The Part B Medicare deductible for 2013 is $147.00.

What should you do with this information? You should avoid taking a big financial hit in the first quarter of 2013 by collecting deductibles at time of service. How do you do that?

• Let all patients know in advance that you collect deductibles by making it part of your communication with them. Put it in your financial policy (get a copy of my preferred financial policy below), put it on your website, and let patients know when you schedule their appointment, or make an appointment reminder with verbiage like:

“We look forward to seeing you at your appointment. Please bring your insurance cards and all medications to your visit. We will collect your co-pay, your deductible, and any co-insurance required by your insurance plan.”

• Explain what a deductible is. Get my sample patient handout explaining deductibles below.
• Train front desk staff on deductibles and get them comfortable discussing deductibles with patients and answering their questions.
• Do not collect deductibles for Medicare patients who also have Medicaid, or for Medicare patients with supplemental insurance as there most likely will not be a balance that the patient will owe.
• It is ideal to use a Credit Card On File program to charge the patient’s credit card at time of service, or when the EOB (Explanation of Benefits) arrives in 15 days.

Other important Medicare numbers for 2013

Part A: Hospital Insurance Premium for 2013– $441.00 per month. Most 65+ patients get Part A for free if they already receive retirement benefits from Social Security or Railroad Retirement due to taxes paid during working years. Part A includes coverage for:

• Inpatient care in hospitals
• Skilled nursing facility care
• Hospice care
• Home health care – skilled nursing care, physical therapy, occupational therapy, speech therapy, medical social services, dietary and home health aides (100% covered with no co-pay) for homebound patients after a 3-day hospital stay

 

Part B: Medical Insurance Premium for 2013 – $104.90 per month for most, but not all patients. Some patients automatically get Part B, others may have to pay more based on their IRS tax return from 2011. Part B includes coverage for:

• Services from doctors and other health care providers
• Outpatient care (includes emergency room and observation services for physician charges)
• Home health care – services provided to a homebound patient when the patient has not been hospitalized for 3 days prior to need
• Durable medical equipment
• Some preventive services

Part C: Medicare Advantage Plans – also called a Medicare Replacement Plan because it replaces traditional or original Medicare with a plan offered by a Medicare-approved private insurance company (BCBS, UHC, etc.) Premiums vary with individual Medicare Advantage Plans. Medicare Advantage Plans:

• Include all benefits and services covered under Part A and Part B
• Usually include Medicare prescription drug coverage (Part D) as part of the plan
• May include extra benefits and services for an extra cost
• Cannot be used in combination with a Medigap policy

 

Part D: Medicare Drug Coverage for 2013 – monthly premiums will vary based on income, and whether or not Part D is included if the patient opts for Part C coverage. Some plans have deductibles and some do not. Most drug plans have a coverage gap referred to as the “donut hole”, which means coverage is temporarily limited after the patient and drug plan have spent a certain amount for covered drugs. In 2013, once the patient reaches the donut hole, they pay 47.5% of the plan’s cost for covered name-brand drugs and 79% of the plan’s cost for covered generic drugs until the end of the donut hole is reached. In every successive year after 2013, the donut hole will shrink until 2020 when the donut hole will cease to exist.

Medicare Supplement Insurance (also called Medigap) – Policies are sold by private insurance companies and help pay some of the health care costs that Medicare doesn’t cover. Patients have a one-time 6-month Medigap Open Enrollment Period which starts the first month they are 65 and enrolled in Part B. This period gives patients a guaranteed right to buy any Medigap policy sold in their state regardless of their health status.

Click here to receive a free copy of a financial policy and a patient handout explaining deductibles.

CMS just announced the new numbers for premiums and deductibles for 2012. Now is the ideal time to think about Medicare deductibles and what your policy is on collecting deductibles at time of service.

If you’ve been hesitant to collect deductibles, ask yourself if you can handle the loss or delay of payment of $140 per Medicare patient. Most practices can’t. If you are thinking about collecting deductibles and other front-end collection techniques, my book “The Smart Manager’s Guide to Collecting at Checkout” is your guide to making it happen for your healthcare group. Click here to read more.

