How To Get Ready For The Medicare Overhaul

Medicare recipients are in for a big shock this fall. The 1997 Balanced Budget Act enacted some major changes in Medicare that began taking effect in 1999. You’ll be expected to make more choices.

Yet a recent AARP survey found that only about 11% of Medicare participants know enough to make an informed choice. Perhaps worst of all the budget for promoting the changes, which was inadequate to begin with, was cut in half. Medicare participants in only five states will receive the complete information booklets describing all their options. Everyone else had to wait a year, though you could have begun choosing in January 1999.

The biggest change is that there will be more managed care options for Medicare recipients. Now Medicare recipients can choose between two types of coverage, as my readers know from past articles. One choice is traditional fee-for-service Medicare. Under this program, Medicare pays for covered services and you pay for deductibles, copayments, and non-covered services. Often, Medicare supplement policies are purchased to handle some of those payments. The other option is a health maintenance organization (HMO) that accepts Medicare recipients. Not every HMO accepts Medicare recipients, and only about 15% of recipients are covered by HMOs.

Beginning next year, there will be more managed care options available to you. These include:

• Preferred Provider Organizations (PPOs): These are networks of physicians that provide health services at discounted fees. You meet with doctors in their regular offices and might be able to find a PPO doctor convenient to your home.
• Provider-Sponsored Organizations (PSOs): These are plans that are owned by doctors and hospitals that otherwise operate much like HMOs.
• HMOs with Point of Service Options: A number of HMOs already offer this option. It allows you to be treated outside the HMO’s doctors in return for paying a higher fee. You might pay a higher premium at the outset or pay a higher copayment whenever you visit an out-of-network doctor.
• Medical Service Accounts: This experimental program allows you to put tax-deductible money into a tax-exempt account. This account can be used to pay routine medical expenses. The MSA must be paired with a high-deductible insurance policy that will cover major medical expenses.
• Fee For Service (FFS): This operates much like traditional Medicare, with some differences. There is no limit on the amount doctors can charge for services under this option and no limits on premiums.

These options are in addition to traditional Medicare and Medicare HMOs.

The goal of these changes is to reduce Medicare’s costs by encouraging more recipients to choose these managed care options. The payments are set up to encourage medical providers to offer more of these options than they do now. Also, recipients are supposed to be greater coverage for the same or lower cost than under traditional Medicare. For example, managed care options are likely to cover more preventive care, cover vision and dental care and prescriptions, and charge lower copayments and deductibles for doctor visits and other services.

In addition, the monthly premium for traditional Medicare will rise faster than was anticipated before the 1997 budget act. That should give you an additional incentive to consider one of the managed care options.

By staying with traditional Medicare, you’ll have the certainty of the current system and be able to choose virtually any doctor or hospital you want. But you’ll face rising costs in both Medicare premiums, deductibles, and copayments, as well as for Medicare supplement insurance. With the managed care options you are likely to receive more services at a lower cost.

The disadvantages of the new options are that your choice of physicians is limited, and you might have to go to an office that is not convenient to you. The law tries to further encourage you to try managed care, by providing that you can leave one of the managed care programs and enroll in traditional Medicare and get supplemental insurance without any pre-existing illness clauses or being denied coverage. But the downside is that the times during the year when you can switch coverage with this protection will be limited. Currently, you can switch between programs monthly.

When considering your options in coming months, cost will be one factor. But your health and the way you seek health care also will be important. For example, if you have a particular condition or disease (or one runs in your family), you’ll want to be sure it is covered under any new plans you consider.

Also, managed care encourages frequent doctor visits and preventive care. But managed care also relies on the primary care physician to coordinate and direct medical care. If you prefer going to several different physicians and like to make the choices yourself, then managed care might not be for you.

Of course, we’ve all heard the horror stories of managed care organizations that deny coverage or don’t refer patients to specialists when needed. But not all managed care organizations work that way, and the quality of care might depend on the type of medical problems you have.

That’s where the Health Care Financing Administration (HCFA), which administers Medicare, comes in. The HCFA planned to publish booklets that summarize the major features and quality of care offered by managed care organizations in specific markets. That would allow you to compare the quality, services, and cost of your options. This is information HCFA has had for years but hasn’t made available to the public. Now HCFA says that it doesn’t have the money to publish the complete booklets in time. Medicare recipients in Ohio, Florida, Arizona, Oregon, and Washington will get the complete booklets this fall. Everyone else will get general information describing the changes and get the comparative data in the fall of 1999.

Another factor is that not everyone will have all the options. Managed care organizations will offer services in areas they think will be profitable. If you live in a populous area, especially one with a large Medicare population, you might have the full range of options over the next couple of years. People in other areas might have only a few options.

It’s time to begin preparing for the coming changes in Medicare. It will take a lot of work to find the best option for you, and the government will provide only part of the help.