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Road Map To American Health Care
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Traditional Medicare is a fee-for-service program that covers your care from almost any doctor or hospital anywhere in the country. A Medicare HMO (Health Management Organization) will only allow you to use specific doctors and hospitals within a specific area. The Medicare HMO also decides what type of care it will pay for and what doctor(s) you must see to receive to have the HMO pay for that care. In return for agreeing to follow these strict guidelines you receive additional benefits such as vision, dental, and prescription drug coverage. You may also have lower co-payments.

You continue to pay your monthly Medicare Part B premium in addition to a monthly Medicare HMO premium, and most HMOs do not require you to pay deductibles. However, Medicare HMOs will charge a coinsurance payment with each doctor's visit. This is usually less than you would pay under traditional Medicare. Also, if you have a Medicare HMO you do not need to buy additional coverage through a Medigap plan. However, if you want to see doctors or hospitals outside the HMO's network, you usually have to pay for those treatments out of your own pocket. You must also obtain a referral before seeing a specialist.

Once you join a Medicare HMO, you will be asked to choose a primary care physician (PCP) from the HMO's list of doctors. This physician becomes the coordinator and gatekeeper for the care that you receive. The Primary Care Physician may provide you with care personally or may give you a referral to see a specialist. This gatekeeper arrangement is designed by the HMO to control costs - to provide health care at the lowest cost possible and avoid unnecessary care expenses.

Private companies offer managed care plans (HMOs) to Medicare. These companies sign a one-year, risk contract with Medicare. In this contract the HMO agrees to receive a fixed amount of money to assume a financial risk. It agrees to pay for all needed health services for each Medicare beneficiary enrolled in its plan, regardless of the services that any particular individual needs. When a member's services cost less than the fixed amount, the plan keeps the savings. Therefore, the HMO's incentive is to closely monitor service to ensure that only medically necessary procedures are provided.

Keep in mind that a Medicare HMO is supposed to provide the same coverage offered by traditional Medicare. They cannot legally discriminate based on age or health. Medicare HMOs are required to accept all Medicare beneficiaries entitled to Part A and enrolled in Part B with the exception of people suffering from End Stage Renal Disease (ESRD).

Before you decide to join an HMO, make sure you fully understand the rules of your particular HMO. Also decide what your needs are and whether a Medicare HMO will meet those needs. The following information offers some key points to consider and tips for making an informed decision.


Medicare HMOs vary greatly, so researching the Medicare HMOs that interest you is key to finding a plan that meet your needs. Here are some hints:

  • Contact the HMOs that you are interested in and ask them for a list of benefits and services the HMO offers in addition to the standard Medicare services. Also, ask them to send you a list of all the doctors, nurses, hospitals, service facilities, and pharmacies in their network.

  • Talk with other HMO enrollees, especially people who have conditions similar to yours.

  • Contact your state insurance office for information on comparing HMOs.

  • Another beneficial source for comparing HMOs is Medicare itself. You can visit their website and click on "Medicare Compare" or call them at 1-800-MEDICARE (633-4227) to request the following information:
    • a list of all plans offered in your area, including information about extra benefits and costs; a packet on quality and satisfaction information

    • a brochure entitled, A Worksheet for Comparing Medicare Health Plans

    • a brochure entitled, A Guide to Health Insurance for People with Medicare



  • What doctors are in the plan? Will your Medicare HMO let you use the doctors and hospitals you want? If you have a chronic condition, can you choose a specialist as your primary care physician? Remember that even if good doctors are in the HMO network, they can leave the HMO network at any time.

  • Does the Medicare HMO let you choose your primary care doctor from the list provided by the plan, or does the Medicare HMO assign you a doctor? Can you change doctors easily if the one you pick first is not satisfactory? Is the primary care doctor you prefer accepting new patients?

  • What are the medical credentials of the doctors in the HMO network? Are they board-certified? How does the plan review physician performance? How frequently does it perform such reviews?


  • How easy is it to see a specialist? Can your primary care physician (PCP) refer you to a specialist or admit you to a hospital without getting permission from the HMO? If so, does PCP make more money from the HMO by not referring you to a specialist or not admitting you to a hospital? If you are currently seeing a specialist who knows your history, is that doctor included in the HMO Network? If not, can you continue seeing that doctor and still have the HMO pay for that treatment?

