Vol. 244 November 15, 2020 Medicare or Medicare Advantage ?

 

When I delved into the morass of copays, deductibles, and co-insurance percentages (all of which are different kinds of “out-of-pocket” payments by the subscriber), I really felt like I was in front of a roulette wheel or at a craps table. I didn’t feel at all like I was playing Black Jack where the odds are so well known that  books have been written about how to “beat” them . . .  I’ll know in a year if I won the bet or the house did.
– Hubslist, December 15, 2020

In my December 15, 2019 blog I described the difficulties I had comparing the choice between traditional Medicare and Medicare Advantage (3 separate companies). After boring you with too many details about “co-pays”, “co-insurance”, and newly offered “free perks”, I decided to go with  a Medicare Advantage plan of NO additional premium over the basic Medicare deduction from my Social Security check, . I noted that making such a choice was essentially placing a bet, and said I would tell you at the end of a year who won, the house (the private insurance company) or me.

Well, the house won, . . . or, at least, I “lost” the bet for lowering my cost of one year’s health insurance.

By going with Medicare Advantage in 2020 I avoided paying $1700 in Medicare supplement and Part D premiums. The concept behind Medicare Advantage plans is that in return for the patient avoiding additional premiums he/she has “some skin in the game” in the form of co-pays and co-insurance for specific services. The expectation is that the patient will make lower cost choices for his/her medical care when faced with such co-pays and co-insurance. The expected net result is reduced medical care costs to the federal government for the medical care of Medicare-eligible patients.

Since my major accident in May 2020 I have paid the private Medicare Advantage insurance company $2900 in hospital day co-pays, an additional $1505 in outpatient MD visits and services (ambulance, lab, dental, x-rays, Physical Therapy) copayments, and $500 in prescription drug costs for a total of about $5,000 out-of-pocket.

That is an extra out-of-pocket cost to me of $3,300 for Medicare Advantage over traditional Medicare. If you add in the $1700 all services deduction of traditional Medicare the extra cost of Advantage to me this year is still $1600. I concede losing the bet.

The message is clear to me, Advantage plans can be a better buy than traditional Medicare AS LONG AS YOU DON’T GET HOSPITALIZED. Avoiding the cost of hospitalizations is an essential intention of Medicare Advantage plans, but it is based on patient choices, and in emergency events like mine, there is little or no chance the patient can make choices.

Did the cost of any medical care ever influence my choices during this adventure? Maybe. After racking up $270 of $30 copays each for 9 PT visits I decided that I had reached the maximum bang for my buck and stopped going to PT. When a suggestion was made by PT that a MRI of my tight shoulder might be helpful in clarifying a diagnosis,  I demurred when I remembered that there was a 20% co-insurance out of pocket cost for an outpatient MRI, and my shoulder range of motion was already improving with PT.

But of course, my bet of which of these two programs was the best deal for me was really just a minor side bet compared to the “cost” of the main events:
Charges
for 3 mile ambulance ride to ER – $2,520.09
from ER physicians – $2,357
from two in-hospital MD’s evaluations – $740
for 3 days in acute care hospital (no ICU) – $26,655.55
for 6 mile non -emergency ambulance to rehab hospital – $622.50
for 12 days in rehab hospital – $ 45,246.20
for 9 outpatient PT visits – $1465.00
Total charges to Medicare = $ 79,640

 How much were my medical providers paid?
Medicare payment + my copay:
Ambulance run – charge $2,520 – MC $509.34 + $200 = $709.34
ER physicians – charge $2,357 – MC $599.38
MD’s in-hospital evaluations- charge $740 – MC $289.24
Acute care hospital – charge $26,655.55 – MC $14,201.76 + $1080 = $15,281.76
Rehab hospital – charge $45,246.20 – MC $30,793.01 + $1800 = $32,773
PT visits – charge $1465.00- MC 410.20 + $270 = $$680
Total payments to providers – $50,333

Approximate total out-of-pocket cost to me = $5,000 or about 6% of the total charges. Paying 6% of charges for full recovery from a death-defying flip into darkness is really a pretty good deal when compared to having no insurance coverage. So I lost my bet, but won the chance to play again.

Approximate % of total charges MC paid to providers = 63%
                % of charges by type MC paid to:
                Ambulance – 28%
                MDs – 43%
                Hospitals – 67%

Aren’t those “percentage of charges paid” differences interesting? 
B
ut enough of  mind-glazing numbers for now.
A future blog will expound a bit more on this example, and others, of “the smoke and mirrors “ of medical care reimbursements; hopefully providing some insights into the continuing discussions of complicated universal health insurance proposals.

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