Medicare is a pretty good insurance plan but it has some big gaps and no cap on a person’s medical bills.  For 2010 the Part A deductible will be $1,100.  This means, if you go into the hospital you must pay $1,100 of the hospital bill and Medicare pays the rest…EXCEPT for doctors’ fees.  Doctor fees come under Part B of Medicare, which has a $135 deductible.  After you pay this deductible Medicare will pay 80% of your doctor bills.  You must pay 20%.

I have heard many stories of people who have “just Medicare” and have run into big medical bills.  Here is an example:

I got a call recently from a man in Bullhead City, AZ  who  lives on $1,100 per month and has Medicare.  He was recently rushed to the hospital and spent a week getting treatments for a liver problem.  Medicare paid all but $1,068 (2009 deductible) of his hospital bill, but he has to pay 20% of the bills for the surgeons and doctors who treated him during his hospital stay. 

He told me he now owes thousands of dollars in medical bills, which he cannot pay. He still needs treatment, but doctors and labs have told him he needs to pay his 20% upfront or they won’t see him.  Needless to say, he hasn’t got the money and is not getting treatment and tests he needs.

This example shows that Medicare alone is not adequate coverage, as 20% co-insurance can easily add up to thousands of dollars.  And Medicare has no limit on what a patient might pay for their 20%. 

I know Democrats hate Medicare Advantage, but these can be helpful for a person like this man who is on a limited income. With most Medicare Advantage plans, his costs would have been limited to between $600 and $1,000 for his hospital stay. And he could see a specialist for treatment for about $40. He could get the care he needs if he were enrolled in a Medicare Advantage plan.

As usual, when it comes to arguments for and against something, the truth lies somewhere in the middle.

There’s a new Medicare Advantage company in Tucson with a different way of managing chronic illnesses and patients under its care. CareMore Health Plan Inc, is setting up shop in Tucson with Medicare Advantage plans for people with diabetes and chronic pulmonary illnesses such as Asthma, COPD and chronic bronchitis.

CareMore’s Medicare Advantage plans are known as special needs plans focusing on people with particular illnesses. The key to these plans is “coordinated care” which closely manages treatment in an effort to prevent patients from “bouncing around from specialist to specialist and physician to physician, test to test,”according to Chief Executive Leeba Lessin. “When a patient goes into the hospital, we consider it a failure.”

Starting in January 2010, CareMore will have two Care Centers in Tucson where people who enroll in their plans can be treated for routine needs that are associated with diabetes and pulmonary disease. These include podiatry services and wound care for diabetics. The Care Centers will also have a full gym so members can participate in training for balance, strength, and general fitness.  One Care Center will be located on the east side at the corner of Kolb and Speedway.  The second will be in south Tucson. A third Center is planned for Green Valley.

Being new to Tucson, CareMore’s biggest challenge could be building its network of doctors, particularly specialists.  People who enroll in their Medicare Advantage plans will use the Carondolet network of primary care physicians and hospitals (St. Joseph’s, St Mary’s, Tucson Heart Hospital).  But the plan benefits may outweigh the limited network, with co-payments for a hospital stay at $100 per day for days 1-5; outpatient surgery at $75; $0 for x-rays and lab services; and $0 for cardiac rehab services.  Managing members’ health is the most important benefit in these plans.

According to a recent story in the Los Angeles Times, CareMore delivers its services for 86% of the cost of traditional Medicare. CareMore is based in California where it has 34,000 people enrolled in its Medicare Advantage plans which are HMO networks of physicians, clinics and hospitals. They specialize in chronic illness plans.

Medicare Advantage faces cuts because Medicare pays too much money to these private insurance plans which allow seniors to pay low or no monthly premiums and obtain extra benefits.  Medicare Supplements are the next target because seniors who pay monthly premiums for these plans are costing Medicare more money than those who have not purchased a medigap plan.

Out of 43 million people on Medicare, 7 million have individual medigap plans and 14 million seniors have employer-sponsored health coverage in retirement. These retirement health plans are usually a Medicare supplement (medigap)  received through a company, union, state or municipal government. Medicare pays first and the supplement pays second, and many supplement plans leave the senior with no co-payments for doctor visits, tests, hospital stays, chemotherapy, and even scooters.

This is a problem according to a June 2009 report commissioned by the Medicare Payment Advisory Commission (MedPAC).  The study showed that seniors who don’t have to pay for their Medical care use the healthcare system too much, thus Medicare is paying out more money.

Through regression analysis of Medicare claims, the study determined that seniors who paid less than 5 percent of their medical bills averaged 68 to 83 percent higher total Part B spending than those who only had Medicare and no supplemental insurance.  Part B of Medicare covers services such as doctor fees, lab tests, x-rays, MRI’s, CT scans, radiation therapy and chemotherapy.

The MedPAC study determined that seniors with secondary insurance to supplement their Medicare had more elective hospital admissions for things like knee replacements. According to the  report “Preventive care, minor procedures and endoscopies were strongly affected by secondary insurance coverage, with substantially higher use among those with private secondary insurance”.

Beginning in June 2010, two new Medicare Supplements will be offered to try to get seniors to take on higher co-payments for their medical care. These plans will have lower monthly premiums but will not offer 100% coverage.

Plan M includes 50 percent coverage of the Part A deductible ($1,100 in 2010) and no coverage of the Part B deductible ($135 in 2010). Plan N includes 100 percent coverage of the Part A deductible but no coverage for the Part B deductible. Plan N will also require a $20 co-payment for Part B services such as doctor visits, lab tests, oxygen, and chemotherapy.

More changes are likely down the road as the Senate Finance Committee healthcare bill included proposals to create new medigap plans for C and F that include “nominal cost sharing to encourage the use of appropriate Part B physician services”. The new plans C and F would be available in 2015.   Currently, Medicare Supplements C and F offer the most complete coverage for a senior, eliminating almost all medical bills because Medicare pays first and these supplements pay the balance of the bills.  It looks like this type of nearly 100% coverage may not be allowed after 2015 if these changes are in the final healthcare bill this year.