On this episode of Kentucky Health, host Dr. Wayne Tuckson welcomes Dr. Kevin Martin, a retired vascular surgeon and currently an adjunct assistant professor at the University of Kentucky College of Medicine, to discuss the federal Medicare program.
Here are key takeaways from the discussion:
- 1. Tens of millions of senior Americans get health insurance through Medicare, and the program has evolved considerably in its 60-year history.
Dr. Martin, who for 26 years served on the state’s Medicare Carrier Advisory Committee, says the Medicare program dates back to 1965, when President Lyndon B. Johnson signed the Medicare and Medicaid Act. It established a national health insurance program for people age 65 and older; it also established Medicaid, a health insurance program for low-income individuals that operates as a partnership between the federal and state governments.
“Through the years, there have been multiple expansions of Medicare to include people that have been on disability for more than two years, adding also the end-stage renal failure and kidney dialysis program,” he adds. Coverage of most medications distributed to patients through pharmacies under Medicare was minimal and sporadic until 2004, when Congress enacted the Medicare Modernization Act that created a prescription drug benefit.
Americans are eligible to enroll in Medicare when they reach age 65. “It is relatively easy – you can sign up online, but not everybody necessarily should sign up at that point,” Martin says. “The Social Security full retirement age is now 66 to 67, and so a lot of people are working past the age of 65. If you’re still working and covered under an employer health plan, then you don’t necessarily need Medicare, and if you don’t sign up for it, you can still contribute to your health savings account.”
While Medicare has become a bulwark of America’s health care system used by multiple generations of patients, it has always been subject to criticism and revision. Currently Martin says that many health care providers are dissatisfied with reimbursement rates that are too low and/or unequal as well as the complexity of the program’s regulations. He notes that the guidelines for Medicare and Medicaid total more than 300,000 pages.
“If you take a look at what Medicare admits, adjusted for inflation from 2000 to 2021, the hospitals’ and skilled nursing facilities’ reimbursement rates are going up higher than the consumer price index and higher than medical inflation. But you look at the physicians’ (rates), they’re at 10 percent, which is only a tiny fraction of what inflation has been,” he says. “This is one of the driving factors of physicians having to sell off and have their practice be bought out by hospitals or venture capital firms, because they simply can’t keep their doors open.”
- 2. It’s important to learn the different provisions of the program, sometimes called the “Medicare alphabet,” and know what they do – and do not – cover.
When most people think of Medicare benefits, Martin says they think of what’s termed Medicare Part A. It covers inpatient hospital stays and short-term stays in skilled nursing homes and rehab facilities, paid for by federal taxes. Most recipients do not have a Part A premium, but the benefit does require a copay for inpatient stays.
Medicare Part B “is outpatient (care),” Martin says. “Whether you’re getting a procedure at the outpatient hospital or ambulatory surgery center or in your doctor’s office, it covers physician fees, some drugs or vaccines especially those given by infusion, durable medical equipment, and some other preventative things.” There is a monthly premium for Medicare Part B that for most people is deducted from their monthly Social Security payment. Individuals with high incomes are required to pay a higher premium.
Medicare Part C benefits are more commonly known as Medicare Advantage programs in ubiquitous advertising campaigns on TV and in other media. These programs corral Part A, Part B, and Part D (prescription drugs) into one benefit administered by a private insurance company. Enrollees must still pay their Part B premium monthly and some Medicare Advantage plans also have additional premium costs.
Many Medicare Advantage plans also provide extra benefits. “They have some vision coverage – glasses, contacts – dental coverage, health club membership, things like that,” which are either not offered or offered with very limited benefits in traditional Medicare, Martin says.
The Part D prescription drug benefit was added to Medicare in the 2000s, and Martin says that the program has had several changes in recent years. “It is a separate monthly premium that you have to pay to a company, it is run by private companies, and they may change and differ in the drugs that they cover – those drugs may change year to year,” he explains.
“The biggest change, which may be confusing and at the same time simplifying some things, is that for 2025 the maximum out-of-pocket (annual expense per person) will be $2,000 for drugs,” he says. Premiums to Part D are not included in the cap, nor are drugs purchased outside of the plan’s coverage or via discount programs such as GoodRx. Annual vaccines such as flu, COVID-19, and others are covered under Medicare Part B, not Part D, Martin adds, and usually have no cost to the patient.
- 3. There are important differences between enrolling in traditional Medicare and signing up for a Medicare Advantage program. Fortunately, seniors have a designated time each year to educate themselves and make changes based on their health coverage needs and goals.
Most seniors and even Americans in general notice an increase in commercials touting the benefits of specific Medicare Advantage plans from mid-October to early January, Martin says. This is the annual open enrollment period during which Medicare recipients can switch their Advantage plans. He says that since private insurance companies running the plans receive compensation from the federal government for each person they enroll, it’s in their interest to market their plans aggressively when the opportunity arises for clients to make changes in their coverage.
“There’s also additional bonuses and premiums that the (Medicare Advantage) companies get if certain metrics are met,” Martin says. “And once you add up all of those different items, it turns out that those Medicare Advantage programs cost usually 15 percent and sometimes up to 20 percent more than what it costs the federal government for a person to be in traditional Medicare – which is very surprising for a lot of people because the feds have basically been trying to push Medicare Advantage programs and now over half of Medicare beneficiaries are in one of these programs.”
While many Medicare Advantage plans do offer additional benefits such as vision and dental coverage as noted above, they also have drawbacks in certain areas when compared with standard Medicare coverage, Martin says. One of them is portability of coverage.
“Even with traditional Medicare, you do not have coverage with rare exceptions outside of the United States, so if you’re taking a trip abroad, you better buy a traveler’s plan or have some other things in order,” Martin says. “One of the big things with Medicare Advantage is, if you go out of your home area where the plan is based, you probably have very limited coverage, you will have some emergency coverage … so people that travel around a lot, don’t necessarily want to be in an MA plan.”
Another distinction involves the use of prior authorization, Martin explains. While traditional Medicare coverage seldom requires prior authorization for procedures, Medicare Advantage programs have far higher prior authorization rates as they are administered by private insurance companies and thus follow industry standards in that private market.
Martin says denials of prior authorization claims within Medicare Advantage plans have risen sharply in the past two years, noting that recently the insurer United Healthcare had been found to deny 32 percent of these claims, roughly twice the rate of other MA insurers. “And it’s been reported that (United has) been using artificial intelligence to generate some of those denials,” he says.
Excessive use of prior authorization hurts the health care system, Martin argues. He says physicians and patients usually appeal claim denials and, in most instances, those claims eventually get approved. But this denial-approval delay adds strain to the system and can result in poor outcomes for patients, he says.
