for many people contemplating enrollment in a Medicare managed care plan is access to their medical providers of choice.
Many people have the mistaken impression that the plans are typically staff model, with a limited choice of participating providers. In fact, independent practice association (IPA) and group model Medicare risk plans - which include thousands of physicians and specialists and dozens of acute care hospitals - make up more than 90 percent of all Medicare managed care plans.
Of course, even a large number of network providers may not include a specific physician or hospital.
Some people may wish to continue existing relationships with medical providers having skill sets attuned to their particular needs. In these cases, the consumer may have to pay out of pocket for the services.
It has become increasingly common for Medicare managed care plans to capitate - that is, limit the amounts that can be charged by - participating providers. Some of these arrangements restrict patient referral patterns to specialists, hospitals and other ancillary providers (e.g., podiatrists, laboratories, freestanding radiology centers) affiliated with an integrated delivery system.
The choice of a primary care physician can limit which cardiologists orthopedists or other specialists (or hospitals) will provide subsequent treatment. So, a MedicareAdvantage plan may advertise a network of several thousand medical providers when, in fact, each individual patient can access only a small portion of them. This is a complicated concept for the typical consumer.
Each Medicare managed care organization must provide summary descriptive information about its physician compensation plan to enrollees when requested. This requirement stems from a long-standing concern among some members of Congress that certain physician compensation plans may act counter to the best interests of the enrollee.
For example, health plan payment schemes that financially reward a physician for achieving below-average specialty referral rates, hospital admission levels or pharmacy benefit costs could create a perverse incentive to withhold medically necessary care.
In recent years there have been several high-profile legal suits against HMOs with capitated physicians when a plan member was not referred for a costly diagnostic test with dire consequences. HCFA has rules governing physician compensation in managed Medicare plans. In effect, health plans cannot use specific payments as a disincentive to provide services to an individual enrollee. Provisions also exist that place limits on the transfer of substantial financial risk for referral services to physicians or physician groups.
An additional informational burden placed on Medicare managed care organizations is providing private fee-for-service enrollees an explanation of benefits (EOB) for each claim filed by the enrollee. The EOB must include a clear statement of the enrollee's liability for deductibles, coinsurance, co-payment and balance billing.
MedicareAdvantage plans are required to have a quality assessment and performance improvement program that can demonstrate improvement in significant aspects of clinical and nonclinical care areas. It must be structured to improve health outcomes and enrollee satisfaction. In the clinical area, HCFA looks at effectiveness of care, enrollee perception of care and use of services.
The nonclinical areas include indicators such as access to services, appeals and grievances.
Consumers who exercise their rights to request quality assurance program information should be able to differentiate between MedicareAdvantage plans committed to improving quality and those that pay only lip service to the concept.
Few people may care to learn about a Medicare managed care plan's written protocols for utilization review and mechanisms to detect underutilization and overutilization of services but these are critical factors in determining how claims are paid.
MedicareAdvantage plans that terminate a contracted provider must make a good faith effort to provide written notice of the termination within 15 working days to patient enrollees of that provider.
Medicare managed care plan beneficiaries have the right to maintain access to network specialists terminated without cause until current treatment is completed. The plan must also notify enrollees of other Medicare plans in the area that contract with the terminated specialist and an explanation of the process to follow to return to original Medicare.
