Government health plans: Medicare and Medicaid programs
Government health plans
Government health insurance plans provide coverage with reduced or no monthly premiums for the indigent, the older adult, the military, and government employees. There are a number of different plans, but patients need to qualify based on the following factors:
- Age
- Income
- Government occupation
- Health condition
A patient who is age 65 or older can qualify for Medicare. A low-income patient may be eligible for Medicaid. Active-duty service members, military retirees, and their dependents are covered by TRICARE. The Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) covers the spouse and dependent children of a veteran who is permanently and totally disabled from a service-connected disability, and the surviving spouse and children of a veteran who died from one, as long as they are not eligible for TRICARE. The family of a service member who dies on active duty is generally covered by TRICARE instead.
Medicare
Medicare is a federal health insurance program that provides healthcare coverage for individuals who are age 65 or older, people who are disabled, and patients who have been diagnosed with end-stage renal disease (ESRD). Medicare refers to those covered by Medicare as beneficiaries.
The Medicare program is administered by the Centers for Medicare and Medicaid services (CMS), a division of the Department of health and human services (HHS). Laws enacted by Congress regulate the Medicare program.
The Medicare plan is divided into four parts
- Part A covers inpatient hospital charges. It is financed with special contributions deducted from employed individuals’ salaries, with matching contributions from their employers. Due to these contributions and regular Social Security contributions, there is no monthly premium for Part A.
- Part B covers ambulatory care and all professional services, including primary care and specialists. Beneficiaries are required to pay a monthly premium. Beneficiaries can visit any specialist without a referral.
- Part C is a managed care option for Medicare-qualified patients to turn their Part A and Part B benefits into a private plan that can offer some additional benefits. The private plan must cover everything that would be covered under Part A and Part B.
- Part D is a prescription drug program offered to Medicare-qualified individuals that require an additional monthly premium.
Basic medical coverage for Medicare Part B is 80% of the allowed amount after the deductible. This means that patients are responsible for the remaining 20%. The allowed amount is determined using a resource-based relative value scale (RBRVS). Some patients choose to purchase a private supplemental health insurance policy to help cover the 20%. These policies can also pay for services not covered by Medicare. These supplemental health insurance plans are known as Medigap policies. Federal regulations now require Medicare supplement policies to be uniform to avoid confusion for the purchaser.
Example: Part B cost-sharing
A patient’s Part B deductible has already been met. The allowed amount for a covered office visit is $150. How much does Medicare pay, and how much is the patient responsible for?
- Medicare pays 80% of the allowed amount:
- The patient is responsible for the remaining 20%:
Answer: Medicare pays $120, and the patient owes $30 (unless a Medigap policy covers it).
Fee schedule
The fee schedule for Medicare Part B is determined using the RBRVS. This system consists of three parts:
- Provider (physician) work
- Practice expense (overhead)
- Professional liability (malpractice) expense
The provider work component includes the degree of effort and time needed by a provider to perform a particular service or procedure. The practice expense and professional liability components are computed by the CMS. A relative value unit (RVU) is assigned to each of the three components, and the geographic practice cost index (GPCI) is used to adjust for geographic differences in market conditions and business costs.
The RBRVS fee schedule is designed to provide nationally uniform payments to healthcare providers. Payments are adjusted to reflect the differences in practice costs across geographic areas. The fee schedule includes a conversion factor, which is a single national number applied to all services paid under the fee schedule. Conversion factors are set by Congress and changed annually at the request of the CMS.
Depending on the contract between the provider and the insurance carrier (especially Medicare, Medicaid, and other government programs), the difference between the RBRVS schedule and the provider’s fee will be written off.
Contracts between the provider of service and the insurance company vary greatly, depending on the insurance. It is important for the medical assistant to know the contract terms for each insurance company. As insurance payments are received, the medical assistant should closely examine the explanation of benefits (EOB) to ensure that all benefits have been reimbursed correctly.
Medicaid
Medicaid is the government program that provides medical care for the indigent. This program is funded by both federal and state governments to provide medical care for people meeting specific eligibility criteria. All states and the District of Columbia have Medicaid programs, but program specifics vary by state, including the name of the program. For example, in California, the Medicaid program is called Medi-Cal. A person eligible for Medicaid in one state may not be eligible in another state and covered medical services may differ.
The federal government provides funding to each state for Medicaid programs. Each state is required to cover certain services to receive this funding. The individual states decide which additional services will be covered. Medicaid is always the payer of last resort. That means if the patient has any other type of insurance coverage, that insurance company will pay before Medicaid makes a payment.
Mandatory Medicaid benefits
In order to receive federal funds for Medicaid, each state Medicaid plan must cover the following mandatory services - a state can add more, but dropping any of these ends federal funding:
- Inpatient hospital services
- Outpatient hospital services
- Nursing facility services
- Early and periodic screening, diagnostic, and treatment (EPSDT) services
- Home health services
- Physician services
- Rural health clinic service
- Federally qualified health center services
- Laboratory and x-ray services
- Family planning services
- Nurse midwife services
- Certified pediatric and family nurse practitioner services
- Freestanding birth center services
- Transportation to medical care
- Tobacco cessation counseling for pregnant women
An ambulatory care facility has the right to limit the number of Medicaid patients it accepts into the practice. The medical office personnel cannot pick and choose which Medicaid patients they are willing to see. There can be no discrimination based on age, gender, race, religious preference, or national origin. The Medicaid fee schedule is the lowest of all insurance companies, and it may not be in the medical office’s financial interest to accept a large number of Medicaid patients. A provider who accepts Medicaid patients automatically agrees to accept Medicaid’s allowed amount as payment in full for covered services. Some patients who are eligible for Medicaid are required to pay a co-payment. The provider can collect the co-payment from the patient but cannot bill for any amount over the allowed amount.
Eligibility for benefits is determined by the respective states, but a patient scenario on the exam will usually point to one of the following groups as typically eligible for Medicaid:
- Low-income families
- Qualified pregnant women and children
- Recipients of Temporary Assistance for Needy Families (TANF)
- Individuals who receive Supplemental Security Income (SSI)
- Individuals who receive certain types of federal and state aid
- Individuals who are Qualified Medicare Beneficiaries (QMBs) - Medicaid pays for Medicare Part A and Part B premiums, deductibles, and coinsurance for qualified low-income individuals
- Individuals in institutions or receiving long-term care in nursing facilities and intermediate-care facilities