Care away from home

  • What is the HMO's service area? Will the Medicare HMO pay for care away from your home area? Does remote coverage include routine care as well as emergency care?

Additional benefits

  • Does the Medicare HMO pay extra services and benefits, like outpatient prescription drug coverage, dentist, and eye or ear doctor visits? Or will you be charged out of pocket for these? What other benefits and services does the HMO offer in addition to the services Medicare covers?


  • In addition to the Medicare Part B premium does the HMO charge it's own premium? Are there co-payments? For what services?

Service Facilities

  • Where would you go for care? To a central location? To an individual doctor's office? Are the doctor's of facilities hours and locations convenient?

  • Which hospitals, specialized clinics, and nursing facilities are included in the HMO network? Who determines which hospital you would go to, the HMO or your doctor?


  • What services does the HMO cover?

  • Are there special arrangements for emergencies during office hours? How is emergency defined? Do you need to get prior approval for care? How do you get approval if you have a medical need that arises when the HMO is closed? Where do you go to get care when they HMO is closed? How do you get approval for payment after emergency or urgent care has been given?

  • What preventive care is covered by the HMO? Mammograms? Cancer screenings? Do HMO doctors routinely provide preventive care? Does the HMO monitor the doctor's activities?

  • Does the HMO have to approve treatment and other services such as skilled nursing care, physical therapy, and home health care?

  • Does the HMO cover the prescription drugs that you already use? Does the HMO pay the full cost or is there a co-payment? Does the HMO require the generic version of prescription drugs? Will the HMO allow you to use brand name drugs? If the HMO drops your drug from their list of approved drugs, called a formulary, can you still obtain coverage for your drug or switch to an equivalent drug?

  • Does the HMO provide any financial payment for visits to doctors, hospitals, labs, or other facilities outside the HMO network?

Satisfaction with the HMO

  • How many members did the HMO have at the beginning of the year? How many belong now? How many disenrolled during the year? How does this compare with other HMOs in your area?

  • Does the HMO conduct membership satisfaction surveys? Are surveys administered by an outside organization? Are the results available for your review?

  • What is the process for appealing decisions by the HMO? Is there state or public oversight? Is there a consumer hotline in your city or state? Can you get the results of consumer experiences or grievances from that hotline?

ON/POS options

  • If you are considering Out-of-Network(ON)or Point-of-Service (POS) options, be aware that they usually cost more and offer more options. Ask what services are included. What is the annual cost limit on services provided through the plan? What are the cost-sharing provisions for ON/POS care, including premiums, coinsurance, co-payments, and deductibles?


  • If you have a complex or chronic condition requiring frequent specialty care, consider getting a Primary Care Physician, who is also a specialist, eliminating the need for a referral.

  • You DO NOT have to sign anything while the HMO marketing agent is with you.

  • If you join a Medicare HMO, it's a good idea to keep your Medigap policy until you decide if you are happy with the HMO, since reapplying for Medigap may involve a six-month delay. However, you cannot use your Medigap policy unless you return to traditional Medicare.

  • Another good idea is to keep your retiree insurance, which often has extra benefits that are more generous than HMOs provide.

  • Find out how people who need a lot of health care rate their HMO. If you have a chronic illness, ask people with the same or a similar illness whether their HMO gave them the care they needed.

  • Remember that different HMOs will charge different co-payments for Primary Care Physician payments, specialist payments, hospital stays and emergency room visits.

  • Be aware that HMO enrollees who are healthy and do not need much health care tend to be satisfied. So an HMOs high satisfaction rating may mean higher percentages of healthy enrollees — not necessarily better care. So ask the average age of enrollees because younger seniors tend to be healthier than older seniors.

  • One of the big benefits of Medicare HMOs is that they provide drug coverage and/or discounts, but this may be misleading. Keep in mind there are other avenues such as Employer-Retiree Health, Medigap plans, H, I, & J. Also some health conditions qualify beneficiaries for special drug programs. Note as well that mail order HMOs usually limit prescription drug coverage.

  • If you are joining an HMO for its Point-of-Service (POS) benefits, you should investigate whether there are extra fees and premiums required.


