Sunday, September 22, 2013

IBM Extend Health - Why I like Original Medicare

In an earlier post I described the history behind Medicare's current structure.  In 1997 after private insurance companies began offering plans that provide an alternative to the federal government insurance pool the government insurance pool that was created in 1965 was called "original Medicare".  I am a big fan of original Medicare and would never use a private plan alternative aka a  Medicare Advantage plan for a number of reasons. 
  • You can go to any doctor anywhere in the United States who will take original Medicare.  So, if you decide to spend a year traveling across the country and you need ordinary medical attention you don't have to worry about networks or whether a doctor will accept your "zip code" based insurance.  Even though you buy a supplemental medigap plan based on your zip code, in most states medigap plans work the same way as original Medicare. That is, they cover deductibles and copayments irrespective of where you are being treated.  I say most states because Wisconsin, Massachusetts and Minnesota have some unique state medigap rules. 
  • Although you may not need to see a doctor in another state when you are traveling - you might want to go to an expert or a clinic in another state should you have a serious disease.  If the doctor or the clinic will take original Medicare - book an appointment and go!  There is no permission to seek from the plan, no primary physician referrals and no mystery on what you will pay.   The payment structure is the same no matter what state you are in or what procedure needs treatment.
  • The payment structure is always the same.  There are no surprise costs to you or surprise payments to your provider. Part B copayment is always a 20 - 35% depending on whether the provider takes assignment aka the official Medicare fee payment.  The only way to truly know the cost structure for a Medicare Advantage plan is to ask the plan for a payment schedule for EVERYTHING.  The MA plan tell you copays for routine stuff.  But, unusual services such as an ambulance typically have a 50% copay.  They will never tell you what they pay providers - they do not always pay the provider 80% of the fee.  That is more often true for out of network providers.
  • Doctors rarely "drop out" of original Medicare. They might stop accepting new Medicare patients but if they "drop out" of Medicare it means they have NO Medicare patients. That is a radical decision for a provider if they have a number of Medicare patients.  They'll likely phase out of Medicare but are unlikely to abruptly stop treating you.   However, doctors often do drop out of MA plans abruptly and it is usually because of how those plans pay them. The MA plans not only might pay providers less than original Medicare but may be slow to pay providers.  When providers  leave HMO plans you can no longer go to the doctor and have to find a new doctor in the HMO.  For other types of MA plans a doctor can stop accepting the MA plan at any time.  So, you might have an MA PPO plan and are being treated for a complex condition by a doctor you trust.  That doctor can decide to not accept your plan any time during your treatment.
  • I believe Medicare Advantage plans deny claims at a higher rate than original Medicare. I can only verify this anecdotally. I volunteer at the Medicare Rights Center and a large number of the calls I handle revolve around issues with Medicare Advantage plans even though MA plans are used by only 25% of Medicare eligible recipients. There are some insurance providers that are particularly egregious so be sure to look at the star ratings for an MA if you chose this type of plan.  There is one company that makes it almost impossible to talk to a "human" to resolve a claim issue.  The MA plans also rely on people being befuddled by the appeals process and will give up fighting a denial as it is not easy to appeal a denial of coverage even though people win appeals over 50% of the time.
  • I want the option of being able to select the best, lowest cost prescription drug plan and the ability to switch drug plans from year to year. If you select a Medicare Advantage plan that includes prescription drug coverage you are limited to that plan's formulary and it becomes harder to switch MA plans because you then may have to switch doctors. In fact, if you decide to switch from one MA plan to another or to go onto original Medicare for any reason you may face needing to find a new set of doctors.
  • Original Medicare does not restrict the types of prosthetic devices, experimental procedures or durable medical equipment a recipient can use.  For example, some MA plans will only allow one type of hip replacement device to be used even though original Medicare covers all of them.  The MA plan is only required to provide "hip replacement".  They are not required to cover all devices available in the marketplace.
A Medicare Advantage plan that includes drug coverage is easier to use than original Medicare + medigap + part D. It is one stop shoping. The cost will be lower for routine care. People with limited resources for both financial and advocacy support often use the MA structure.   But I don't have those restrictions so I want all the flexibility and predictablility of original Medicare.


  1. very good points. Q: if you (or someone you know) has a MA plan, can he change to a regular medigap without the preexisting condition clause being in effect?

  2. First, they can only change to original Medicare during open enrollment (Oct 15 - Dec 7 to be effective Jan 1) or during the MA disenrollment period (Jan 1 - Feb 14 to be effective the first day of the next month). Second, they then need to buy a part D prescription drug plan. Whether or not they can also purchase a medigap plan depends on the rules of the state where they live and why they are switching. If it is because the IBM group insurance ending then it is a guarantee issue even if they had an MA plan through IBM because that was also a group health plan. If there is no guarantee issue, the insurance company may be able to impose a pre-existing wait period, deny coverage or price the policy based on the condition. However, if they live in wonderful NY or CT then they can buy a medigap any time as NY & CT are continuous enrollment states. However, I believe the insurance companies may still be allowed to impose up to a six month pre-existing condition wait clause when there is no guarantee issue. I believe most don't.

