QUESTION: I am attempting to help several older members of my family with their health care coverage and trying to understand the various concepts such as Medicare fee-for-service, original Medicare, health maintenance organization plans, Senior Advantage plans and Medicare Part D. To say the least, my head is spinning. Can you help?
ANSWER: This is a good question for this time of year, since we are closing in on annual open enrollment time and people should be reviewing the coverage they have to determine whether they need or want to change their coverage for the coming year. A review of terms can’t hurt anyone.
Terminology, no matter what the subject, can be very confusing and in some cases subtle. Also, over time, Medicare has included new types of services and older titles have been changed to incorporate these changes.
Let’s first look at the terms “original Medicare” and “Medicare fee-for-service.” When Medicare was signed into law in 1965, there was only one choice for coverage. That was the plan that allowed enrollees to go to any doctor, hospital or other health care supplier who accepted Medicare payments.
Medicare covered two distinct services: Part A is hospital insurance and Part B is medical insurance. The term “fee-for-service” came from the method those health care providers billed and were reimbursed for. They provided a service to the Medicare beneficiary and directly billed Medicare for that service. Medicare then paid 80 percent of the approved amount and the beneficiary or their secondary insurance, if they had such insurance, was responsible for the remaining 20 percent of the approved amount. This method remains today.
The Medicare program was amended in 1985 to include a different type of coverage. Congress added federally approved health maintenance organizations, known as HMOs, to the plan. This provided Medicare beneficiaries with a choice on how they wanted their health care provided. This type of coverage is available today and included under Senior Advantage plans.
As inroads were made into health care, new plans such as Medicare preferred provider organizations (PPO), Medicare special needs plans and Medicare private fee-for-services (PPFS) plans were developed. All of these plans now come under the heading of Senior Advantage plans and are part of Medicare Part C.
The payment method for Senior Advantage plans differs from the fee-for-service method. The Senior Advantage plans are paid a set monthly fee by Medicare for each enrollee. The enrollee also is usually required to make a co-payment at the time services are received.
Medicare in 2006 added prescription drug coverage known as Medicare Part D. This plan assists Medicare beneficiaries with the cost of prescription drugs. Medicare beneficiaries pay a monthly premium for these plans plus a co-payment for the prescription drugs. The amounts of premium and co-payments depend on which plan is selected from those offered.
To summarize, Medicare has four distinct parts: Medicare Part A hospital insurance, Medicare Part B medical coverage, Medicare Part C Senior Advantage plans and Medicare Part D prescription drug coverage.
I hope this very simple explanation helps a little in understanding a very complex health care coverage system.
Several upcoming classes may help. “What Medicare Beneficiaries Must Know to Prepare for Medicare’s 2013 Enrollment” will be offered:
Tuesday: 9-10:30 a.m. at Ojai Little House/Help of Ojai, 111 W. Santa Ana in Ojai. Call 646-5122 for more information.
Tuesday: 11:30 a.m. to 1 p.m. at Ojai West Campus, 370 Baldwin Road in Ojai. Call 649-8018 for more information.
Sept. 20: 12:30-2 p.m. at Wilson Senior Center, 352 North C St. in Oxnard. Call 385-8028 for more information.
Sept. 21: 1-3 p.m. at the Ventura County Area Agency on Aging Office, 646 County Square Drive, Ventura. Call 477-7310 for more information.
Today: “What Are Your Options for Care When Assistance Is Needed?” seminar, 1:30-3 p.m. Westlake Village Civic Center, 31200 E. Oak Crest Drive in Westlake Village.
Sept. 24: “Will You Pass Your Next Driving Test?” seminar, 1:30-3 p.m., Simi Valley Senior Center, 3900 Avenida Simi in Simi Valley. Call 583-6363 for information and reservations.
Sept. 27: “Preventing Falls” seminar, 3:30 p.m., Senior Concerns Day Center, 401 Hodencamp Road, Thousand Oaks. Call 497-0189 for information and registration.