Privatized Medicare plans can be confusing both to plan subscribers and health care providers. The word “Medicare” on forms or insurance cards for privatized Medicare programs might make them believe the plan is the federal Medicare program –but there are significant differences between Medicare and privatized Medicare plans.
Medicare is administered through the Center for Medicare and Medicaid Services (CMS). It publishes its rules and reimbursement rates annually. The latter are determined by region. Medicare publishes what it does and does not cover, and the information is accessible through CMS.
Medicare Part B covers psychotherapy and is most familiar to psychologists. Under Part B, Medicare allows a specific reimbursement rate for each CPT code. Medicare pays 80 percent of the allowable amount and assigns the remaining 20 percent as the “coinsurance” amount, for which the patient is responsible.
To offset the cost of the coinsurance amount, Medicare subscribers may purchase private insurance plans as secondary coverage. Secondary plans cover some or all of the coinsurance amount.
Supplemental plans are similar, but generally cover the entire coinsurance amount, while secondary plans sometimes leave the patient responsible for a percentage of the cost.
Privatized Medicare plans are entirely different from secondary or supplemental plans. There are several kinds of privatized Medicare plans, including Health Maintenance Organization (HMO) Plans, Preferred Provider Organization (PPO) Plans, Private Fee-for-Service (PFFS) Plans and Special Needs Plans (SNPs).
Other less common types of Medicare Advantage Plans include HMO Point of Service (HMOPOS) Plans (HMO plans that may allow subscribers to get some services out-of-network for a higher cost) and Medical Savings Account (MSA) Plans (plans that combine a high deductible health plan with a bank account – Medicare deposits money into the account, usually less than the deductible, and subscribers can use the money to pay for health care services during the year).
Medicare Advantage, Medicare Complete, Kaiser Permanente Medicare and Secure Horizons are all examples of privatized Medicare plans. Privatized Medicare plans might cover not only coinsurance costs but also Medicare Parts A and B and other costs, often including drug costs (Medicare Part D). Sometimes they cover coinsurance costs and sometimes they leave the patient with some or all of that responsibility. Because these costs are included, Medigap policies cannot work with privatized Medicare plans.
For subscribers, the attraction to privatized Medicare plans is that they might handle all aspects of care (Parts A, B, D and coinsurance charges) and send only one premium bill per month, often at a lower cost than Medicare plus a supplemental or secondary plan. “Simple” appeals to many people.
In a privatized Medicare plan, the private insurance company controls funds that Medicare sets aside for the patient. The privatized Medicare plan dispenses care and reimbursement according to rules it creates, keeping as profit whatever the patient does not spend on care.
The rules that privatized Medicare plans create often include:
*Patients are only covered if they see the privatized plan’s in-network providers (a smaller range of provider choices than standard Medicare).
*Patients might not be covered if they receive services outside the geographic region covered by the plan. This can cause delays or denials of reimbursement for care when subscribers are traveling out of their HMO’s region. It is especially problematic when subscribers relocate out of their HMO’s region.
*Reimbursement to providers can be set at lower rates than standard Medicare (i.e., the private insurer withholds as profit some of the Medicare allowable rate from the provider).
*Pre-authorization might be required for services for which standard Medicare does not require pre-authorization (e.g., 90837 visits).
The first two of these rules make it harder for subscribers to find providers or receive coverage if they travel or relocate; the last two can be disincentives to provider participation in privatized Medicare plans. Combined, these four rules might result in limited access to care in a privatized Medicare plan compared to standard Medicare.
Subscribers are often unaware of these potential drawbacks.
Psychologists working with older adults should familiarize themselves with the differences between Medicare and privatized Medicare plans. Medicare provides a website that is a good resource for information about these differences.
The information that is most available to older adults about privatized Medicare plans comes in the form of advertisements generated by the sales and marketing arms of the private companies selling those plans. Such advertisements appear in AARP magazine, on television channels identified as target markets for older adults and other “targeted” media outlets. The information is crafted to encourage subscription, leaving out many important facts (including the four rules summarized above).
It is important to recognize that the capacity of older adults to seek out or comprehend information about insurance coverage (e.g., the difference between Medicare and privatized Medicare plans) is not the same as that of the general population.
Of the 46 million Americans over the age of 65, 5.5 million have been diagnosed with Alzheimer’s disease, 1.3 million have been diagnosed with Neurocognitive Disorder with Lewy Bodies and 16 million older Americans have been diagnosed with Mild Cognitive Impairment.
To summarize, 22.8 million out of 46 million older adults – almost 50 percent – have some degree of cognitive impairment, ranging from mild to debilitating. Instructing this population to educate themselves about the difference between Medicare and privatized Medicare plans might be unrealistic and inconsistent with APA’s “21 Guidelines for Psychologists Working with Older Adults,” in particular guidelines 5, 7, 8, 16, 19 and especially 20.
Psychologists can assist older adults by encouraging them to access comprehensive sources of information about the differences between Medicare and privatized Medicare plans. These include websites provided by privatized Medicare plans, which contain more information than advertisements, and the Medicare website mentioned above.
Guiding older adults to good resources for information about the differences between Medicare and privatized Medicare plans represents ethical best practices and is consistent with APA’s guidelines.
Websites available from author
Charles M. Lepkowsky, Ph.D., is in private practice in Solvang, Calif. He is a past president of the Santa Barbara County Psychological Association. He taught graduate psychology courses for 14 years. He may be reached by email at: firstname.lastname@example.org.