The Original Medicare Program
is a Federal health insurance program primarily for people
65 and older. However, it is also for certain disabled
people and people with permanent kidney failure. it
was introduced in 1965 and actually went into effect in 1966.
It is run by the Health Care Financing Administration (HCFA)
of the U.S. Department of Health and Human Services.
TWO PARTS OF MEDICARE
are two parts to the original Medicare program.
Insurance (Part A) helps pay for inpatient hospital care,
some skilled nursing care, home health care, and hospice care.
Insurance (Part B) helps pay for doctors, outpatient care,
and numerous other medical services and supplies that are
not covered by Part A.
IS ELIGIBLE FOR MEDICARE?
must be a citizen or a permanent resident who has lived
in the United States for at least 5 years
you are 65 or above, you or your spouse must have worked
at least 10 years in Medicare-covered employment.
you are under age 65, you may qualify if you have a permanent
disability and have received Social Security or Railroad
Retirement Board disability benefits for 24 months or...if
you are a kidney dialysis or kidney transplant patient.
If you are receiving Social Security or Railroad Retirement
Board benefits when you turn 65 or if you have received disability
benefits for 24 months, you will be automatically enrolled
in both Part A and Part B of Medicare.
for Medicare -
You need to apply for Medicare if you are not receiving Social
Security or Railroad Retirement Benefits 3 months before you
turn 65, or if you require regular dialysis or kidney transplant.
To apply , contact a Social Security Administration office
or, if you or your spouse worked for the railroad, the Railroad
Federal government contracts with private insurance organizations
called Intermediaries and Carriers to process your Medicare
claims. The Intermediaries process claims for Part A
and the Carriers process claims for Part B.
REVIEW ORGANIZATIONS (PROs)
are groups of practicing doctors and other health care professionals
who are paid by the Federal government to review the care
given to Medicare patients. Each state has PRO that
decides, for Medicare payment purposes, whether the care is
reasonable and necessary, is provided in the appropriate setting,
and if it meets the standards of quality accepted by the medical
profession. The PROs have the authority to deny payments
if these requirements are not met.
Original Medicare Program
REVIEW COMMITTEES (URCs)
group performs basically the same tasks as the PROs. The primary
difference between the PROs and the URCs is who provides their payment.
The URCs are paid by the facility (hospital or nursing home) rather
than by the government.
DRG AND PROSPECTIVE PAYMENT SYSTEMS
the Prospective Payment System, hospitals are paid fixed amounts
by Medicare based on the principal diagnosis for each hospital stay.
These payment categories are called Diagnostic Related Groups (DRGs).
This system was implemented in October of 1983 primarily as a cost-containment
that time, Medicare took the ailments and injuries that could happen
to an individual and divided them into specific groupings.
There are currently almost 500 of these groupings.
also assigned a specific dollar amount to each DRG grouping as a
designated amount the hospital would be paid based on the principal
diagnosis of the patient. The hospital receives this fixed
amount regardless of the length of time a person stays in the hospital.
If a patient remains in the hospital for one day or twenty days...
the hospital receives the exact same amount of money.
DRG System is one of the most misunderstood aspects of the Medicare
program. It is an area that should be fully understood by
Medicare recipients to avoid the possible financial ramifications
that could occur as a result of not being correctly informed.
Part A Covered Services
room, meals, general Nursing, and other hospital services
and supplies such as operating and recovery room costs, rehabilitation
services, special care units and x-rays (but not private duty
nursing, a television or telephone in your room, or a private
room unless medically necessary).*
admission charge of $768 during days 1-60 of a hospital
stay. Medicare pays all other covered expenses.
per day for days 61-90 of a hospital stay.
per day for days 91-150 of a hospital stay. **
costs from the 151st day on of a hospital stay.
Nursing Facility Care
room, meals, skilled nursing and rehabilitative services,
and other services and supplies such as medical supplies,
wheelchairs, blood transfusions, and drugs furnished by the
facility while there. *
Each Benefit Period You Pay
for the first 20 days
to $96.00 per day for the 21st through the 100th day.
costs from 101st day on.
skilled nursing care, physical therapy, speech language therapy,
pathology services, home health aid services, durable medical
equipment (such as wheelchairs, hospital beds, oxygen and
walkers) and supplies.*
for Home Health Care Services.
of approved amount for durable medical equipment (such as
wheelchairs, hospital beds, oxygen and walkers).
and symptom relief and supportive services for the management
of a terminal illness. Home care is provided.
