Medicare has a policy that is called assignment of benefits. It is complicated and I am going to explain it so everyone will understand it. This happens mostly when a Medicare recipient has Original Medicare and a standalone drug plan. They do not have a supplement or an MAPD plan. One, it means the doctor or facility can get paid directly from Medicare. So, the doctor or facility bills Medicare directly, instead of the Medicare recipient. It also means that the Doctor must write off the part that Medicare disallowed. The patient is only responsible for the 20% that Medicare did not pay.
Two, it also means that if the doctor or facility does not take Medicare assignment of benefits those doctors or facilities can charge you the part of the cost that Medicare disallows. Example: Your doctor’s bill was $200. Medicare decides that they will only pay $150. Then Medicare pays 80% of the $150 or $120. If that doctor or facility does not take an assignment of benefits the Medicare recipient owes the 20% Medicare did not pay or $50 plus the 20%. Unless you have a Medicare Supplement that pays the excess charges that Medicare disallows, you will be responsible for those excess charges. This aspect of Medicare is very hard to understand.
Suffice it to say that if you have Original Medicare and a standalone drug plan you are responsible for the 20% and any excess charges not paid by Medicare. Going to a famous facility in Scottsdale which does not take an assignment of benefits and you pay the 20% plus the excess charges so around 35%. With Original Medicare and a supplement, you usually do not have to pay the excess charges as most supplements take care of that for you.
Medicare Advantage plans do not have that issue as most costs for services are at a fixed dollar amount. The Medicare Advantage plans are all subsidized by the federal government and that is why there usually is little or no monthly premium. These plans do away with the assignment of benefits clause since most of the doctors and facilities used take the plan and between your copay and the plans payment to the doctor or facility cover all charges. If you go out of network these plans either charge you a higher copay or do not pay any portion of that bill.
Many seniors choose a Medicare Advantage plan because of no monthly premium and no assignment of benefits. Since every Medicare recipient pays the monthly Part B premium, for many not having to pay anything additional is a blessing.
To clarify information about these MAPD plans suffice it to say that these plans are either an HMO, a PPO, or in some cases an MSA (Medical Savings Account). The latter is not popular yet and some of us doubt it will ever be as popular as the HMO/PPO plans. The MSA plans give you federal dollars to use towards the deductible or costs for services. When you have used the federal dollars there still is a deductible to pay. Many seniors cannot afford this type of plan but are available to any senior.
If any senior needs clarification about how the assignment of benefits works, please feel free to contact me either by phone or email. Happy to assist you by answering your questions.
Len Barend, The Barend Agency Inc.
Len Barend, broker