Recently, the Center for Medicare and Medicaid Services (CMS) authorized the sale of a Medicare Plus Choice Private Fee For Service Plan in Wisconsin. While the Plan is required by federal law to have its benefits, disclosures, premiums, and advertising material reviewed and approved by the CMS, the Office of the Commissioner of Insurance (OCI) believes that Wisconsin's Medicare-eligible consumers need to be well informed when they are deciding what coverage is best for them.

Medicare is the health insurance program run by the federal government that provides health insurance coverage to senior citizens and certain disabled persons. Medicare Plus Choice plans are part of the Medicare program, but under these programs Medicare coverage is provided by a private health maintenance organization (HMO) or insurance company.

Medicare and Medicare Plus Choice plans are regulated by CMS, a federal agency in the Department of Health and Human Services. State insurance laws do not at all apply to traditional Medicare, are largely preempted by federal law, and apply on a very limited basis to Medicare Plus Choice coverage.

While there are a number of different Medicare Plus Choice plans authorized by federal law, the most commonly sold plans have been Medicare Plus Choice Managed Care plans offered by an HMO. However, Medicare Plus Choice Private Fee For Service Plans are becoming more popular and are offered by private health insurers where the private insurance company stands in the shoes of Medicare.

All insurance plans have their own inherent strengths and weaknesses, so consumers should consider any plan carefully. What follows are some structural characteristics about Medicare Plus Choice that consumers should consider when making a decision to obtain their health insurance coverage.

Term of Contract
The insurance company contracts with the federal government to provide you Medicare coverage. The contract runs for only one year. Therefore, the insurer has the right to withdraw from its plan at the end of any plan year. This means that if the insurer pulls out of the market, you would need to find coverage elsewhere, either through traditional Medicare or with another Medicare Plus Choice plan in your area. In this case, you will always have guarantee issue rights into any other Medicare Plus Choice plan in your area or into traditional Medicare with a Medicare supplement policy.

Opting Out
Under current federal and state law, the first time you sign up for any Medicare Plus Choice plan and you find that you do not like the plan, you can opt out of the plan within the first year and go with another Medicare Plus Choice plan in your area or to traditional Medicare with a Medicare supplement insurance policy. However, this right of guarantee issue into a Medicare supplement policy only applies the first time you sign up for a Medicare Plus Choice plan and decide you don't like it.

Coverage
In a Medicare Plus Choice Private Fee For Service Plan, you may go to any health care provider who accepts Medicare assignment, accepts the insurer's fee schedule or participates in the Medicare program but charges in excess of the Medicare assignment amount, and be covered by the plan. For participating providers who do not accept Medicare assignment, you would likely be responsible for any charges that are up to 15 percent in excess of the Medicare allowed amount. If you go to a provider who does not participate in the Medicare program, you would not have any coverage at all and would be responsible for the entire amount of charges levied by the provider.

Comparing Plans
Federal law requires Medicare Plus Choice Private Fee For Service plans to provide at least the "equivalent" coverage of traditional Medicare. Since there is no standard set of benefits required of these plans, it will become more and more difficult for you to compare plans, coverages and costs amongst the Medicare Plus Choice plans and traditional Medicare with a Medicare supplement insurance policy.

Premiums
Medicare Plus Choice Private Fee For Service plans are allowed to charge you a premium in addition to the Part B Medicare premium already automatically deducted from your Social Security checks for the "additional" benefits they provide. Though CMS needs to approve the additional amount of premium charged, there are no guidelines and standards that OCI is aware of in federal law pertaining to the loss ratio (the amount of claims paid in relation to the premium collected) that the plans must meet for the premium they charge.

Make informed decisions about your health care coverage. It is always better to know what you're buying before you actually need it so that there are no surprises when you really do need it. Don't be afraid to ask questions.

For more information visit OCI's Web site at http://oci.wi.gov or call OCI at 1-800-236-8517. There you can find a fact sheet on Medicare Plus Choice along with contact information for any questions you may have about the plans and those insurers who provide the coverage.

Medicare Plus Choice Considerations - Part 2

By Guenther Ruch, Administrator
Division of Regulation and Enforcement
Office of the Commissioner of Insurance