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Vol. 19 No. 8 — October 2011
Navigating the Medicare Maze
by Stephanie C. Ardito
Principal, Ardito Information & Research, Inc.

With fall arriving, I’ve been thinking about the long, hot summer, both literally and figuratively. While much of the U.S. endured scorching temperatures and Africa suffered heart-breaking droughts and famines, politicians were not immune from the blistering season. U.K. Prime Minister David Cameron felt the heat from the Rupert Murdoch hacking scandal; Hosni Mubarak went on trial in Egypt; and the U.S. Congress continued its fervent disagreements about raising the debt ceiling, cutting costs, generating revenue, and balancing the budget.

Since entitlement programs are the chief governmental programs under fire, I decided to revisit the healthcare bills passed back in March (H.R. 3590, the Patient Protection & Affordable Care Act [], and H.R. 4872, The Health Care & Education Reconciliation Act []). I hoped to review new legislation expected later this year and next year for the two major health entitlement programs — Medicare and Medicaid — and to determine how future budget cuts may alter implementation of any changes scheduled to take place.

Admittedly, when I searched the two bills, I was immediately overwhelmed by the hundreds of references to Medicare and Medicaid. I then opted to concentrate on Medicare specifically, but even then, I was faced with a crushing amount of information. In frustration, I turned to the Henry J. Kaiser Family Foundation and its 15-page, nonpartisan Implementation Timeline []. I was able to comfortably focus my search by clicking on Medicare under the “Customize by Topic” banner on the left side of the website page. This approach brought down the Timeline page count considerably.

As I read through the Medicare timeline, I became further daunted by all the Medicare terms, phrases such as “Part A,” “Part B,” “Part C,” “Part D,” “Original Medicare,” “Donut Hole,” “Medigap,” and “Advantage Plan.” It occurred to me that it might help to define these terms, to point out new features implemented by the healthcare laws since they were passed, to outline what consumers can expect down the road (if Medicare isn’t overhauled by Congress and legislation remains intact), and to identify resources and tools that I have found especially helpful in navigating the maze of information surrounding this entitlement program.

Medicare Parts A and B (Original Medicare)

The Medicare program was signed into law by President Lyndon B. Johnson on July 30, 1965. In a nutshell, if you are 65 or older, are under age 65 with certain disabilities, or are any age and diagnosed with end-stage renal disease (i.e., permanent kidney failure requiring dialysis or a kidney transplant), you will receive free health benefits if you or a spouse paid Medicare taxes while working.

Two governmental websites provide substantial information about Medicare. The Centers for Medicare & Medicaid Services (CMS) [] is an exhaustive resource, but I found the site difficult to maneuver. Instead, I wandered over to the more user-friendly site [], also maintained by the CMS, but developed primarily for those who are seeking or are covered by Medicare coverage, as well as for their families and caregivers.

Starting with the section titled “Medicare Basics,” I read through the four principal parts of Medicare. Medicare Part A (often called premium-free Part A), covers hospitalizations, skilled nursing facilities but not long-term care, and hospices. Medicare Part B is paid health insurance, covering doctors’ visits, outpatient care, and other medical services not included in Part A. Medicare Part B enrollees pay a small monthly premium and an annual deductible fee before insurance kicks in. The insurance rate and deductible fee, as with private health insurance, may change every year.

Combined, Medicare Part A and Medicare Part B are often referred to as “Original Medicare.” In short, the government pays your health providers for any medical services you use. However, since Medicare may not pay all your costs under Parts A and B (generally, 80% of medical costs are covered by Medicare), you can elect to buy a Medicare supplement insurance policy from a private company. Such a policy is called Medigap.


In 2011, if you are enrolled in the original Medicare plan (Parts A and B), you will pay close to $100 a month for coverage. If you add a Medigap policy, a second premium will be paid to a private insurance company. As long as you pay your Medigap premium, your policy will automatically be renewed every year.

State and federal laws mandate that basic medical benefits must be the same among Medigap policies. However, some plans provide additional benefits not covered by Medicare. What does vary among Medigap policies is cost. Those seeking Medigap policies would be wise to compare premium costs among the countless insurance plans available to potential beneficiaries.