It also covers necessary inpatient care and a variety of services
otherwise not covered by Medicare.
a hospital or skilled nursing facility during a covered stay.
must meet certain conditions in order for Medicare to cover these
have 60 lifetime reserve days that may only be used once.
Part B Covered Services
includes doctor bills, inpatient and outpatient medical and
surgical services and supplies, physical, occupational and
speech therapy, diagnostic test, and durable medical equipment.
deductible (pay once per year).
of approved charges after the Part B deductible.
for most outpatient mental health.
of all excess charges if your doctor does not accept assignment.*
Tests & Services:
Blood tests, urinalysis, x-rays, kidney dialysis and transplants.
pay nothing for these services.
Part B will help cover these costs if you don't have Part A.
You must meet certain requirements in order for Medicare to
cover these services.
for services if you meet the requirements.
of approved amount for durable medical equipment.
Covered as an outpatient, or as part of a Part B covered service.
Part B also Helps Pay for :
Speech language pathology services
Artificial limbs and eyes
Arm, leg, knee and neck braces
Some preventative services
Very limited outpatient drugs
Limited chiropractic services
Breast prosthesis (after a mastectomy)
Limited ambulance services
The services of practitioners
Part B out-of-pocket expenses depend on whether your health care
provider "accepts assignment" or not.
determines the approved charges for Part B services.
your doctor accepts assignment, he or she agrees to accept
Medicare's approved charges as payment in full (with no
your doctor does not accept assignment, he or she may charge
up to 15% above the Medicare approved amount.
Other insurance can help cover medical expenses not covered by
parts A or B Medicare. Information on your choices is provided
on the following pages.
though Medicare covers many health care costs, you will still have
to pay Medicare's coinsurance and deductibles. Plus, there
are many medical services that Medicare does not cover or does not
cover completely. The result... you will have to pay these
health care costs out of your own pocket. This is why you
should consider coverage in addition to Medicare.
Insurance- "Medigap" is the name given to supplemental
plans sold by private insurers to fill in the "gaps" in
the original Medicare plan. To make shopping for a plan easier,
federal law requires that insurers offer only plans that fit the
10 standard plans approved by the government. These are called
"Standardized" plans and are designated with letters A
through J. Regardless of what the insurer calls its plan,
benefits for each letter designation are identical from company
to company. So, if you purchased a Plan C, the benefits would
be exactly the same with all companies. However, there could
be differences in cost and service.
The best time to purchase a policy is during your Medigap open enrollment
period. For a period of six months from the date you are first
enrolled in Medicare Part B and are age 65 or older, you have
the right to purchase the Medigap policy of your choice. you
cannot be turned down or charged higher premiums because of poor
health during this period. However, once your six month open
enrollment period ends, you may not be able to buy the policy of
your choice. Original Medicare with a supplemental policy
(Standard supplement and Medicare Select) is the coverage preferred
by most retirees, with Medicare Select rapidly becoming the most
popular in the nation.
Select- Today as never before, it is increasingly difficult
for health care consumers, particularly seniors, to be able to see
a doctor of their own choosing. This becomes even more challenging
when your medical need requires a specialist. This is due
to new rules and regulations. Yet survey after survey reveals
that Americans care deeply about being able to choose their own
doctor and maintaining that personal relationship. The Medicare
Select program protects this choice while at the same time offering
its beneficiaries substantial savings. Medicare Select also
offers seniors important features which eliminate many of the hassles
associated with health insurance reimbursement. It offers
Freedom of Choice by allowing you to choose your own doctor.
It eliminates the Part A deductible thereby saving you hundreds
of dollars per year. And, Medicare Select premiums are normally
lower than traditional Medicare supplemental premiums.
Select is the same s standard Medigap insurance in nearly all respects.
The only difference between Medicare Select and standard Medigap
insurance is that is that insurers have networks of hospitals for
you to use in non-emergence situations in order to receive full
benefits. You may use any hospital in the case of an emergency.
choosing a Medicare supplement, it is important to remember that
you do not need more than one Medigap policy. Choose the plan
that offers the services you want at the price you can afford.
having access to quality health care, the freedom to choose your
own doctors, and saving money are concerns of yours, then Medicare
Select may be your best choice.