MEDICARE PART B (covers a portion of the cost of physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items)

• In 2012, the Part B deductible will be $140, a decrease of $22 from 2011.
• The standard Medicare Part B monthly premium will be $99.90 in 2012, a $15.50 decrease over the 2011 premium of $115.40.
• The standard premium is set to cover one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over, plus a contingency margin. The contingency margin is an amount to ensure that Part B has sufficient assets and income to (i) cover Part B expenditures during the year, (ii) cover incurred-but-unpaid claims costs at the end of the year, (iii) provide for possible variation between actual and projected costs, and (iv) amortize any surplus assets.  Most of the remaining Part B costs are financed by Federal general revenues.  (In 2012, about $2.9 billion in Part B expenditures will be financed by the fees on manufacturers and importers of brand-name prescription drugs under the Affordable Care Act.)
• The largest factor affecting the contingency margin for 2012 is the current law formula for physician fees, which will result in a payment reduction of about 29 percent in 2012.  For each year from 2003 through 2011, Congress has acted to prevent smaller physician fee reductions from occurring. The 2012 reduction is almost certain to be overridden by legislation enacted after Part B financing has been set for 2012. In recognition of the strong possibility of increases in Part B expenditures that would result from similar legislation to override the decrease in physician fees in 2012, it is appropriate to maintain a significantly larger Part B contingency reserve than would otherwise be necessary.  The asset level projected for the end of 2012 is adequate to accommodate this contingenIn 2012, Social Security monthly payments to enrollees will increase by 3.6 percent.    The dollar increase in benefit checks is expected to be large enough on average to cover the increase in the Part B premium of $3.50 that most beneficiaries will experience. For those who were paying the standard premium of $115.40, their benefits checks will only increase.

MEDICARE PART A (inpatient hospital, skilled nursing facility, and some home health care)

• Approximately 99% of Medicare beneficiaries do not pay a premium since they or their spouses have at least 40 quarters of Medicare-covered employment
• Some enrollees age 65 and over and certain persons with disabilities who have fewer than 30 “quarters of coverage” obtain Part A coverage by paying a monthly premium ($451 for 2012) set according to a statutory formula.
• Those who have between 30 and 39 “quarters of coverage” may buy into Part A at a reduced monthly premium rate which is $248 for 2012, the same amount as in 2011.
• The Part A deductible paid by a beneficiary when admitted as a hospital inpatient will be $1,156 in 2012, an increase of $24 from this year’s $1,132 deductible.
• The Part A deductible is the beneficiary’s cost for up to 60 days of Medicare-covered inpatient hospital care in a benefit period. Beneficiaries must pay an additional $289 per day for days 61 through 90 in 2012, and $578 per day for hospital stays beyond the 90th day in a benefit period.
• For beneficiaries in skilled nursing facilities, the daily co-insurance for days 21 through 100 in a benefit period will be $144.50 in 2012, compared to $141.50 in 2011.

 

MEDICARE PART D (medications)

• The estimate for the average 2012 Part D premium for basic coverage is $30.  This is slightly lower than the actual average for 2011 of $30.76.
• The estimate for the average 2012 Part D premium for supplemental coverage is $8.  The estimate for the average 2012 total Part D premium is $38.

 

MEDICARE ADVANTAGE PLANS (replacement for traditional Medicare)

• On average, Medicare Advantage premiums will be 4 percent lower in 2012 than in 2011, and plans project enrollment to increase by 10 percent.
• Of people with Medicare, 99.7 percent continue to enjoy access to a Medicare Advantage plan, and benefits remain consistent with those offered in 2011.
• Those who enroll in Medicare Advantage plans may have different cost-sharing arrangements. On average Medicare Advantage premiums will be 4 percent lower in 2012 than in 2011, and plans project enrollment will increase

Medicare is a federal health insurance program created in 1965 for:

• people age 65 or older,
• people under age 65 with certain disabilities, and
• people of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a kidney transplant)

Medicare Part A – 99% of patients don’t pay a premium for Part A (hospital insurance) because they or a spouse already paid for it through their payroll taxes while working. The $1,100 deductible for 2010, paid by the beneficiary when admitted as a hospital inpatient, is an increase from 2009.   Part A helps cover:

