Magazine article The CPA Journal

Medicare Part C-Medicare+choice

Magazine article The CPA Journal

Medicare Part C-Medicare+choice

Article excerpt

Medicare+Choice, a product of the Balanced Budget Act of 1997, will result in important changes to the Medicare program effective January 1, 1999. It promises to provide expanded health-care options, new preventive health benefits, and new patient protection.

Health Care Options

Medicare+Choice will expand upon the health insurance plans presently available. New choices are expected to include coordinated care plans, private fee-for-service plans, and medical savings accounts. Each year, Medicare beneficiaries will be given the opportunity to choose the type of plan in which to participate. Those already enrolled in a plan are not required to change coverage if satisfied with their current plan. (Existing plans include the original Medicare plan, the original Medicare plan with a supplemental insurance policy, and plans of managed care organizations that have contracts with Medicare.) A brief description of the new array of plans follows:

Coordinated Care Plans. These managed care plans include health maintenance organizations (HMOs), HMOs with point-of-service (POS) options, provider sponsored organizations (PSOs), and preferred provider organizations (PPOs). Beneficiaries' choices of doctors and hospitals will vary by the type of Medicare managed care plan chosen. HMOs and PSOs are usually more restrictive; participants must use the plans' doctors and hospitals. The less restrictive PPOs and HMOs with POS options allow participants to use doctors and hospitals outside of the plans, but for an additional cost.

Private Fee-for-Service Plans These plans allow participants to select their own doctors and hospitals, but the insurance plans, not the Medicare program, decide how much to pay for services. As a result, the fees for coverage may be higher than other plans offered in the traditional program. Providers are allowed to bill beyond what the plans pay, and participants are responsible for paying whatever amounts the plans do not cover.

Medical Savings Accounts (MSAs). During a test period, a limited number of individuals will be able to use a Medicare MSA plan. MSA participants are required to purchase a highdeductible health insurance plan. Medicare contributes a prescribed amount to the MSA to be applied to the premium, and any excess remains in the MSA. Generally, money in the MSA can be used, tax-free, for any medical expenses. Any surplus in the MSA is added to the next year's deposit. Withdrawals can be made from a Medicare MSA for nonmedical expenses, but such withdrawals will be taxed, and penalties may apply. …

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