Medicare offers more ways to receive your benefits through other
health plan choices. Medicare allows you to choose the
way you receive your benefits. You may choose the Original
Medicare Plan, which is the traditional payment-per-service
arrangement. In addition, there are now several other options
from which you may choose. Not all options may be available
in your area.
Medicare Managed Care Plans
Managed Care Plan involves a group of doctors, hospitals, and other
health care to Medicare beneficiaries in exchange for a fixed amount
of money from Medicare every month.
Maintenance Organizations (HMOs),
Provider Organizations (PPOs),
Sponsored Organizations (PSOs),
Private Fee-For Service Plans
choose a private insurance plan that accepts Medicare beneficiaries.
The insurance plan, rather than the Medicare program, decides how
much to reimburse for the services you receive.
Medicare Medical Savings Account Plan
is a test program for some Medicare beneficiaries. It is a
health insurance policy with a high deductible.
of the new health plan choices may be right for you. The choice
is yours. No matter what you decide, you are still in the
+ Choice (M&C)
Medicare choices are explained in the new Medicare + Choice program
which offers Medicare beneficiaries up to six different coverage
options including traditional Medicare and Medicare HMOs (Health
Maintenance Organizations). Traditional Medicare (fee-for-service)
is the only option that is available to everyone on Medicare.
This option couples Medicare with a Medigap policy or with the expanding
Medicare Select program. The other options may not be available
in every area.
new options are:
Medicare Provider-Sponsored Organizations (PSOs), which are very
similar to HMOs except they are run by doctors and hospitals; Medicare
Preferred Provider Organizations (PPOs), which are similar to HMOs
but allow you to see providers outside the network. They do
not require that you choose a primary care physician - you can go
directly to any doctor associated with the plan; Medicare Private
Fee-For-Service (PFFS) plans, which are more like traditional Medicare
except you may pay more out-of-pocket expenses; and Medicare Medical
Savings Accounts (MSAs), which have two parts, an insurance policy
and a savings account - Medicare will pay your insurance premium
and deposit a specified amount in your MSA each year to pay for
your health care.
beneficiaries do not have to change plans. By doing nothing,
they stay in traditional Medicare, and coverage continues.
They will be wise, however, to explore other plans and compare their
costs and benefits.
beneficiaries have the right to switch to a new Medicare option
(except an MSA plan) whenever they want until January 1, 2002.
After January 1, 2002, they will be able to choose only once a year
(with certain exceptions), but they may not be able to get the same
supplemental coverage. All of these programs will be discussed
in more detail later in this booklet.
help you understand your choices more fully, we have provided an
overview of Medicare and your coverage options on the following
Medicare Health Plan Choices With M+C
+ Choice (M+C)
addition to Medigap policies, you may have other Medicare health
plan choices available to you. To be eligible for these other
health plan choices, you must:
both Part A and Part B of Medicare.
to pay the monthly Part B premium.
in the plan's service area (counties in which the plan is offered).
have permanent kidney failure.
Maintenance Organization (HMO)
HMO is a group of healthcare providers and facilities that work
together. Medicare pays the HMO to provide your care.
You will be assigned to a primary care provider who will oversee
all of your care in the HMO. You will most likely need his
or her approval to see a specialist and you will probably be limited
to seeing only providers who belong to the HMO.
With Point of Service (POS)
- Under the POS option, the plan allows you to receive certain services
outside of the plan's established provider network. In return
you will be responsible for a portion of the costs.
- PSOs are just like HMOs except they are actually run by the doctors
and hospital who provide the care.
Provider Organizations (PPOs)
- PPOs allow you to visit any provider in the plan at any time.
Additionally it could pay the costs of providers who are not part
of the network.
- These are private insurance plans that accept Medicare beneficiaries.
You pay extra if the costs for medical services are higher than
the Medicare rates.
Savings Accounts (MSAs)
- MSAs combine a high deductible insurance policy with a savings
account to pay for Medicare approved expenses. MSAs are not
should look very closely at the pros and cons of M + C and Original
Medicare before you make a decision. You may have more services
available under M + C but you may have to use their providers.
Your care may not be covered outside of the plan's service area
unless it is an emergency. If you want to go back to original
Medicare, you may not be able to purchase the Medigap policy of
your choice because of health conditions.
booklet provides general information about Medicare. It is
not intended to replace information from the Federal or State governments
or private insurance companies.
receive a hard copy of this booklet please call The Association
of Retired Americans at 1-800-806-6160 or e-mail
us at firstname.lastname@example.org.