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Retiree Medical, Prescription Drug and Mental Health and Substance Abuse Programs - Moore Wallace   
Coordinating Benefits With Other Programs
Medicare
Examples
Here are some examples that show you how coordination with Medicare works. These examples assume that you are covered under both Medicare (as the primary payer) and the Retiree Group Health Program (as the secondary payer).
Example 1 – Hospitalization, First Claim of the Year. Suppose you are hospitalized and after a short stay you are billed $10,000. The hospital charges (covered under Part A of Medicare) $7,000, and $3,000 is attributable to physician charges (covered under Part B of Medicare). All of the charges are covered (and are under the maximum reimbursable charge) under both Medicare and the Retiree Group Health Program, and this is your first claim of the year.
First, the covered charges are sent to Medicare for payment. Medicare calculates the amount it owes and pays that amount to the health care provider. Since it is the first claim of the year, you must first satisfy the Medicare deductibles. The deductible for Part A charges is $912, and there is a $110 deductible and 20% coinsurance for Part B benefits. In this example, Medicare pays $8,400 of the $10,000 total covered charges. You are responsible for the remaining amount of $1,710 ($912 Part A deductible + $110 Part B deductible + $688 Part B coinsurance = $1,710). All deductibles and coinsurance amounts listed are current as of 2005 and are adjusted annually.
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Part A
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Part B
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Total covered charges
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$7,000
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$3,000
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Medicare deductibles (for 2005)
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– 912
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– 110
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Covered charges after deductible
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= $6,088
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= $2,890
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Part B coinsurance ($2,890 x 20%)
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N/A
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– 578
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Amount Medicare pays
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$6,088
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= $2,312
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Total covered charges
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$7,000
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$3,000
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Medicare payment
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– 6,088
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– 2,312
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Remainder after Medicare pays
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= $912
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= $688
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To determine whether or not the Program will pay any part of the remainder, the claims administrator determines how much the Program would pay if Medicare had not paid first.
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Part A
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Total covered charges
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$7,000
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CIGNA Post-65 Medicare
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– 500
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Covered charges after deductible
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= $6,500
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20% coinsurance up to the out-of-pocket limit minus the deductible
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– 1,300
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Amount the Retiree Group Health Program would pay if Medicare had not paid first
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= $5,200
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Since Medicare paid more ($6,088) than the Program would have paid ($5,200) on the Part A charges, the payment from the Program is $0. You must pay the health care provider the $912 for which you are responsible. Even though the Program didn’t pay anything on this claim, you have met your deductible for the remainder of the calendar year. In addition, you received a credit of $1,300 for out-of-pocket covered expenses under the Program.
Since Medicare paid less ($2,312) than the Program would have paid ($2,400) on the Part B charges, the payment from the Program is $88. You must pay the health care provider the $600 you are responsible for. You received a credit of $600 for out-of-pocket covered expenses under the Program.
Example 2 – Follow-Up Physician Visit. Let’s assume that after your hospitalization, you visit your physician for an office visit that is covered (as it is under the maximum reimbursable charge) under Medicare and the Program. This is your second claim of the year, and total covered charges are $700. Let’s also assume you have met your maximum out-of-pocket covered expenses under the Program.
Again, the covered charges are sent to Medicare for payment. Medicare calculates the amount it owes and pays that amount to the health care provider. In this example, Medicare pays $560 (80%) of the $700 total covered charges. You are responsible for the remaining amount of $140.
Total covered charges
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$700
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Amount Medicare pays
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– 560
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Amount you are responsible for after Medicare pays
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= $140
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To determine whether or not the Program will pay any part of the remaining $140, the claims administrator determines how much the Program would pay if Medicare had not paid first. Remember, at this point, you have met the annual deductible and out-of-pocket limit, so the Program would pay 100% of the covered charges.
Total covered charges
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$700
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Amount the Retiree Group Health Program would pay if Medicare had not paid first
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$700
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Since Medicare paid less ($560) than the Program would have paid ($700), the Program will pay the $140 not paid by Medicare. You pay nothing. Again, since you have satisfied your annual deductible and out-of-pocket limit under the Program, this is generally how your eligible remaining claims for the year would be calculated.
If you are eligible for Medicare and don’t enroll, your benefits under the Program will be paid as though full Medicare benefits (both Part A and Part B) were paid.
Example 3 – Physician Does Not Accept Medicare Assignment. Suppose you visit your physician for an office visit for services covered under Medicare and the Program, but your physician does not accept Medicare assignment. (This means that the physician can bill you for charges above what Medicare allows and above the maximum reimbursable charge, up to the total billed amount.)
Let’s assume the physician charges are covered under Part B of Medicare, and you have met your Medicare deductible, your Program deductible, and your out-of-pocket limit.
If the total billed charges were $1,000 and Medicare allowed only $700, then you subtract the amount Medicare pays ($700). You are then responsible for $300 (see the table below).
Total billed charges
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$1,000
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Amount Medicare pays
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– 700
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After Medicare pays, you are responsible for this amount
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= $300
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To determine whether or not the Program will pay any part of the remaining $300, the claims administrator determines how much the Program would pay if Medicare had not paid first (see the table below). Again, this table assumes you have met your Medicare deductible, your Program deductible, and your out-of-pocket limit.
Total billed charges
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$1,000
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Amount the Retiree Group Health Program would pay if Medicare had not paid first
($350 was disallowed because it was above the maximum reimbursable charge)
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$650*
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The physician can choose to bill you the difference between what Medicare paid and the total billed amount if the physician has not agreed to accept Medicare assignment. Additionally, you will be paying the physician an amount above the maximum reimbursable charge, and this amount will not count toward your out-of-pocket limit. Therefore, even though you have met your out-of-pocket limit, you will be responsible for paying this amount to the physician.
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