I am often asked if there is a specific network of doctor’s that my client’s must use in order to get benefits from their private Medicare supplement insurance.
The answer is a definite maybe. It all depends on whether you have a true Medicare supplement insurance plan a Medicare Select plan or a Medicare Advantage, aka MA, plan.
MEDICARE ADVANTAGE (MA)
A MA plan is not really a supplement. It is a replacement type plan. MA plans replace Medicare parts A & B. They are required to provide the same services as Medicare. There is a difference between original Medicare and MA plans.
Original Medicare requires medical providers to send their bills directly to Medicare. The federal government then takes care of the claim.
Medicare Advantage plans work differently. The insurance company acts as an administrator for you. The federal government pays the insurance company the amount of money they have set aside for your health care each month. The insurance company then uses this pool of money to pay claims.
If there is money left at the end of the month, the insurance company makes a profit that month. If, however, claims exceed the amount the insurance company took in, they have to pay those claims out of their reserve fund.
The PPACA froze the amount of payment from the government at 2010 levels. That means that the payments they receive in 2014 will be no greater than what they got in 2010. As long as medical providers do not raise their costs any further, there should be no problems. However, that is unlikely to happen.
The PPACA authorizes the Department of Health and Human Services to increase payments 1 time. It is my understanding that the Obama administration plans to exercise that option for the election year of 2012. That way, voting seniors with MA plans will not be affected until after the presidential election.
MA is still funded by the federal government under Part C of Medicare. The difference between Medicare and Medicare Advantage is in how they are funded. MA plans are administered by private insurance companies. If several months go by where the insurance company does not collect enough money, expect that they will disenroll from the program for the following year, raise premiums or cut benefits.
In order to control costs and avoid fraud, waste and abuse, many MA plans are built on HMO or PPO models. Both those models use networks of medical providers. Those networks have agreed to provide a discount for their services to people in the MA plan.
If you have an MA plan, you need to review it every year when you receive your renewal paper work. Make certain that the network has not changed and the plan still meets your needs.
There is another type of MA plan. Original Medicare does not cover prescription drugs. You need a separate insurance plan, called a Medicare D plan, for that type of insurance.
MAPD plans are a type of MA plan that includes prescription drug coverage. If, however, your MA plan is built on an HMO or PPO model, your choices of pharmacies are limited. Many of the PPO type plans will let you get your prescriptions filled at several of the major pharmacy chain stores.
MAPD plans that are built on an HMO will only allow you to fill your prescriptions at one of their approved pharmacies.
If you have a MAPD plan, when you are doing your annual review of network medical providers, you need to review which pharmacies are available. Those can change each year along with your doctors and hospitals.
If the approved pharmacies for the following year are not acceptable, you will need to make adjustments during your Medicare D Annual Enrollment Period.
MEDIGAP / MEDICARE SUPPLEMENT
If you have original Medicare with a private insurance supplement, you have no additional networks with which you have to be concerned. As long as your medical provider accepts Medicare, your Medicare Supplement insurance policy will be accepted.
For most of your life you may have been covered with health insurance plans that required you to pay attention to networks. That is because insurance companies have negotiated discounts for their members.
As a rule, medical providers charge a different rate for the same procedure depending on the insurance status of the patient. Patients with private insurance can expect to receive a significantly lower bill from their doctor/hospital just because they have health insurance.
Patients without health insurance can expect to receive a significantly higher bill from their doctor/hospital. They do not get the advantage of negotiated discounts.
Medigap / Medicare Supplement insurance plans do not have traditional “networks.” That is because of the way they pay. Click on the attached picture to see a good explanation of how they pay. Jack Adams is an independent insurance agent. He is not associated in any way with The Insurance Barn. The advice in this video only applies to you if you have a regular Medigap / Medicare Supplement insurance plan.
I will try to explain the billing and claims payment process for people who do not want to take the time to view a video. It works like this.
As you can see, Medigap is billed by Medicare, not your doctor. When you need to have medical treatment, you do not have to remember to ask your doctor/hospital if they accept XYZ insurance. All you need to ask them is if they accept Medicare.
Since Medicare Supplement plans are regulated by the Centers for Medicaid and Medicare Services, aka CMS, they are not allowed to independently negotiate prices for their members.
As a result, there are no separate networks required by any insurance company offering one of the CMS approved Medigap plans.
There is a type of Medigap / Medicare Supplement where “networks” are involved. Those plans are called Medicare Select plans. One of our Medigap / Medicare Supplement insurance companies, Blue Cross Blue Shield of Texas, describes Medicare Select plans as.
“A Medicare Select option works just like a standard Medicare Supplement plan with one difference. With Medicare Select option, all scheduled inpatient hospital stays must be at a Medicare Select Network Hospital in order to have coverage for the $1,100 Medicare Part A deductible.
Only certain hospitals are network providers under this policy. Check with your physician to determine if he or she has admitting privileges at the network hospital. If he or she does not, you may be required to use another physician at the time of hospitalization or if you still use a non-network hospital, you must pay the Part A deductible and any non-covered charges.
If you do not go to a Medicare Select Network Hospital for a scheduled non-emergency hospital stay, you agree to pay the Medicare $1,100 Part A deductible. However, in an emergency admission, you are covered at any hospital, regardless of whether you go to a Medicare Select Network Hospital.”
Medicare Select plans are normally much less expensive than traditional Medigap /Medicare Supplement insurance. Just remember they are more restrictive if you have to be hospitalized. Most insurance companies will only sell a Medicare Select plan to people who live within a specified radius of a Medicare Select hospital.
Although it is not called a “network,” it is important for you to remember that not all doctors/hospitals will accept Medicare payments. Some medical providers feel that the amount that Medicare authorizes for some procedures is not enough. They do not accept Medicare patients or require them to pay the excess over what Medicare pays.
The lesson to be learned is that you still need to verify with your doctor/hospital that he/she/they will bill Medicare on your behalf and that they are contracted with Medicare. As long as they will and are, you should never have any problems with a Medigap / Medicare Supplement.
There are some Medigap / Medicare Supplemental insurance policies that will pay the doctor when he/she charges more than the Medicare approved amount. If you want to make certain your Medigap does, read your policy or tell your insurance agent that is what you want.
If you have questions about plans that cover excess doctor fees or any other issues regarding Medigap/Medicare Supplement, click on THE INSURANCE BARN and send us your question.
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