CC #307

This material has been developed by and is presented by The Sandwich Generation ®

Conversations With Carol #7
Medicare and HMO Alert
By Carol Abaya, M.A.

For more than a decade I have been involved with aging issues and elder/parent care.  Change is the name of the game.

The biggest - and still developing - changes involve health care in general and Medicare more specifically.  There is a lot of information ‘out there.’   Sometimes it can get very confusing.  What is important   is how these changes impact you or one of your family members.

This is Carol Abaya.

Every day I learn something new.  I thought I knew quite a bit about Medicare and what it’s all about. 

But last year, as a dear friend of mine lay dying in the hospital, I got a hysterical call at 11:30 P.M. from her daughter.  "I’m getting all kinds of bills from the hospital.  A couple hundred thousand dollars worth."  She could hardly talk.  "What do I do?"

"Medicare should be paying," I said.

My friend, at that point had been in the hospital for almost 10 months.  I knew she had supplemental insurance.  So I was as surprised as her daughter.

"Let me check my files," I told her, "and I’ll get back to you."

What I learned after going through the Medicare handbook line by line surprised me.

So, our visit today will focus on Medicare - maybe not such a pleasant subject because, after all, who wants to get sick?  But it’s inevitable.  Sooner or later everyone  needs a doctor - or doctors, plural - or the hospital.  Medicare is a great program,   but it does have its limits, and HMOs have further limitations.

Rather than keep you in suspense about what I learned that night, I’ll tell you now.  Then I’ll go into more detail about Medicare - what it is, and what it pays for.

Medicare only pays for a maximum of 150 days in the hospital - per benefit period.  After that you’re completely on your own!  You do have 60 reserve days that can be used in addition to the base 150 days.  But you can only use these days once in your lifetime.

My friend had been in the hospital for many more days.  And the bills, still outstanding and in negotiation, amount to almost $350,000.

There may be a way of "extending" those 150 days, by using nursing home and hospice benefits.  However, this seems possible only if you know about the 150 day limit and how to maneuver these other benefits.  .

Let’s get to basics.

Medicare covers both hospital care (Part A) and physician care (Part B).  If you are 65 and receiving social security, you receive Part A benefits at no cost to you.  However, you need to register for Medicare Part A about 6 months before your 65th birthday.   

If you want Part B, you also must sign up for it and this year (2000) $45.50 will be deducted from your social security check.

Enrollment Period: 

You must enroll in both Part A and Part B.  If you don’t enroll in Part B, prior to turning 65, then you can only enroll between January 1st and March 31st of each year, with benefits effective July 1.  The monthly premium will be higher if you wait  before signing up.


If you are in the hospital, you pay the first $776 (2000) of the bill, per benefit period. Medicare then pays all the bills for the first 60 days only.

What most people don’t know -- and why families can get bills for thousands of dollars -- is that the patient pays a co-insurance amount of $194 (2000) per day for days 61 through 90, and $388 (2000) per day for days 91 to 150.

Most people do not know about this limitation, and think that Medicare will pay all the hospital bills.

In reference to Part B, you pay the first $100 of doctors’ bills, and then 20% of the rest of the bills per calendar year.

Benefit Period

A Benefit Period  for Part A starts the day you are admitted into a hospital and ends when you haven’t received inpatient hospital or skilled nursing care for 60 consecutive days.

This means you have to be out of the hospital or nursing home and at home for 60 days before you can start a new benefit period, as I described earlier.

Doctor Co-Pay

Most people know that they have to pay 20% of doctors’ bills, in what is called a co-insurance payment or co-pay.  What many don’t know is that a doctor who accepts Medicare can only charge 15% more than what Medicare approves for that particular service or medical procedure.  If he charges more, you don’t have to pay.

This is why when a Medicare patient goes to the doctor, he or she should not pay anything at the time of the visit.  While many offices have signs saying you have to pay the co-insurance at that time, this just isn’t true.  Don’t bring a check book with you!  Don’t let a clerk intimidate you.  Wait until you get the Medicare statement and see the amount Medicare has approved.  Don’t pay more than 15% more than the amount approved by Medicare!  Too often, doctors’ bills are  higher than the legal amount allowed. 

Hospital Care

We’ve already talked about hospital bills, the number of days covered and the amounts you have to pay.  Medicare pays for a semiprivate room, meals, general nursing care and other hospital services and supplies (but not private duty nursing, a television or telephone in your room, or a private room,   unless medically necessary).

Skilled Nursing Homes

Medicare will pay for all the costs of a nursing home for the first 20 days.  For days 21 to 100, the patient pays $97 (2000) a day; and for the total cost after day 101.  Included are a semiprivate room, meals, skilled nursing and rehabilitative services, and other services and supplies.

