Medicare deductible and holding Medicare claims for dual eligibles, or Medicaid as secondary

Medicare part B (outpatient services) has a 20 percent coinsurance and a $183 deductible. The deductible is applied to the first provider (doctor, hospital, surgery center or lab) that sends in a claim in the calendar year, rather than being based on the date of service. The deductible has went up from $157 to 166 to 183 over the last four years, and as Medicare continues to bleed, expect the deductibles to continue to increase.

Here’s what I wrote on our soloeyedocs email thread in 2016: “Just as an aside, there are 50 million people on part B. Assuming 70% are in traditional Medicare and not an advantage plan, the $19 per person increase in deductible from $157 to $166 saves Medicare $665 million. I’m sure that as the budget gets more constrained the Medicare B deductible will continue to increase.”

Once the deductible is met, he patient or other insurance is responsible for 20% coinsurance.  So for example assuming you are the first to submit a claim, if a patient has a $150 bill Medicare will pay nothing. The secondary insurance or the patient will be responsible for the full $150. But if $100 of the deductible has been met, for the same $150 charge, Medicare will apply $83 to the deductible (to get to $183) and then pay 80% of the remaining $67, or $53.60. Then either the secondary/ supplement or the patient is responsible for the remaining $96.40 ($83 deductible plus $13.40 coinsurance).

Commercial insurances secondary to Medicare sometimes pay the deductible. They have their own rules, coinsurances, copays etc. so sometimes they pay nothing at all and the patient is responsible for the deductible or coinsurance other times they pay for everything.  Then you have to go and chase after the patient if you didn’t figure this out before they were seen.

For supplements (also known as Medigap policies) there is often an alphabetical letter on the card. Only supplement plans C and F cover the deductible. Plan K has a coinsurance of 10% of the Medicare allowed amount and plan L had a 5% coinsurance. Plan N has a $20 copay for office visits (or 20% of the allowed amount if this number is less than $20). Most supplements don’t have networks and just pay whatever medicare doesn’t so you don’t have to credential with them. Indeed, I have been paid as secondary from some Arizona Medicaid commercial plans that I am out of network with.

I keep a version of the chart handy for my front desk to refer to:

So for patients who have straight medicare (no secondary or coinsurance), or a supplement that isn’t plan C, F or J, or a secondary that won’t pay, I collect the deductible at the time of service. (Note: plan J is not sold anymore but some patients are “grandfathered” in; it covers the part B deductible as well as coinsurance). To accomplish this, I have a table of my common codes with their allowed amounts and we usually have a good idea of what code I’ll bill for office visits and what procedures I’ll do. Occasionally if I perform extra testing that goes to the deductible, we will bill the patient after the fact.

Sometimes if a patient has a secondary rather than a supplement, they may have a coinsurance or deductible on the 20% not paid by Medicare. Once we figure out any copays or other responsibilities on the secondary or supplement, we put a pop up notice in our practice management system so for future visits we can collect the correct amount. Of course if we overcollect we issue a refund promptly. Tricare covers both the deductible and coninsurance.

If a patient refuses to pay the deductible and it’s the beginning of the year I hold the claims until the deductibles have been met. If it is November 15, then I hold firm, because they may not see another doctor by the end of the year to meet the deductible.

So holding a claim means waiting until another doctor or lab will send in their claim before you send in yours. This might mean that although you see the patent in January, you submit the claim in June (Medicare allows up to 365 days from the date of service). That doctor will be paid zero for the first $183 allowed amount applied to the deductible (the allowed amount is the contracted reimbursement from insurances for a certain procedure code, if is fixed for Medicare and Medicaid but negotiable for commercials); obviously you don’t want to be the one to be paid nothing. As stated before I try to collect the amount at time of service, but will hold claims at the beginning of the year if the patient refuses to pay and the supplement doesn’t cover the deductible.

Your practice system should verify Medicare eligibility as well as how much of the deductible has been met. For patients who we hold the claim on, we check this information bimonthly and once the deductible has been met we send in the claim. Make sure your practice management system has this feature!

There is usually a one week delay between the time Medicare receives a claim and the deductible is updated in my PM system and their website. So sometimes we collect the deductible based on information date of service but another office has sent in a claim ahead of us, so we promptly issue a refund.

As an aside, we also verify through our practice management system that the patient hasn’t enrolled in a Medicare Advantage plan, which is a private commercial plan that “replaces” traditional Medicare, often with a lower or zero premium but the trade off of higher copays, a narrow network (this is a big gotcha for physician offices because many practices are out of network for Medicare advantage HMOs, leading to getting paid nothing).

This gets more complicated for patients with Medicare and Medicaid as secondary, also known as dual eligibles. For this discussion I am talking with patients with traditional Medicare as the primary and a Medicaid plan as secondary. In some states, patients can choose between different commercial Medicaid plans. For example, in Arizona UHC community plan, Mercy care is run by Aetna, and Health Net have their AHCCS (AZ Medicaid plans).

There are also Medicare- Medicaid dual advantage plans, which is a commercial plan that replaces both Medicare and Medicaid. Some examples in Arizona is the UHC Dual Complete or the Mercy Care Advantage plan. Even if you are credentialed with traditional Medicare, you need to be separately credentialed for these plans because they are replacement plans. They have their own networks (which are frequently narrow networks) and fee schedules. Occasionally I have even seen patients with a Medicare advantage plan as primary and Medicaid as secondary!