CMS has published a 60-page booklet entitled “Choosing a Medigap Policy: A Guide to Health Insurance for People With Medicare” []. On page 47 of the guide, you will find a listing of State Health Insurance Assistance Programs (SHIPs) and State Insurance Departments. These resources can be especially helpful if you need assistance in buying Medigap insurance within your local community.

Another Medigap insurance search aid is Medigap Policy Search []. After entering your ZIP code, all Medigap policies available in your area are displayed in a table. If you are interested in a specific carrier, policies can also be viewed by insurance company name. Each table view provides a list of basic benefits and whether or not deductibles are part of the plan. You can further sort the table by policy name, monthly premium, or estimated annual cost.

Preventive Care

Beginning in 2011, as a result of the health reform law, Medicare Part B beneficiaries no longer have to make co-payments for many preventive services. Medicare now covers a free, one-time preventive visit within the first 12 months of your enrollment in Medicare Part B. The doctor’s visit includes a review of your medical history and recommendations regarding preventive health services you can take advantage of without co-payments. These services include screenings for breast, cervical, vaginal, colorectal, and prostate cancer; bone mass measurements; diabetes; glaucoma; and HIV. In addition, every 5 years, you can benefit from free cardiovascular screenings that check your cholesterol and other blood fat (lipid) levels. Specific vaccinations available without co-pays include flu, pneumonia, and hepatitis B shots.

Individuals who have been enrolled in Medicare Part B longer than 12 months are also entitled to a yearly wellness checkup as described above. Most of these services are available at no cost, as outlined in the CMS “Medicare Consumer Guide to Preventive Services” [], published in December 2010.

Medicare Part D

On Dec. 8, 2003, President George W. Bush signed the Medicare Modernization Act, which added an outpatient prescription drug benefit to Medicare. Called Medicare Part D, the legislation provides prescription drug coverage. First made available to all Medicare recipients on Jan. 1, 2006, beneficiaries pay monthly premiums to private insurance companies of their choosing, but they may face a coverage gap or “donut hole” after a specific amount of money has been spent for prescriptions.

To provide relief to those facing a gap in their prescription drug coverage, the Patient Protection & Affordable Care Act includes a $250 rebate for people who reach the Part D “donut hole.” In June 2010, the first rebate checks were sent to Medicare beneficiaries. According to a U.S. Department of Health and Human Services (HHS) report, as of March 22, 2011, 3.8 million beneficiaries had received a $250 check to close the gap [].

Starting on Jan. 1, 2011, an additional provision of the health legislation was enacted. When beneficiaries reach the “donut hole,” they will receive a 50% discount on brand name prescription drugs when purchased at a pharmacy or ordered through the mail, as well as some coverage for generic drugs. This provision will be in effect until the coverage gap is closed in 2020 []. On Dec. 17, 2010, CMS sent a letter to pharmaceutical companies providing operational guidance for those participating in this Medicare Coverage Gap Discount Program [].

On June 28, 2011, CMS announced that nearly 500,000 people had received a discount on brand-name prescription drugs, with an average savings of $545 per beneficiary [ Counter=3996&intNumPerPage=10&checkDate=&
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]. More than a month later, CMS issued a press release stating that Part D premiums would be reduced in 2012 to about $30 a month [].

To find prescription drug coverage, the Medicare Plan Finder is a good resource []. You have two choices for identifying insurance plans. With the General Search option, you enter your ZIP code. When you hit Enter, two questions must be answered: “How do you get your Med­ icare coverage?” and “Do you get help from Medicare or your state to pay your Medicare prescription drug costs?” When you “Continue to Plan Results,” you are asked to list the drugs you take, as well as the dosage and how often you fill your prescriptions. After entering the names of your prescriptions, a list of participating pharmacies appears on the screen. You can choose to select up to two pharmacies in your area, or proceed to review the prescription drug plans available in your area.

Information provided about each policy is quite detailed. You will see an estimated annual drug cost, monthly premium cost, and deductibles for original Medicare and each private prescription drug plan. Drug restrictions are noted, as well as a rating of each plan based on 36 topics in five categories.

Medicare Part C (Medicare Advantage Plan)

Medicare Part C, most often called the Medicare Advantage Plan [], is health insurance offered by private companies approved by Medicare. Medicare Part C generally provides hospital (Part A), medical (Part B), and prescription drug coverage (Part D) and may include additional coverage benefits such as vision, hearing, dental, and/or health and wellness programs.