Remember, if you go into a nursing home under Medicare, it must be Medicare certified.  The home cannot ask for a deposit or other payment as an admission requirement.  It’s illegal for them to ask you to pay anything up front.  Some nursing homes still try to get some payment up front.  It’s a federal offense.

Home Health Care

Medicare will pay for intermittent skilled nursing care, physical and speech therapy, pathology services, home health aide services, durable medical equipment, supplies  and other  services.  You pay nothing for Home Health Care services,  and 20% of the approved amount for durable medical equipment .

Hospice Care

For terminal illness, if the patient is expected to live less than 6 months, Medicare will pay for care in a hospice certified facility.  A certain amount of home care is also provided.

You need all the facts

In order to make an informed decision, you need to have all the facts -- about the traditional payment program and HMOs.

The traditional Medicare program still provides the most comprehensive and flexible medical treatment. 

 As a fee-for-service program, it  has virtually no restrictions on your choice of doctors or hospitals, access to specialists, procedures or diagnostic tests as long as the provider is Medicare-approved and the services are covered by Medicare.

You will receive treatment according to your doctors’ recommendations -- and no one else will refuse you treatment.  You won’t be refused an operation, for example, based on your age or referral to a specialist.

Also, very important is the fact that you will be covered by Medicare for hospital and doctors bills wherever you are in the United States.  Whether you winter part of the year in another part of the country, are away for just a weekend, or are on vacation,  traditional Medicare pays the bills as if you were at home.

Medicare itself recommends that if you are happy with the way you get health care now, you shouldn’t do anything.  If you do nothing, you will continue to receive your Medicare health care in the same way you always have.

Now let’s take a look at HMOs in general.  Proponents point out that HMOs do a risk evaluation when someone joins and are therefore better able to identify problems or potential serious illnesses early on.  Earlier intervention may help reduce costs over time because crises may be avoided.

Those who favor HMOs over the traditional Medicare program say HMOs

  • emphasize preventive medicine and education ;
  • generally require less out-of-pocket payments;
  • improve  coordination of health care services;
  • may cover prescription drugs, eyeglasses, hearing aids, dental care;
  • check out doctors’ reputations before hiring them and may have a policy to hire only board certified physicians.

Another positive element is the number of contact points for recourse.  A patient can complain to the doctor him/herself, as in fee-for-service situations.  But if the patient is not satisfied, then he can go to the HMO, which must by law in many states have a complaint procedure.  And finally, the state agency which licenses the HMO (e.g. Department of Insurance) and the one which oversees care quality (e.g. Department of Health) can be asked to intervene.

HMO proponents point out that unnecessary visits are reduced, especially by those who "imagine" illnesses.  And coordination of medicine can help reduce incidents of adverse medicine interaction, which lead to costly hospital stays.

Those don’t think HMOs are so great are concerned about the possible reduction of care to the elderly.  This is tied into the fact that many HMOs still penalize doctors if they refer too many patients to specialists.  In other words, the doctor could make more money by withholding care.

Treatment and diagnostic procedures could be denied by a non-medical person - even in a life-threatening situation.  Treatment is not denied under the traditional system.

Other major concerns include:

  • Being "locked into" using only the plan’s physicians and hospitals;
  • Limited service locations, creating access problems;
  • No or limited coverage when you travel to another geographic area;
  • The disenrollment time may take as long as 30 days, which means a person may not have any coverage during that time;
  • "Rationing" of care may occur, especially to those who are very ill or who have a number of medical conditions.

Also, in an HMO, the patient usually has unrestricted access only to the primary care doctor.  Usually  all appointments with specialists  must be authorized in advance.  This makes care for a person with one or more chronic illnesses very cumbersome.  Before the patient can even go to the specialist for a regular checkup or emergency, approval may be needed ahead of time.

Another important thing to remember is that a Medicare HMO can terminate its contract with Medicare at any time.  In recent years, several hundred thousand older people have had to find other health providers with short notice as a result of such cancellations.

Evaluating an HMO and deciding whether or not to join is not easy.  The caveats make the difference.  When all is said and done, any decision is very individual because generalities are difficult to make.

However, there are basic questions you need to ask and factors to evaluate:

  • Doctors

Is your own primary care doctor a participating physician?  If not, do you really want to change?


If you have specific chronic illnesses, are the specialists you now use part of the network?  If not, do you really want to change?


Which hospitals participate?  Is the one you would normally use part of the network?  Are the doctors you use connected to that hospital?  If your doctors are not connected with that hospital, think twice.


