Beware of a Medicare Payment Loophole for Rural U.S. Hospitals

[Wally]

If you are a Medicare patient in a rural area, then going to the hospital could leave you paying a lot more for services than you might have planned. Life is difficult enough when you are ill, it is really unfair that those who may be most vulnerable are not protected from hospital charges that would be illegal on the private insurance market.

Here’s how a payment normally works. The hospital sends a big bill to Medicare. Medicare then says…uh uh…we’re going to pay this smaller number. Medicare then pays the hospital 80 percent of the small number, and the Medicare patient pays 20 percent. . . .

However, the game changes in rural areas for hospitals that are designated as Critical Access Hospitals. Due to a loophole in the Medicare law, these hospitals can charge the patient a percentage of the bill that is higher than the 20% that normally would be required as a patient's responsibility. This information is not shared up front with the patient by Medicare or the hospital, so it creates a situation where the patient can be left with no choice but to pay the bill.

In the 11/7/2014 article linked below, this loophole in the Medicare law is explained in more detail. The article also provides a link to a search feature where you can check to see which hospitals in your state may fall under this Medicare payment exemption.

See, http://nhpr.org/post/lack-transparency-leaves-some-medicare-patients-dark-half-nh-s-hospitals

 

[Sushi]

Due to a loophole in the Medicare law, these hospitals can charge the patient a percentage of the bill that is higher than the 20% that normally would be required as a patient's responsibility.

Does one's Medicare supplemental pick up the greater than 20%?

Sushi

 

[Sherlock]

It's like a minefield now. There was a story recently of a person who went unconscious and got taken to the nearest hospital where she ended up with a gigantic bill - though one mile down the road was the other hospital where she would have been fully covered. Then another story about someone on vacation in another country who now owes a fortune over a medical episode - even though she was assured before she even left that she was covered if anything happened.

 

[Wally]

Does one's Medicare supplemental pick up the greater than 20%?

Sushi

I believe that if you have purchased a supplemental policy, then some or all of this cost may be picked up by the private insurer. Of course in any of these policies there is always the language limiting coverage to what is reasonable and customary, which presents a whole other can of worms.

The greatest concern for this type of loophole in Medicare coverage is that it tends to fall on the shoulders of those in the U.S. who are only covered by Medicare and may not have funds to purchase supplemental private insurance. The Medicare patient is not given notice by the "Critical Access Hospital" that they will be subject to a greater out of pocket expense by selecting this type of hospital for their care.

 

[minkeygirl]

Another thing, is if you go to the hospital and they don't make you an impatient and instead keep you on observation status, that will cost you too.

So make sure you are not on observation status.

@Sushi how were you able to get a supplement? Where I am I can't get one because I'm not 65 and the cost even though is insane or was.

 

[Sushi]

how were you able to get a supplement? Where I am I can't get one because I'm not 65 and the cost even though is insane or was.

The one I have is expensive--maybe $180 per month? But together with standard medicare, I have not had to pay anything extra for things that are covered by Medicare--together they pay 100%. I think the Medicare site gives you details on any supplementals you are eligible for.

Sushi

 

[SDSue]

@Sushi Somehow I remember being told that those under 65 could not purchase supplemental? Is this not correct?

 

[WillowJ]

@Sushi Somehow I remember being told that those under 65 could not purchase supplemental? Is this not correct?

Unless there are some states allowed to make weird rules, you should be able to get a Medicare Advantage plan anytime you qualify for Medicare. Not sure about MediGap plans. I didn't see those at Medicare.gov (maybe we don't have them in my area, as we have an abundance of Advantage plans, some for $0, some for 50-100 or more), and I didn't look carefully at the provider site's medigap plans because my clinic won't take traditional Medicare, so I needed an Advantage plan.

However you cannot have a separate medical supplement and drug supplement. There are combined ones however.
Edit: I was told the above but it's actually that you cannot have a C+D plan and another D plan. (which is what I first thought, but an insurance company I was trying to work with told me the above wrong thing which is now struck through)

If one doesn't have "creditable" drug coverage (I think those discount cards don't count), then they charge you extra if you ever do need drug coverage, unless you qualify for Extra Help (then it would be waived, I think).

 

[SDSue]

@WillowJ Thanks so much for answering my question. I wish I understood, but I feel like you're speaking a foreign language lol. I have a lot to learn!

 

[WillowJ]

@WillowJ Thanks so much for answering my question. I wish I understood, but I feel like you're speaking a foreign language lol. I have a lot to learn!

Traditional Medicare is where Medicare itself is your insurance carrier. It is broken down into different parts.
Part A is hospital coverage, Part B is medical (your usual doctor clinic, GP, physical therapy, outpatient stuff... plus some other things).

Part D is drug coverage which is supposedly optional, but if you are eligible for Medicare and do not have any kind of drug insurance (Medicare Part D, long-term disability, insurance from your work/pension, something like that), you get fined in the form of a higher premium later if you do decide to carry it. Unless you qualify for Extra Help, a program to help pay premiums and copays for people with limited income and limited assets.

A Medicare Advantage plan is a private insurance company that has an agreement with Medicare to offer Medicare plans with Part A and Part B coverage. It replaces Medicare in most cases as your insurer, and your clinic or hospital does not normally have to deal with Medicare at all: they would deal with Humana or United Healthcare or whoever is carrying your policy. For some reason, this is known as Part C. They may offer drug coverage as part of the combined package (which I think is still called Part D).

A MediGap plan, as best as I understand it, is a private insurance company which offers coverage in addition to Medicare. You have Medicare and another insurance, like Humana or United Healthcare, which picks up some more of the costs. A coinsurance of 20% (original Medicare) might convert into a copay of $15 (medigap plan). And your clinic or hospital will be dealing with two insurers (Medicare and the other one) on your behalf.

The Advantage or Medigap plan might also have a "MOOP" or Maximum Out Of Pocket expense amount: once you get to a designated figure of medical (not drug) expenses, you would have to pay only for limited things (so you'd probably pay a doctor visit copay, but not for MRI).

You can change your policy every year, but only during open enrollment (which just ended for this year), unless you qualify for (and are enrolled in) Extra Help, and then you can change whenever you want.

Ok, now I see that Medicare says you can have Part C with no drugs and a drug-only plan. My current insurer told me you could not. Sigh.

 

[SDSue]

@WillowJ Thanks for clarifying. Your summary is the best I've seen to help me understand the Medicare puzzle. It would have taken me hours (days?) to comprehend!

 

[WillowJ]

Ok, now I see that Medicare says you can have Part C with no drugs and a drug-only plan. My current insurer told me you could not.

Apparently the cause of this is that some plans that say they do not come with Rx and do not generally cover drugs, have a small amount of covered drugs. If there is any drug coverage at all, it counts as having two drug plans.

Evidently it's hard to tell. In my county there are 7 plans "without drug coverage" but only 2 or 3 of them can be combined with plans with medical coverage.