Reimbursement Process

Doctors, health care providers and health care equipment suppliers who accept Medicare patients are limited in what they can charge patients for Medicare-covered services. Some doctors agree to accept the Medicare-approved fees -- called the assignment -- for their services. In this case, beneficiaries are responsible only for the deductible and coinsurance amounts.

If the doctor or supplier does not accept the assignment, he or she can sometimes charge 15 percent over the Medicare-approved amount. In this case, the doctor can insist that the patient pay all or most of the bill at the time of the appointment. The doctor is then required to submit a claim to Medicare, which then sends its share of the bill directly to the beneficiary.

Medicare providers and suppliers are legally required to file claims for covered services and supplies. Beneficiaries should not have to file their own claims but they do need to make sure that their pharmacy or supplier is enrolled in Medicare. Otherwise, they will be responsible for the entire bill.

If a provider accepts the assignment, the patient usually pays his or her share of the bill -- the coinsurance and deductibles -- to the provider at the time of the appointment. The provider then files the claim and Medicare pays its share of the bill directly to the provider.

Medicare now typically pays hospitals a set amount for each patient's stay, which is based on the average cost of providing care to patients with similar illnesses. However, Medicare does allow for "outlier payments" -- additional reimbursement to hospitals to cover the cost of cases that are more expensive to treat. According to Thomas Scully, who overseas the Medicare system, these payments are designed to insure hospitals against the losses that could results from cases that are extremely expensive to treat.

Appealing Medicare Decisions

When patients or doctors disagree with Medicare's reimbursement decisions, they have the right to appeal and ask that the program provide coverage for something it had rejected.

Whether patients must reimburse their doctors during the appeals process for claims that Medicare rejects primarily depends on whether the patients signed an Advance Beneficiary Notice before the appointment. Doctors are supposed to give patients those notices when they are going to have an appointment or service that the doctors do not expect Medicare to cover. When patients do not sign an Advance Beneficiary Notice before an appointment, they are not responsible for charges not covered by Medicare.

After submitting a bill for a doctor's appointment or other health care costs incurred outside of a hospital, Medicare beneficiaries and their providers receive a document that lists the portion of charges that will be covered. Patients or doctors can appeal when a service is not covered. When patients are the ones filing the appeal, Medicare encourages them to get a letter from their doctor explaining why the health care service was medically necessary.

If a patient or doctor continues to push an appeal through the system after the first review does not result in an increased payment, he or she may be able to request a hearing with an administrative law judge. Under a 2000 law, Congress mandated a 90-day processing time for these cases, but key provisions of that law have not gone into effect. Scully told the House in April 2003 that it takes about 330 days to complete the average Medicare hearing. Some appeals for amounts over $1,000 continue beyond this stage and are eventually resolved in federal court.

The steps for non-urgent appeals of decisions on Medicare Part A coverage, such as costs associated with hospital stays, are similar to the steps for outpatient services. However, there are fewer levels of appeals, so they advance more quickly to the administrative law judge stage.

Medicare beneficiaries covered by private Medicare + Choice plans can also appeal decisions made on their coverage. When the plans do not find in the beneficiaries' favor, their decisions are reviewed by an independent organization that works for Medicare and not for the private plan.

Whether hospitalized patients are in Medicare + Choice or traditional Medicare, they can file an urgent appeal if they are told Medicare will no longer cover their hospital stay. If that appeal is filed within approximately 24 hours, the reviewing doctors will issue a ruling by the end of the next business day.

Patients can request a review of that initial appeal decision, and that second appeal can take up to three business days. If the initial appeal request was filed on time, patients are not charged for their hospital stay while their appeal is being reviewed, even if their request is eventually rejected.

According to the Medicare Rights Center, the majority of people who file appeals eventually are successful in receiving additional Medicare coverage.

-- By Karyn Schwartz, Online NewsHour

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