July 27, 2015
In general, your Medicare insurance is divided into three parts; Part A, Part B and Part D. The simplest descriptions of Medicare refer to Part A as inpatient hospital coverage and Medicare Part B as outpatient coverage. While technically correct, the details are where many Medicare beneficiaries get caught misunderstanding their coverage, resulting in surprise billings that could have been avoided. Our recent article on Part A covered what to look out for and expect from that portion of coverage. We hope to do the same with Medicare Part B in this article so that our readers are forewarned and forearmed.
To understand Medicare it may be best to first look at the contracts between healthcare providers and the Center for Medicare and Medicaid Services (CMS) which is that portion of the Department of Health and Human Services (HHS) that manages Medicare.
All insurance organisations have negotiated rates for medical services. Medicare has negotiated medical services down to between 15% and 18% of non-negotiated prices. That means that if there were a medical procedure that would cost $1,000 before negotiation, the Medicare-participating doctor has agreed to accept Medicare’s rate of between $150 and $180 for that service. More on this later in our next article on the difference between Participating and Nonparticipating providers.
Medicare Part B covers outpatient services, doctor services, lab work, home health care and Wellness care. In everything it covers, Part B will either pay 80% or 100% of the approved negotiated rate after the annual deductible is paid. The exception to this is Wellness service which is covered 100% and does not require the deductible to be paid.
The annual Medicare Part B deductible for 2015 is just $147. This deductible has been both higher and lower in the past, so we won’t assume it will only rise in the future. However, as we understand it, the Senate Committee on Health and Human Services anticipates that this annual deductible may rise to $250 per year by the year 2020. This is a once per calendar year deductible.
All Medicare Part B beneficiaries receive annual Wellness Care checkups free. These are preventive care checkups that have no deductible and no co-pay. They are entirely free unless your doctor decides to run tests that are out of the normal range of tests for preventive care.
Here is what is important; when you first sign on to Medicare you get a Welcome to Medicare preventive care visit. You must request this “Welcome to Medicare checkup” visit when you make an appointment with your doctor. Once you have completed the appointment, mark you calendar. You are entitled to a similar free wellness visit once every twelve months. If you have another wellness visit within the twelve month time period, you may be liable. To be clear; whenever Medicare refers to covering a service “yearly”, they are referring to once every 12 months, not just once per calendar-year. See pages 59-61 of your Medicare & You guidebook for Medicare Wellness care details.
Note: When Medicare Part B offers services every twelve months, this is not a “calendar year” service. Every twelve months means there must be at least 365 days between services. If you have the next service 360 days after the last, Medicare will not cover it and you may be personally liable.
Whenever you visit your doctor’s office, it is Medicare Part B that provides your insurance coverage. Medicare Part B pays 80% of the approved Medicare negotiated rate. If you have a Medicare supplement plan, it will pay all or most of the rest.
Also, whenever you have an outpatient service from a hospital, the billing falls under Medicare Part B. This is
important to understand especially because more and more hospital services are now done on an outpatient level. In fact, according to the latest statistics from H-CUP (Healthcare Cost and Utilization Project) 65% of all surgeries in the U.S. are now completed as an outpatient service.
However, even if you are a hospital inpatient your physician services may fall under Part B. Part A does not cover in-hospital physician services unless the physician is an employee of the hospital. If you are an inpatient and you have surgery, it is possible the surgeon fee will be billed as Part B and not Part A. In that case, Medicare will cover 80% of the bill, not 100%.
It can get a little complicated, but here are two ways to tell if your physician fee while being an inpatient will be covered under Part B or Part A. First, if the physician is not an employee of the hospital, that service will likely fall under Part B. Second, if the service is billed separately from a bill issued by the hospital, it will likely fall under Part B. Conversely, any service billed directly by the hospital should be under Medicare Part A.
In addition to the above, it’s very important to also consider that just because you are spending a night at the hospital DOES NOT mean you are an inpatient. It is becoming increasingly common for doctors to keep patients in the hospital for observation. This “observation status” is not an official admittance into the hospital. As such, the stay and ALL related costs during that time will fall under Part B. Medicare will cover 80% of your stay and possibly 100% of lab services. You or your Medicare Supplement will be responsible for the 20% co-pay. If you are not certain if you are an inpatient or just under observation, it’s up to you to ask your doctor or the hospital staff. They are not required to inform you of the difference.
Important: Not all services provided while an inpatient in a hospital will be covered under Part A. Any physician service from a doctor who is not a hospital employee will a Medicare Part B charge. Also, just because you are spending a night or more in the hospital does not mean you are an inpatient. You may be there under observation, in which case all services fall under Medicare Part B.
Home health services are covered by both Medicare Part A and Part B. You must have either Medicare Part A and / or part B for Home Health Services. The services cover Home Health Care or intermittent skilled nursing care, physical therapy and occupational or speech therapy.
A doctor must order your care, and a Medicare-certified home health agency must provide it. You must be homebound by Medicare’s definition. Your care must be established and reviewed by your doctor.
Original Medicare Part A and Part B combined create a thorough and complete health insurance coverage. By knowing when your services will be billed by Plan A or Plan B, you can prepare for any potential financial consequences and avoid unnecessary bills.
When combined with the proper Medicare Supplement policy, people on Medicare can expect to have very little financial risk in their healthcare. Unlike Medicare Advantage plans that have maximum out-of-pocket exposure of up to $6,700 per year, the people with Original Medicare Parts A and B along with the right Medicare Supplement may only have the Part B deductible of $147 and possibly a $20 per visit co-pay as their maximum out-of-pocket financial risk. The result is very robust health care, the freedom to see any doctor that takes Medicare and the ability to seek out top specialists in their field and rest assured that your Medicare health insurance coverage will relieve the financial burden.
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