MEDICARE: PART B BENEFITS

Benefits
Part B of Medicare provides benefits for most medical expenses not covered under Part A. These include the following:

- Physicians' and surgeons' fees. These fees may result from house calls, office visits, or services provided in a hospital or other institution. Under certain circumstances, benefits are also provided for the services of chiropractors, podiatrists, and optometrists.

- Diagnostic tests in a hospital or in a physician's office.

- Physical therapy in a physician's office, or as an outpatient of a hospital, skilled-nursing facility, or other approved clinic, rehabilitative agency, or public-health agency.

- Drugs and biologicals that cannot be self-administered.

- Radiation therapy.

- Medical supplies such as surgical dressings, splints, and casts.

- Rental of medical equipment such as oxygen tents, hospital beds, and wheelchairs.

- Prosthetic devices such as artificial heart valves or lenses after a cataract operation.

- Ambulance service if a patient's condition does not permit the use of other methods of transportation.

- Mammograms and Pap smears.

- Diabetes glucose monitoring and education.

- Colorectal cancer screening.

- Bone mass measurement.

- Prostate cancer screening.

- Pneumococcal vaccine and its administration.

Home health care services as described for Part A when a person does not have Part A coverage or Part A benefits are not applicable.

There were proposals by President Clinton and others to add prescription drug coverage to Medicare that would be partially financed by the large budget surpluses of recent years. In addition, there would be a relatively large increase in the Part B premium. Although the coverage would be subject to maximum annual limits and substantial copayments, the cost of this coverage would be significant because of the high use of expensive prescription drugs by the elderly.

Exclusions
Although the preceding list may appear to be comprehensive, there are numerous medical products and services not covered by Part B, some of which represent significant expenses for the elderly. They include the following:

Most drugs and biologicals that can be self-administered, except drugs for osteoporosis, oral cancer treatment, and immune-suppressive therapy under specified circumstances

- Routine physical, eye, and hearing examinations, except those previously mentioned

- Routine foot care

- Immunizations, except pneumococcal vaccinations or immunization required because of an injury or immediate risk of infection

- Cosmetic surgery, unless it is needed because of an accidental injury or to improve the function of a malformed part of the body

- Dental care, unless it involves jaw or facial bone surgery or the setting of fractures

- Custodial care

- Eyeglasses, hearing aids, or orthopedic shoes

In addition, benefits are not provided to persons eligible for workers' compensation or to those treated in government hospitals. Benefits are provided only for services received in the United States, except for physicians' services and ambulance services rendered for a hospitalization that is covered in Mexico or Canada under Part A. Part B is also a secondary payer of benefits under the same circumstances described for Part A.

Amount of Benefits
With some exceptions, Part B pays 80 percent of the approved charges for covered medical expenses after the satisfaction of a $100 annual deductible. Annual maximums apply to outpatient psychiatric benefits ($450) and physical therapy in a therapist's office or at the patient's home ($400). A few charges are paid in full without any cost sharing. These include (1) home health services, (2) pneumococcal vaccine and its administration, (3) certain surgical procedures that are performed on an outpatient basis in lieu of hospitalization, (4) diagnostic preadmission tests performed on an outpatient basis within 7 days prior to hospitalization, (5) mammograms, and (6) Pap smears.

The approved charge for doctor's services covered by Medicare is based on a fee schedule issued by the Health Care Financing Administration. A patient is reimbursed for only 80 percent of the approved charges above the deductible—regardless of the doctor's actual charge. Most doctors and other suppliers of medical services accept an assignment of Medicare benefits and therefore are prohibited from charging a patient in excess of the fee schedule. They can, however, bill the patient for any portion of the approved charges that were not paid by Medicare because of the annual deductible and/or coinsurance. They can also bill for any services that are not covered by Medicare.

Doctors who do not accept assignment of Medicare benefits cannot charge a Medicare patient more than 115 percent of the approved fee for nonparticipating doctors. Because the approved fee for nonparticipating doctors is set at 95 percent of the fee paid for participating doctors, a doctor who does not accept assignment of Medicare benefits can charge a fee that is only 9.25 percent greater than if assignment had been accepted (115 percent × 95 percent = 109.25 percent). As a result, some doctors either do not see Medicare participants or limit the number of such patients that they treat.

The previous limitation on charges does not apply to providers of medical services other than doctors. Although a provider who does not accept assignment can charge any fee, Medicare pays only 80 percent of what the fee schedule shows has been approved. For example, assume the approved charge for medical equipment is $100 and the actual charge is $190. Medicare reimburses $80 (.80 × $100), and the balance is borne by the Medicare recipient.