How does Medicare pay Doctors and Hospitals?

August 13, 2018     About this blog:  click here

How does Medicare pay Doctors and Hospitals?

If you are on Medicare, it can be pretty confusing – when you get a doctor or hospital bill – as to who is paying what, and especially just what Medicare is paying.

To make it more baffling, the terms on the hospital and doctor bills often don’t clearly tell you.

So, it would be nice to learn what Medicare is supposed to be paying, at least.

Medicare not paying at all?

The first issue, which is usually fairly clear, is whether or not Medicare is refusing to pay anything at all.  Sometimes Medicare denies the doctor’s claim.

The coding system by which doctors and hospitals submit bills to Medicare is extremely complex, with a lot of room for error.  These errors can cause Medicare to not pay, until it’s cleared up.

Plus, Medicare can refuse something on the grounds that it is not medically necessary.  When this happens, the doctor’s office or hospital can submit more information, and that sometimes results in Medicare deciding to pay.

If you notice this on one of your medical bills, then contact your doctor’s office.  They should be able to re-submit the bill.  In many cases, Medicare will then approve it.

Payments under the two types of Medicare:  A& B, and Medicare Advantage

With Medicare Parts A and B – also known as “original Medicare” — the government directly pays for your doctor and hospital for their outpatient services.

The government sets an official rate for each service, and gives the medical provider 80% of that amount. The remaining 20% is paid by your Medicare Supplement insurance policy.

For hospital in-patient services, the government directly pays all but $1,340 of the bill.  Part or all of the remainder is paid by your Medicare Supplement insurance policy.

Meanwhile, your insurance policy sets its own deductibles and co-payments that you have to pay towards the doctor and hospital bills.

Medicare Advantage – also known as Medicare Part C – works very differently.   This kind of Medicare is in the form of an insurance policy, in which the government gives a flat monthly amount (about $800) to the insurance company.  You pay a monthly premium to the company as well.

The insurance company then decides how much to pay each provider for each service, and pays the entire amount to them.  Medicare Advantage policies generally pay medical providers about the same, or a little better, than they would get paid by original Medicare A and B.

The medical provider cannot send any bill to the federal government because, in essence, all of your Medicare money has been given to the insurance company.

When you sign up for a Medicare Advantage policy, you probably don’t realize that you are officially taking yourself off of Medicare A and B, and telling the government to give your Medicare money to the Insurance company you picked.

And again, your Medicare Advantage insurance policy sets its own deductibles and co-payments that you have to pay towards the doctor and hospital bills.

Networks of Medical Providers

The two different types of Medicare make a difference as to which doctors and hospitals you will see.

With Medicare A and B (“original Medicare”), you can go to any doctor or hospital anywhere in the country which accepts Medicare.  That’s virtually all of them.   The government will give its 80% payment to any of these.

With Medicare Advantage, you can only go to certain doctors and hospitals to get full coverage.  Some of these insurance policies will let you go to one that are not in their network, but you will pay bigger deductibles and co-pays to do that.

The insurance company has decided which doctors and hospitals are in its network, and which are not.

Keeping Track:

If you are on Medicare A and B (“original Medicare”) and have a Medicare Supplement insurance policy, you will get, from Medicare, a Medicare Summary Notice (MSN) every 3 months.

It lists your health insurance claims, and tells if Medicare paid the claim and if it’s been sent to your  insurance company.  You can compare your MSN to any statement you get from the insurance company and medical bills you get from providers.

If you have a Medicare Advantage insurance policy, you should  receive a monthly statement which tells each hospital and medical service you had.  It tells the amount billed (what the hospital or clinic wish it were paid);  the amount approved by the insurance; how much the insurance paid, and how much is left for you to pay.

 

By the way:  Medicare A and B is called “original Medicare” because it was the only form of Medicare when it was created, in 1965.    In the 1970’s a second form was created, called Medicare HMOs.  These HMOs have continued, but were given the new name of Medicare Advantage in 2003.

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