You must first be enrolled in Medicare Parts A & B before you may enroll in a Medicare HMO. Enrolling simply involves requesting, completing, and returning the HMO's enrollment forms.

To leave or disenroll from an HMO, you may either notify the HMO in writing or complete a form at your local Social Security Office. If you write to the HMO, it is a good idea to send your request by certified mail, return receipt requested, so that you have proof that the HMO received your letter. Currently, beneficiaries who are dissatisfied with their HMO plan are locked-in for no longer than one month. This will continue through 2001.

In 2002, enrollees may change their plan only during the annual enrollment period. If you are dissatisfied with the HMO within the first three months of enrollment you can withdraw and return to traditional Medicare. After these first three months you must wait until the next annual enrollment period to withdraw or you will be without any health coverage. This open enrollment period will take place the month of November. If you join a new plan in November your coverage with that plan will begin January 1.


There are different types of HMOs; risk-based, cost-based, and Medicare Select. Most Medicare HMOs are risk-based.

  • In a risk-based plan, Medicare pays a set payment for each member, regardless of whether the member is healthy or sick. Risk-based HMOs offer more benefits at a lower cost than Medigap plans, but also impose rules and restrictions on your care. Some risk based plans offer a Point-of-Service option. This allows you the use of out-of-network doctors for an additional cost.

  • Another type of Medicare HMO is cost-based. In a cost-based plan, Medicare pays the HMO the actual cost of treating the individual. In this type of plan, care may be obtained inside and outside the network. Inside the network, the Medicare HMO covers the full cost of care, except for a co-payment. Outside the Medicare HMO network, Medicare covers 80% of the cost and the enrollee pays the 20% difference plus a co-payment. While cost-based plans offer more choices, they are more expensive. Also there are very few cost-based HMOs available.

  • The third selection is actually not an HMO. It is called Medicare Select and is similar to Medigap or a supplemental insurance policy. However, it is similar to an HMO in that it restricts choice of hospitals, home health agencies, and skilled nursing facilities. If you go outside the Select network, neither Select nor Medicare will cover the bill


If you are dissatisfied with your HMO, you can use the grievance and appeal mechanisms to obtain better service or coverage. Information about the grievance process should be included in your membership materials or can be easily obtained through customer service upon request. Be careful not to confuse a grievance with an appeal. Make sure the HMO does not treat the appeal as a grievance or vice versa as this will slow and confuse the process. If you are so dissatisfied that you want to disenroll from your Medicare HMO, you may do so if you follow the guidelines. See ENROLLMENT PROCEDURES for details.

How do I know if I have a grievance or an appeal?
When to file a grievance:

  • You feel the facilities are inadequate or in poor condition.

  • You did not like the way your doctor treated you.

  • You could not get an answer you needed from customer service.

When to file an appeal:

  • You feel medically necessary care has been denied, reduced, or terminated inappropriately. (Before you begin and appeal it is best to start a paper trail as early as possible so that you can document the circumstances of your unsatisfactory care).

If you have questions about the appeal or grievance process or if you wish to have help filing an appeal or a grievance contact the Medicare Rights Center at 1460 Broadway, New York, NY 10036, 1-212-869-3850 or


You have specific guaranteed rights whether you have traditional Medicare or a Medicare HMO:

  • Right to emergency care when and where you need it without prior approval.

  • Right to appeal if Medicare does not pay for a covered service, or if a doctor or hospital doesn't give you a service you believe should be covered.

  • Right to know all your treatment options. Medicare HMOs cannot have rules that stop a doctor from telling you everything you need to know.

  • Right to have any personal information that Medicare collects kept private.

  • Right to know why the HMO needs the information and how it will be used.

Within a Medicare HMO you have additional rights:

  • Right to choose a women's health specialist from the HMO's list of doctors.

  • Right to enough visits to a specialist to deal with your needs if have a complex or serious medical condition.

  • Right to know how your HMO pays its doctors. The HMO must tell you in writing.

  • Right to appeal any decision about your medical services, such as an HMO not agreeing to pay or denying service.

  • Right to file a grievance for matters other than payments or service requests.

  • Right to get another Medigap policy if you meet certain qualifications, such as losing your HMO unexpectedly or leaving your HMO within the first year of joining, etc. Call Medicare at 1-800-633-4227 for complete details.
    NOTE: you must apply for the reinstatement of a Medigap policy within 63 days after your coverage ends.