In relation to these three items, if you spend part of the year in another part of the country on a regular basis (for example in the winter) and/or visit children in other parts of the country, will you be covered -- and how -- for doctors and hospital expenses?  This is very important!

  • Other Services Available: 
  • Does the HMO pay for prescription drugs, dental care, eyeglasses, hearing aids, routine foot care?


    What does the premium cost?  If you have Medicare, does the HMO accept the 95% rule or do you have to pay anything extra?


    What is the co-pay (the amount you have to pay) for office visits and various other services?  If you use a doctor outside of the network or in another part of the country, how much do you have to pay?  Keep in mind that with traditional Medicare the patient always pays only 20%.

    Senior Sensitivity:

    Is there a gerontologist on the staff?  Can the gerontologist be your primary care physician?  If not, why?


    Be sure and talk with seniors and their families.  Some HMOs will not refer the elderly to specialists or recommend certain tests.  The older and sicker the person is, the more likely this scenario is to develop.

  • Exclusions and limitations:
  • What are the covered -- and even more important -- what are the uncovered services?  How many office visits are you "allowed" each year?  Make sure all the patient’s medical conditions and problems are covered.

      Leaving the network:

    If someone is not happy with the doctors or the care, what is the procedure for returning to Medicare or changing to another HMO?  How long does the process take?  And what happens to your medical needs during that transition period?  Besides getting this information from the HMO, a call to Medicare is also warranted to confirm what the HMO says.  Is there a cost to change?  If so, what is it?


    Where is the HMO’s office located?  How easy is it to get to?  What is the parking situation?

      Word of mouth:

    Do any friends belong, and if so, how do they feel about the care and services?  What are the reputations of the owner/administrator and the doctors on staff?  Besides talking to others in town, including the current primary care physicians, call the state American Medical Association to see if there have been any charges or law suits filed against any of the doctors.

      State licensure: 

    Most states license HMOs.  But is there a periodic review and re-evaluation process?  If so, how often does this occur?  Has the state found any deficiencies or made any charges?  Have there been any patient complaints about the
    HMO, its services, etc.?

      There are a number of other important elements that need to be considered, and information about these areas may not be so easy to obtain.  But answers are critical to the final decision to join or not to join.
    • Who makes the initial and then final decision to refer a patient to a specialist?  Is it a board certified physician or someone else?

    What are the criteria for referrals and what are the limitations?  What is the appeal process if a patient wants to be referred to a specialist and is refused?  What are the state regulations in reference to referral refusals?  This is especially important for those over 80, who are more vulnerable to illness.  Older patients more often get turned down in specialist referrals or testing situations than younger people

    • Changing doctors:

    You have moved to a new home in another city, joined an HMO and been assigned a primary care physician.  However, you do not like him/her and want to change.  Can you?  Or are you locked into that one doctor?

    • Referral Procedure:

    If the specialist is in the network, does the primary care physician make the referral once and then the patient is able to go as the patient and specialist feel necessary?  Or does the primary care physician have to make an official referral for every visit?  And if a referral has to be made for each and every visit, does the patient then have to physically go to the primary care physician’s office for either the referral order or an examination?  Also is the primary care physician’s fee reduced if he refers "too many" patients to specialists "too often?"


    Physician payment:  One of the most important elements to look at is how the doctors are paid.  Are they paid a set fee per patient regardless of the number of visits each year or paid a set amount per visit?  A doctor who gets more money if he gives less care could be motivated not to work in the patient’s best interest.  By the nature of the HMO system, the fewer services they give, the more profit the HMO makes.

    Physician Incentives:  Are physicians monetary bonuses based on quality care and medical "outcomes" or on a low usage basis?  Are physicians penalized if their patients have a high utilization rate and exceed the average number of visits factored into the HMOs financial plan?  Is there a quality assurance program, and if so, how is it implemented?

    Medical cost ratios:  What percent of the premium (received from Medicare or the insurance company) goes to direct care and how much to administration?  At least 75% to 80% should go for direct medical care.  If the administration ratio is higher, are there other non-medical services provided, such as patient transportation?  Visiting nurses?  Educational programs?

    Refusal to treat:  One of the toughest elements involves whether or not the current physician will continue to care for a patient if the patient switches to an HMO.  Physicians have been known to refuse to treat a patient who switches to an HMO, if he/she had been a Medicare fee-for-service patient.  This is a definitive possibility if the physician is paid a flat fee per patient as opposed to per visit or is penalized money wise if the patient has frequent doctor visits. We’ve had a long visit today.  Tomorrow we’ll talk about
    a happier subject-- pets -- and how they can bring
    happiness and better health to everyone, regardless of age.
    This material is copyrighted by Carol Abaya Associates and cannot be reproduced in any manner, print, or electronically.