Standard Medicare & Supplements

Medicare Part A and Part B
Every year Medicare requires a $100 deductible paid by the patient for outpatient services; i.e., Medicare Part B. Part A covers inpatient stays for hospital rooms, etc. but Part B still covers and pays for the doctors who see you in the hospital. Some therapists (like OT and PT) may be “bundled” into the hospital rate and may be billed to Part A. By the way, there is an $800 yearly deductible for hospital stays before Part A starts to pay for care.

Regarding Part A, Medicare will only pay 80% of the allowed rate it sets for the CPT code/service billed, if various criteria are met like having a primary care doctor’s referral in some cases. In only one professional area, mental health, Medicare pays less than the 80% leaving a bigger cost to the patient. This is actually called the psychiatric reduction (maybe, penalty would be more descriptive) and there is also a lower allowance for mental health hospitalizations like detox. Gradually this has been rectified as Medicare slowly increased the rate from 50%) to the full 80% it pays against all other medical services–thus mental health services are gaining “parity” with all other medical professions including chiropractic and foot medicine. Anyway, you pay the 20% of the “allowed” rate, which is called your “copay” amount.

The 20% copay was meant to discourage seniors from obtaining to many frivolous services; i.e., to prevent you from going to doctor's anytime you had an ache or pain, if you thought it was free. The copay is just high enough to make you think twice before seeking care that Medicare will have to pay the bulk of. So, private insurance companies figured that here was an opportunity to sell a service, called secondary polices that pay what Medicare doesn’t pay; i.e., that 20%. These policies supplement Medicare by paying, in some cases, the 20% the patient was supposed to bear. They are called Medicare supplemental insurances, or more commonly Medigap plans.

Supplemental Insurance
This is often called a secondary insurance because is only pays if Medicare (the primary) insurance pays. They are also called “Medigap” insurances as they pay the 20% gap between what Medicare allows the doctor to bill and what they pay. Medicare was and is not happy about this, because it defeats the purpose of making seniors share in the cost to avoid unnecessary services provision. If you buy insurance, some folks feel they might as well use so they demand scans, tests, and consultationss that they might forgo if they shared in some of the cost.

Many patients ask if we can bill their secondary insurance, when Medicare chooses not to pay for some reason. They might not like the place of service, the referent, etc. We are not allowed to bill the secondary for any amount if Medicare refuses to pay. Think of it this way: If Medicare pays $0, then the secondary insurance will, at most, pay 20% of $0–which is $0. The secondary only pays if Medicare does, it never does it pay on its own.

There are many, many of these Medigap insurances and they all have different rules. Just Blue Cross/Blue Shield probably has a dozen different Medigap policies. The policies differ. With BC/BS Medex plans we almost always successfully collect the 20% copay from them. However, we often never collect it from United Health Care (UHC). Yet, we usually collect from the AARP Medigap insurance, which is interesting since AARP’s plan is operated by UHC. Go figure!

Medicare and Medicaid (MassHealth)
MassHealth acts as a secondary or supplemental insurance. However, MassHealth pays us about $1.80 of the $100-$120 (the 20%) copay still due after Medicare’s 80% payment. We are not allowed to charge a MassHealth patient any more beyond the $1.80 MassHealth Pays. Since we are already losing two thirds of our normal fee to accept Medicare’s low allowed rate, Medicaid is very hard on us. The answer, of course, would be a single payor insurance for all Americans as previously suggested in the section on Medicare's Benefits.

We will charge you for the 20% copay (and any deductible up to $100) due. We find most families are willing to cover the $80-$100 cost (sometimes plus the $100 deductible early in the new year) for a family member on Medicaid who cannot pay themselves. An exception in Massachusetts is Senior Whole Health which combines Medicare and Medicaid making it convenient to patients and doctors-by having a single payor. Senior Whole Health normally pays the entire Medicare allowed rate with no balance left for the patient, but it is only available in urban areas like Brockton and Boston. We rarely see it on Cape Cod, unfortunately.