Medicare Managed Care Plans: An Alternative to Medigap Insurance
A Medicare managed care plan can supplement your Medicare coverage.
A Medicare managed care plan is one way to get coverage for the health care bills that Medicare doesn't pay. Medicare managed care plans are HMOs or PPOs that provide basic Medicare coverage plus other coverage to fill the gaps in Medicare coverage.
Medicare Managed Care Plans vs. Medigap Insurance
Medicare managed care plans fill the gaps in basic Medicare, as do medigap policies. However, Medicare managed care plans and medigap policies operate in different ways. Medigap policies work alongside Medicare to pay the bills: Medical bills are sent both to Medicare and to a medigap insurer, and each pays a portion of the approved charges.
Medicare managed care plans, on the other hand, provide all the coverage themselves, including all basic Medicare coverage, plus other coverage to fill the gaps in Medicare coverage. The extent of coverage beyond Medicare, the size of premiums and copayments, and decisions about paying for treatment are all controlled by the managed care plan itself, not by Medicare.
The Economics of Managed Care
The basic premise of managed care is that the member-patient agrees to receive care only from specific doctors, hospitals, and others -- called a network -- in exchange for reduced overall healthcare costs.
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Several varieties of Medicare managed care plans are available. Some have narrow restrictions on consulting with specialists or seeing providers from outside the network. Others give members more freedom to choose when they see doctors and which doctors they may consult for treatment. Plans that offer more choices in coverage -- especially PPOs and HMOs with point-of-service options -- charge higher premiums.
If you are considering a Medicare managed care plan, you must decide whether any of the plans available in your area offer adequate care at an affordable cost -- including the costs of copayments for doctor visits and prescription drugs. (To see a comparison of managed care plans in your area, go to www.medicare.gov/Choices/Overview.asp.)
Here are some of the basic types of managed care plans.
Health Maintenance Organization (HMO)
The HMO is the least expensive and most restrictive Medicare managed care plan. There are four main restrictions.
Care within the network only. Each HMO maintains a list -- called a network -- of doctors and other healthcare providers. The HMO member must receive care only from a provider in the network, except in emergencies. If the plan member uses a provider from outside the network, most plans pay nothing toward the bill, and Medicare will not pay any of the bill either, since a plan member has technically withdrawn from traditional Medicare by joining managed care. The plan member must pay the entire bill out of pocket.
Discuss with your doctors any particular HMO you are considering. Ask whether your doctor has heard of problems with the plan, particularly with approval of treatments, referrals to specialists, or early release from inpatient hospital care. It may be useful to talk with the billing office staff at your doctor's office, since the staff there has daily contact with the insurance company bureaucracy.
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