Medicare may start operating more like an insurance company by requiring prior authorization for expensive operations and procedures. Medicare has announced a test program to see how this might work, and it will focus on states where patterns of fraud and abuse are high. Good news for Arizona:  we’re not on the list!

Medicare Advantage plans, which are run by insurance companies, require doctors to get prior authorization for hospitalization (except in an emergency), operations of any kind, and many expensive procedures and tests like MRIs or CT scans. But Medicare does not operate this way, and the result is billions of dollars in payments for medical services that are not necessary.

Medicare isn’t going to require doctors to get approval before providing services, but doctors have been put on notice that their bills will be audited before they get paid. And if the auditors determine the service was unnecessary, Medicare will not pay the bill.

The full story can be found at Forbes. Here is an excerpt:

In Florida, in fact, 100% of stent, ICD, and pacemaker implantation procedures will undergo review before payment. Similar programs will take place in California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina, and Missouri, but the precise percentage and mix of cases that will undergo auditing has not yet been stated.

On November 15 the demonstration program was announced by CMS:

The Recovery Audit Prepayment Review demonstration will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional “pay and chase” methods of looking for improper payments after they have been made.

There are two ways for seniors to get help with their Medicare premium and Part D drug costs. Medicare beneficiaries with monthly income below $1,246 (individual) or $1,675 (couple) can apply to the state of Arizona for help.  Seniors with slightly higher income can go to Social Security for help with their Part D premium and drug costs. The “Limited Income Subsidy” is for people whose monthly income is less than $1,381 (individual) or $1,859 (couple).

Apply through the state of Arizona:
A person on Medicare fills out an AHCCCS form (Arizona Health Care Cost Containment System, pronounced “access”) and provides proof of income or where it comes from. (AHCCCS is Medicaid in Arizona.) This proof can be the annual letter from Social Security that shows how much a person receives and how much is being taken out for the Part B premium and any other charges, such as a Part D premium to an insurance company. Sometimes bank statements may need to be provided.

For people in other states, you can find info on where to get this help by googling “medicare savings program (your state name)”.

Here’s the help: Once approved for the Medicare Cost Sharing program, the state will pay the person’s part B monthly premium, which is $96.40, $110.50, or $115.40 (for those who are new to Medicare this year). Social Security will waive the Part D premium, up to about $25.00 per month. Then Social Security provides a subsidy to help with prescription costs, so the person will pay only $6.30 for a one-month supply of even the most expensive brand name drugs. Generics would cost $2.50 for a one-month supply.

Another important benefit is that people getting this help do not have a “doughnut hole” in their drug plan. This is the gap in Part D plans during which the plan stops paying for drugs and the person must pay 100% of the cost – until $4,550 has been spent. In 2011, people in the doughnut hole get a 50% discount on their brand drug costs.

Asset limits: When processing an application for help, AHCCCS has no asset limit (bank accounts, stocks, bonds, life insurance), but only considers income (Social Security check, pension, annuity payments, alimony). With no asset limit, it is best to apply through the state of Arizona (AHCCCS) for this help.  Social Security does consider assets when it processes an application for help.

Apply through Social Security:
Some people qualify for help with their drug costs, but not the state’s help with their Medicare Part B premium. People who have monthly income of less than $1,381 (for a single person) or $1,859 (for a couple) can get help with their Part D premium and their prescription costs. This help is received through an application to Social Security. Go to ssa.gov and see the link in the left hand column “Get extra help with Medicare prescription drug costs”. The application is pretty simple and Social Security will process it in about two weeks.

No penalty: Some people who qualify for help with their drug costs have never enrolled in Part D. Once approved for help, a person can enroll in a Part D plan and will not be penalized for a late enrollment.

I’ve heard that over 25% of seniors who qualify for help are unaware of these assistance programs. Having $96 more to spend each month is a big help. But the drug cost help can be the difference between choosing to take needed prescriptions and having money to buy food. So spread the word.

Forms can be found on-line at: http://www.azahcccs.gov

Or email me at medicareblog@gmail.com