  3. As a first time commenter to your blog, let me say I find your blog to be well written and a good source of useful and generally accurate information, particularly for retired IBMers. And I have read ALL of your posts and the comments.

    Allow me a bit of background by way of introduction. I first worked extensively with Medicare in the 1960's when IBM software - SHAS - was widely credited as literally making the early days of VERY COMPLICATED Medicare billing possible, arguably enabling the early acceptance and success of Medicare. And more recently, after retiring from IBM, for several years I worked on a daily basis with the Centers for Medicare & Medicaid Services (CMS), insurance companies, and medical providers across the spectrum from major university teaching hospitals to solo practitioners. Now mostly retired and Medicare-eligible myself, I help family members in multiple states, a number of friends including IBM retirees, and others evaluate which Medicare coverage option(s) may be best for them.

    I look forward to your next blog post and reading more of your excellent and insightful writing. THANK YOU for sharing with us!

  4. As you know and described in your blog, Medicare Part C (Medicare Advantage) plan availability in most states varies at the COUNTY level, and included “extra” coverage, provider participation, premium, and plan rating vary significantly. After asking a few questions, most of which are similar to yours, I too often recommend “original” Medicare along with a Medicare Supplement (Medigap) plan; however I do not categorically dismiss Medicare Advantage as it MAY be the best choice for some people.

    For example, consider a relatively healthy person in Florida with no currently ongoing or planned/needed/known future medical treatment/procedures living in an area near an excellent major university medical center and teaching hospital with other nearby very good hospitals, ready access to an extensive Regional PPO physician network accepting Medicare Advantage - most physicians in the area accept the MA plan which is offered by the health insurance company considered by many to be the best in the state, ranked as one of the best in the United States by U.S. News & World Report, with a JD Power 5 star (highest) rating. The MA plan includes full prescription coverage as good as or better than any Part D plan (generic drugs with $0 co-pay), dental with $0 co-pay for two exams and cleanings and one dental X-ray per year, along with vision and hearing coverage with $0 co-pay for routine eye exam and hearing aid, $0 deductible and a relatively low maximum out-of-pocket limit that is less than half some so-called high deductible plans, Visitor/Travel Program extending PPO network coverage of all Medicare Part A, Part B and supplemental benefits offered by plan outside service area in 28 states and one territory. All for a $0 monthly premium.

    The point is, while the above is obviously one of the “best” MA plans in the country - it is NOT AARP/UnitedHealthcare, a Medicare Advantage plan MAY be a good choice for some people as the above was/is for my sister. Do not forget, Medicare Advantage is so popular in Florida that specific language was added to the Patient Protection and Affordable Care Act (ACA) to secure Senator Bill Nelson's vote.

    I quickly hasten to add, for reasons similar to yours, as I have for others, I recently recommended “original” Medicare along with a Medicare Supplemental Plan F (Medigap) to an IBM retiree in North Carolina who is actively being treated for a medical condition and who frequently travels and spends extended time in other states.

    While I am not familiar with 2014 plan details for New York, based upon your blogs, I have no doubt “original” Medicare (Parts A and B) + Medicare Supplemental Plan F (high deductible) + Medicare Prescription Drug Plan (Part D) is the best choice for you.

    From the patient perspective, clearly Medicare Advantage plans are most similar to “original” Medicare in areas where most doctors and all major hospitals and clinics accept the desired plan - remembering individual providers may not “accept” all or any MA plans - and the enrollee does not travel out of the plan coverage area for long periods of time. In other words, there are some places where MA works better than others, and some places where it is not even an option.

    As you have covered, while it often may be possible to quickly dismiss some coverage options for one reason or another, for example a low CMS rating or “favorite” providers do not participate, it is now more important than ever for IBM retirees, everyone for that matter, to make an informed decision about their health insurance as the default choice is often not the right one.

    I want to reiterate that for many people, as it is for you, that “original” Medicare with a Supplement and Part D is THE BEST CHOICE and an option I often recommend; however, when addressing a national audience, there are locations and individual circumstances where Medicare Advantage may be the best choice.

    1. I agree that there are times when an MA plan is a better fit for a person. But picking one based on price can be misleading unless the buyer has looked at the entire schedule of cost sharing not just the routine care copays and have also investigated the limitations. I personally know two people who thought they had wonderful MA plans and the plans were great while they were healthy and/or had routine problems. It was not until they got relatively rare cancers did they discover they could not go to the most expert cancer clinic (City of Hope) to receive treatment because it was not accepted. Neither lived long enough to be able to switch to original Medicare. My sincere advice is to be sure to know all the cost sharing and limitations of an MA policy before buying one.