• inpatient care in hospitals (excluding the physician fees), including critical access hospitals
• skilled nursing facilities (not custodial or long-term care)
• some hospice care
• some home health care

Medicare Part B – Part B (outpatient/doctor insurance) base premium for 2010: $96.40/month (no change from 2009.)  Premiums are higher for single people over 65 making more than $85K per year and for couples making over $170K.  Part B premiums cover approximately one-fourth of the average cost of Part B services incurred by beneficiaries aged 65 and over.  The remaining Part B costs are financed by Federal general revenues.  In 2010, the Part B deductible is $155.  Part B helps cover:

• physician fees in the hospital
• physician fees in their offices and other outpatient locations
• other outpatient services (x-rays, lab services)
• some services of physical and occupational therapists
• some home health care

Medicare Part C – Medicare now offers beneficiaries the option to have care paid for through private insurance plans.  These private insurance options are part of Medicare Part C, which was previously known as Medicare+Choice, and is now called Medicare Advantage. Medicare Advantage expands options for receiving Medicare coverage through a variety of private insurance plans, including private fee-for-service (PFFS) plans, local health maintenance organizations (HMOs) and regional preferred provider organizations (PPOs), and through new mechanisms such as medical savings accounts (MSAs), as well as adding payment for additional services not covered under Part A or B.

Medicare Part D –  Starting January 1, 2006, Medicare prescription drug coverage became available to everyone with Medicare.  The so-called “doughnut hole” is the amount the patient pays between the initial coverage limit of $2,830 and the out-of-pocket threshold of $4,550 – a total of $1720 that the patient is responsible for.

• Initial Deductible: $310
• Initial Coverage Limit: $2,830
• Out-of-Pocket Threshold: $4,550

COMPARISON OF MEDICARE PLANS

Original Medicare Plan

WHAT? The traditional pay-per-visit (also called fee-for-service) arrangement available nationwide.

HOW? Providers can choose to participate (“par”) or not participate (“non-par”.)  Participating providers accept the Medicare allowable and collect co-insurance (20% of the allowable.) Reimbursement comes to the providers.  Non-participating providers may charge 15% more (called the “limiting” charge) than the Medicare allowable schedule, but the patient will receive the check, which is why some non-par practices require payment at time of service for Medicare patients. To be able to charge patients for non-covered services, patients must sign an ABN before the service is provided.

Original Medicare Plan With Supplemental Medigap Policy

WHAT? The Original Medicare Plan plus one of up to ten standardized Medicare supplemental insurance policies (also called Medigap insurance) available through private companies.

HOW? Medigap plans may cover Medicare deductibles and co-insurance, but typically will not cover anything Medicare will not.  Medicare primary claims will “cross-over” to many Medigap secondary claims so the practice does not have to file the secondary Medigap claim.  Patients may still have a small balance that is cost-prohibitive to bill for.

Medicare Coordinated Care Plan

WHAT? A Medicare approved network of doctors, hospitals, and other health care providers that agrees to give care in return for a set monthly payment from Medicare. A coordinated care plan may be any of the following: a Health Maintenance Organization (HMO), Provider Sponsored Organization (PSO), local or regional Preferred Provider Organization (PPO), or a Health Maintenance Organization (HMO) with a Point of Service Option (POS).

HOW? You have to have signed a contract or be grandfathered in (called an “all-products” clause) under an existing contract to see patients and get paid. Primary care providers may have to provide referrals and/or authorization for specialty services and providers. A PPO or a POS plan usually provides out of network benefits for patients for an extra out-of pocket cost.

Private Fee-For-Service Plan (PFFS)

WHAT? A Medicare-approved private insurance plan. Medicare pays the plan a premium for Medicare-covered services. A PFFS Plan provides all Medicare benefits. Note: This is not the same as Medigap.

HOW? Most PFFS plans allow patients to be seen by any provider who will see them. PFFS plans do not have to pay providers according to the prevailing Medicare fee schedule or pay in 15 days for clean claims.  Providers may bill patients more than the plan pays, up to a limit. It would be a good thing to notify patients if your practice intends to bill above the plan payment.

Need more?  Click on CMS (provider-oriented) or Medicare (patient-oriented.)