In addition to the Medicare Part B premium, individuals will most likely pay a second monthly premium to take advantage of the services offered by the Medicare Advantage Plan. The plan works like Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and private health insurance plans in that you may have co-payments, annual deductibles, out-of-pocket costs, and constraints on which doctors and specialists you can see (i.e., you may be required to use an approved network of doctors and medical facilities). Medicare Advantage Plans do not cover hospice care, since this service is offered by the premium-free Medicare Part A. If you join a Medicare Advantage Plan, you don’t need, and can’t be sold, a Medigap policy (see above). However, if your Medicare Advantage Plan doesn’t offer drug coverage, you can choose to join a Medicare Prescription Drug Plan (Medicare Part D).

If you’re feeling as overwhelmed as I am about all the Medicare choices available to us, see the sidebar at right for additional resources that boil down everything I’ve written about so far.

Upcoming Legislative Changes

Additional Medicare adjustments being made this coming year as a result of the healthcare law generally don’t affect the services beneficiaries will receive. Worth noting, however, is one program being implemented for those who are homebound. Beginning Jan. 1, 2012, the Medicare Independence at Home Demonstration program will provide primary care services to beneficiaries in their homes. Details are sketchy at the moment, but a one-page fact sheet [] defines “an applicable beneficiary as an individual who has been determined to be entitled to benefits under part A and enrolled under part B, not enrolled in a Medicare Advantage plan or the Program of All-inclusive Care for the Elderly, must have two or more chronic illnesses as designated by CMS, must have a non-elective hospital admission within the past 12 months, must have two or more functional dependencies requiring the assistance of another person, and must meet other criteria as specified by the legislation.”

In 2012, Medicare’s attention will be mainly on payment rates and performance. For example, hospitals, skilled nursing facilities, home health agencies, and ambulatory surgical centers will be required to develop “value-based purchasing programs.” High-quality plans that reduce hospital readmissions will be rewarded with bonuses. By the same token, reduced Medicare payments will be made to facilities with excessive and preventable readmissions. Fraud and abuse prevention initiatives will also be implemented in 2012.

As I submit this column toward the end of the summer, the U.S. debt ceiling has been raised and the nation’s budget will be reduced by $1 trillion during the next decade. For the moment, no entitlement programs have been cut. Undoubtedly, we can expect a continuing contentious and sizzling fall among both political parties, as yet one more congressional “Super Committee” recommends another $1.2. trillion in cuts by Thanksgiving. Whether or not Medicare survives in its current form (including upcoming legislative changes resulting from the healthcare law) is yet to be seen. You can be assured that I will follow up with Searcher readers!

For Further Information …

To get your arms around the various Medicare coverage choices (original Medicare versus Medicare Advantage Plan), start with the following, easy-to-read chart:

Second, read two Medicare guides produced by AARP. The “Medicare Starter Kit,” written by Patricia Berry and published in the April 1, 2011, issue of the AARP Bulletin (also available on the AARP website []), breaks down Medicare basics into eight sections:

  • Top eight do’s and don’ts
  • What it covers
  • What does it cost
  • Do you qualify?
  • Enrolling at the right time
  • Figuring out your choices
  • Other healthcare coverage
  • Getting help

The second AARP Medicare guide is titled “Medicare Part D & You” []. The publication is divided into six parts:

  • How Medicare Part D works
  • “Extra Help” paying for prescriptions
  • Moving in and out of the doughnut hole
  • Do you need Medicare Part D?
  • Choosing a Part D drug plan
  • Signing up for a plan

You might also refer to the following AARP resources regarding prescription drug coverage:

  • Medicare Part D glossary
  • Where to go for help
  • Using the Medicare Plan Finder

inally, see’s Quality Care Finder [], a fairly new resource added to the website. Here, in one place, you will find almost every medical and prescription drug plan option a Medicare beneficiary may seek. Not only does the site provide search tools to compare all the policies mentioned in this column and in the AARP publications, but one can also compare hospitals, nursing homes, home health agencies, dialysis facilities, and physicians.

Stephanie C. Ardito is an independent consultant to the healthcare and pharmaceutical industries. Based in Wilmington, Del., her email address is

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