  • Right to complain to the Medicare HMO company about problems getting care and to appeal when you believe the HMO was wrong to deny, reduce, or stop services or refuse payment or services.


What are the differences between traditional Medicare and a Medicare HMO?

  • In a Medicare HMO you must always see your Primary Care Physician (PCP) first. You cannot see a specialist without a referral from your PCP. You can only see health care providers that are part of the HMO's list of approved service providers. You must see providers within a specific area. There are fixed co-payments at every visit. There are no annual deductibles to pay.

  • In traditional Medicare you can choose any doctor, hospital, nursing home, or pharmacist you wish to provide you with health care. You are covered for care given anywhere in the United States. You choose which health care procedures to have performed and when.

What are the disadvantages of a Medicare HMO?

  • Having to use only those doctors, specialists, hospitals, pharmacies, and facilities with the HMOs network, having to get the HMO's prior approval for every procedure.

  • HMOs use financial incentives with health providers to get them to limit care to only those procedures that are indisputably medically necessary.

What is the advantage of a Medicare HMO?

  • Lower out-of-pocket expenses, less paperwork, and coverage for preventive care

What is a Medicare HMO?

A Medicare HMO is an organization that contracts with the government and is paid by Medicare to finance all Medicare-covered health care services for people who enroll in the HMO.

Which companies offer a Medicare HMO?

To receive a list of the Medicare HMOs in your area, call the National Medicare Hotline at 1-800-MEDICARE. You can then contact those HMOs near you and ask them to send you information on their plans.

Who can join a Medicare HMO?

Medicare HMOs must accept everyone on Medicare regardless of health condition, except for people with ESRD kidney failure.

How do Medicare HMOs provide care at so little cost to me?

Medicare HMOs receive a specific amount from the Government for each person enrolled in their plans. Medicare HMOs manage costs by controlling what care you receive and when, while pocketing savings they realize on your care. A gatekeeping mechanism has been established to provide control over the cost of the care you receive. Meaning, you must see a primary care doctor and get a referral before seeing a specialist. And you must receive care only from doctors and hospitals in the HMO's network, except in emergencies or with prior permission from the HMO.

When is an HMO not a good idea?

  • If you are a "snow bird" living in two different areas in the summer and winter months an HMO will not cover you.

  • If you have free or low cost supplemental health insurance from an employer, joining an HMO may not save you money

  • If you are low-income, you may qualify for a less costly alternative Medicare assistance program, such as Qualified Medicare Beneficiary (QMB), Specified Low-Income Beneficiary, or Qualified Individual (QI) plan which will cover some or all off your Medicare premiums, your co- payments and deductibles. Then your Medicaid will cover your prescription drugs and custodial care. To see if you qualify contact Medicare at 1-800-MEDICARE (633-4227) or call Social Security at 1-800-772-1213.

  • If Medigap offers you more of the treatment options you must have free of the HMO's restriction on the doctors or facilities you can see.

What if I join Medicare HMO and I do not like it?

To leave or disenroll from an HMO, you may either notify the HMO in writing or complete a form at your local Social Security Office. If you write to the HMO it is a good idea to send your request by certified mail, return receipt requested, so that you have proof that the HMO received your letter. Currently, beneficiaries, who are dissatisfied with their HMO plan are locked in for no longer than one month. This will continue through 2001. In 2002, enrollees may change their plan during the annual enrollment period only. Within the first three months of that enrollment if you are dissatisfied you can withdraw and return to traditional Medicare. After these first three months you must wait until the next annual enrollment period to withdraw or you will be without any health coverage. This open enrollment period will take place the month of November. If you join a new plan in November your coverage with that plan will begin January 1.

What do you do if your Medicare HMO pulls out of Medicare in your area?

You may enter another Medicare managed care plan in your area or you may return to traditional Medicare. Either way you are still in the Medicare program and will receive all Medicare covered services.

How will my costs vary?

Your costs will vary depending on whether your HMO charges a monthly premium in addition to the Part B premium, how much the plan charges you each time you visit your doctor i.e., your co-payment, the type of health care you need and how often you need care, and how much the plan charges for extra benefits.

What is emergency care?