Getting back to patients with traditional Medicare as primary and Medicaid as secondary, If you send in the medicare claim and all of it is applied to the deductible, you’ll get a zero EOB from Medicare. Then you mail a copy of the medicare EOB and CMS1500 (billing) form to Medicaid… but Medicaid will only pay their allowed amount.

Medicaid pays the medicare deductible up to the medicaid allowed amount which varies depending on your state. So it depends on what state you live in. If the medicaid allowed amount is (significantly) less than 80% of the medicare allowed amount then definitely hold the claim. You aren’t allowed to bill the balance that Medicaid doesn’t pay. So if the Medicaid allowed amount is significantly lower than 80% of Medicare you get hosed if you send in the claim before the deductible is met.

In Arizona and Nevada it’s pretty good, here’s the link for you to search the allowed amounts. Here is the link for Arizona reimbursements. On the other hand, California rates are pretty poor. Here is the link to California rates.

Let’s say you practice in California. The allowed amount for Medicare for a 92004 is about $170. So if you hold the claim until the deductible is met then medicare pays 80 percent of $170, or $136. But if you are the first to send in the claim before any of the deductible has been met, Medicare pays zero. Then when you send in the claim to Medicaid they only pay up to the allowed amount for 92004 which is about $60 in California. So by holding the claim you get $136 rather than $60, which doubles your money. If you lose $76 fifty times, that’s $3800 right out of your pocket.

Here in AZ our Medicaid commercial plans pay me $115-130 for a 92004 depending on which plan.  The Medicare allowed amount for 92004 is about $150. So even if I send a claim when the deductible hasn’t been met, I send the zero EOB to the Medicaid plan and still get paid $115-130. So I don’t have as much to lose. Most of my patients have commercial supplements rather than AHCCS as a secondary anyway.  I write off the balance on medicare/ Medicaid patients, as we are required to by law for QMBs- qualified Medicaid beneficiaries. As long as you participate in traditional Medicare, even if you don’t participate in Medicaid, my understanding is you have to write off the balances and can’t bill the patient. Which is why you get stiffed if you send in Medicare claims before the deductible is met, get a zero eob from Medicare, and only the $60 allowed amount from Medicaid.

If the deductible has been met medicare pays me 80% of the $150 allowed amount for 92004, or $120. Then I send it to the AHCCS Medicaid plan and get between zero (for the plan that has allowed rate of $115) to $10 (for plan with allowed rate of $130). Lunch money.

But as cited above for California, if your state has a very low Medicaid reimbursement amount, and many of your patients are Medicare/ Medicaid, you should hold the claims. You need to look up the allowed amounts for your state. Some states pay poorly for office visits, but over 80% of Medicare for surgeries or procedures. 2018 update: now some Medicare carriers show a zero deductible even if the entire deductible is remaining if the patient is a QMB- so you have no way to know whether the deductible has been met- in this post Ho Sun wisely explains how you could send those claims in first to meet the deductible, then send in all the office visit claims.

While mathematically there is no need to hold on to deductibles for medicare/Medicaid plans here in AZ, in practice I do hold the claims because sometimes Medicaid plans will “forget” to pay by accident and it’s a huge hassle to clear it up; someone else’s office or billing company can handle the task. Other times the patient may be disenrolled from Medicaid but the eligibility checking site hasn’t updated yet, leading to zero EOBs from both Medicare and Medicaid and a patient that in all probability won’t pay.

Some retina doctors who see patients frequently for injections will just eat the deductible for the ease of cash flow as anti VEGF drugs cost about $2000. You can decide what works best for your practice.

Docs on our google group have asked me if I hold the claim for commercial insurances if the deductible hasn’t been met. Medicare patients are over 65 amd usually have lots of doctor visits and only a $183 deductible which will get met pretty quickly. On the other hand, commercial plans have deductibles of $2000 or higher, meaning that a few doctor’s visits won’t meet the deductible and you’ll be left holding a claim that will pay zero. Additionally, commercial plans frequently require that you submit claims within 90 to 180 days from the date of service, whereas traditional Medicare allows for 365 days from the date of service.

I hope that everyone is doing billing themselves. It would really be terrible if you were paying a billing company 6% of your revenue and they weren’t paying attention to holding the claim for a Medi- medi patient when the deductible hasn’t been met, they could be costing you a ton of money. And you’re paying them to do this! For the example of 92004 in California illustrated above, you lose $76 per patient if you send in the Medicare claim before the deductible has been met. At 6% for a billing company this is $4.56 which is barely worth their time. It will get written off. But for you it’s $76, certainly worth training your employees to pay attention to. Even if the patient has a supplement that doesn’t cover the deductible you still need to collect from them. Your billing company will send three statements and then write it off. You need to understand how insurance works so you can collect at the time of service. I train my staff to do this, rather than doing it myself. Everyone that runs their own practice needs to do the same, unless you want to be the sucker that sends in the claim to meet the deductible and lose revenue.

I hope this helps, wish someone had told me this before I opened. Ho Sun touched on it in his blog and I remember emailing him for help. This isn’t rocket science once you figure it out; I didn’t know any of this until after I opened doors. Ironically, I think that solo doctors have more control over their practices compared to big groups that have layers of management to implement policies. Maybe if you need someone to send in a claim to meet the Medicare deductible, send the patient to one of the mega groups in town….