Emergency care is when you believe that your health or your life is in serious, immediate danger. All managed care plans allow you to get emergency care is as they define it.

What is urgent care?

Urgent care is when you need care for a sudden illness or injury, but it is not defined as a medical emergency. You get urgently needed care from your primary care physician. However, if you are out of the Medicare HMO's service area for a short time and cannot wait until you return home, your Medicare HMO must pay for urgently needed care. Medicare gives you the right to appeal if the HMO does not pay.

What do I do if I need long-term care?

  • Medicare does not pay for long-term care. For additional information call 1-800-Medicare (633-4227) to receive a Guide to Health Insurance for People with Medicare. The Medicare website now has a section that compares nursing homes. You can get information about where nursing homes are located, their size, and any problems that have been reported.

  • Additional sources for beneficial information on long-term care include:
    A Shopper's Guide to Long-Term Care Insurance
    Published by National Association of Insurance Commissioners NAIC
    120 W. 12th Street Suite 1100 Kansas City, MO 64105

What is Medicare+Choice?

The Balanced Budget Act (BBA) of 1997 dramatically altered Medicare managed care by creating Medicare+Choice, allowing the elderly to select coverage from a variety of indemnity and managed care plans. This program allows individuals to receive and pay for care in different ways, depending on the plan they choose. Despite the new emphasis on choice, Medicare+Choice is still an HMO program.


Comparing Medicare HMOs Do they keep their members?

A report from Families USA, which analyzes the rate at which Medicare beneficiaries leave or voluntarily disenroll from an HMO it provides a state-by-state and national picture of disenrollment rates. As the report explains disenrollment rates are critically important for two reasons:

  1. They provide information on how satisfied beneficiaries are with a plan and may indicate that a specific HMO may have trouble providing quality care, or that marketing agents were not providing accurate information.

  2. They can be used as a monitoring device by the HCFA. High disenrollment rates set off alarms that HMO oversight might need to be increased. There will, of course, be some level of disenrollment. However, disenrollment rates should be roughly comparable for all HMOs in a given area if all enrollees are satisfied.

To receive a copy of this or other helpful publications please contact:

Families USA Foundation
1334 G Street, NW, 3rd floor
Washington, DC 20005

The Henry J. Kaiser Family Foundation has commissioned and produced several very informative publications and reports. Some of the most relevant include:

Medicare State Profiles, September 1999, contains state and regional data on Medicare and the population it serves. This report is a key resource providing basic facts about the Medicare population and documenting differences across states and regions.

How Medicare HMO Withdrawals Effect Beneficiary Benefits, Costs, and Continuity of Care
When Medicare HMOs pulled out of certain states or counties the people who experienced the greatest problems were minorities, the poor, and those under 65 with disabilities.

Medicare HMO Withdrawals: What happens to Beneficiaries? Health Affairs (Nov-Dec 1999, Vol.18, No 6) A complementary article to the above report.

Analysis of Benefits Offered by Medicare HMOs in 1999: Complexities and Implications
This study found that the level of monthly premiums charged by Medicare HMOs and generosity of many supplemental benefits, especially prescription drugs, vary widely within and across markets. This study uses Medicare Compare, a Health Care Financing Administration database, to analyze and compare benefits and premiums.

Other relevant Kaiser publications included:

  • Medicare and Women, The Faces of Medicare
  • Medicare and Minority Americans,
  • Prescription Drug Coverage for Medicare Beneficiaries: A Side-by-Side Comparison of Selected Proposals

To receive copies of these reports call 1-800-656-4533 or visit the Kaiser Family Foundation on the Internet at

Before you Buy: A Guide to Long Term Care Insurance, AARP 1997
Medicare was never designed to pay for long-term care. So any coverage Medicare offers for treatment at a skilled nursing facility (SNF) or for home care is very limited. This publication explains what your alternatives are and the best steps to take to achieve those alternatives. To receive this brochure contact the AARP at: 601 E Street, NW Washington, DC 20049

Medicare & You 2000 provides a detailed description of Medicare what Medicare Parts A & B cover along with a comparison of Medicare and Medicare HMOs To receive a copy contact Medicare at 1-800 Medicare (633-4227), TDD 1-877-486-2048 Or contact the Medicare Rights Center, 11th Floor, 1460 Broadway, 11th floor NY, NY10036

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