Navigating The Differences Between Traditional Medicare And Medicare Advantage Plans

Understanding the differences between traditional Medicare and Medicare Advantage plans is crucial for effective and efficient claim management — which directly correlates to your accounts receivable. The plans can differ significantly both in billing requirements and claim processing — let's explore these differences in detail.

Traditional Medicare Plans

Also known as ‘Original Medicare,’ traditional Medicare is a federal health insurance program primarily for individuals aged 65 and older, as well as for certain younger people with disabilities. It consists of these main parts:

• Medicare Part A: Covers inpatient hospital stays, care in a skilled nursing facility, hospice care, and some home health care.
• Medicare Part B: Covers outpatient care, doctor visits, preventive services, and medical supplies.
• Medicare Part D: Covers prescription drugs and administered by private health plans.

Additional Important Details:

• No Referrals Needed: Providers can treat any patient who has Traditional Medicare without needing a referral.
• Routine Vision Care: Medicare does not cover the refraction or eye exams with refractive diagnosis codes in the primary position (this does not include medical diagnosis, such as post-cataract removal). 
• Claims Submission: Claims are submitted directly to Medicare through the Medicare Administrative Contractor (MAC) or clearinghouse. 
• Fee Schedule: The Medicare Physician Fee Schedule contains reimbursement rates for services, tests and procedures. The rates are updated annually and vary by MAC.
• Patient Responsibility: By accepting assignment, providers agree to charge patients only the Medicare deductible and coinsurance amount. The Medicare Part B deductible for 2025 is $257. Patients are responsible for a 20% coinsurance after their deductible has been met.
• Member ID Card: 

Supplemental Insurance: Many patients with Traditional Medicare also have Medigap policies to cover out-of-pocket costs. These policies cover the 20% coinsurance and may cover the patient’s deductible. Medigap policy issuers have not offered new policies that cover the deductible since January 1, 2020. Patients new to Medicare since that date are responsible for paying their deductible. It is a best practice to check eligibility on a patient’s Medigap plan before their visit, so you know how much to collect at the time of service.

Medicare Advantage Plans

Medicare Advantage, also known as Medicare Part C, is offered by private insurance companies approved by Medicare. These plans must provide at least the same coverage as Original Medicare but often include additional benefits such as prescription drug coverage, vision, dental and hearing care. Important details include:

• Network Restrictions: Medicare Advantage plans typically operate as Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs). Some commercial payers require providers to contract separately with their Medicare Advantage plan to be considered a participating provider.
• Referrals: HMO plans may require referrals from the patient’s primary care physician for medical eye care. 
• Routine Vision Care: Medicare Advantage plans often contract with a vision plan to provide routine vision care for their members. 
• Claims Submission: Claims are submitted directly to the Medicare Advantage plan or clearinghouse. Claims submitted to Traditional Medicare during the time a patient is active with a Medicare Advantage plan will be denied. Exception: If a patient is in hospice, Traditional Medicare is primary — submit these claims with a GW modifier.
• Out-Of-Network-Claims: Non-participating providers can submit an out-of-network claim to Medicare Advantage PPO plans, but claims to HMO plans will be denied. Providers cannot bill more than the Medicare Limiting Charge for out-of-network claims.
• Fee Schedule: Although Medicare Advantage plans are required to provide beneficiaries with the same coverage as Traditional Medicare, they are not required to pay providers at the Medicare fee schedule. 
• Patient Responsibility: Depending on the plan, patients may have a copay, coinsurance or deductible to meet before the plan benefits apply. Check eligibility to determine patient responsibility.
• Member ID Card: Medicare Advantage carriers, eg, UnitedHealthcare, Cigna, will issue an ID card bearing the plan’s logo. Patients enrolled through a Medicare Advantage plan should not present with the traditional Medicare card shown above.

Be sure to note the Payer ID on the member’s card as this number can differ from plan to plan.

Scheduling And Billing Processes

Now that you understand the differences between Traditional Medicare and Medicare Advantage plans, here are some Pro Tips to help your processes run more smoothly:

1. Ask patients for ALL of their Medicare cards. Patients may not understand that they have a Medicare Advantage plan. If they present a Traditional Medicare card and a Medicare Advantage card, scan both cards. Keep the Traditional Medicare card as inactive in the event the patient switches to a different plan or goes back to Traditional Medicare.
2. Verify benefits approximately three days before the appointment. Notify the patient before the appointment of their expected out-of-pocket responsibility and collect this amount on the day of the visit. Be sure to check eligibility on both the Traditional Medicare and Medigap plan or the Medicare Advantage plan as applicable. 
3. Once a patient chooses a Medicare Advantage plan, they are no longer active with Traditional Medicare. All claims must go through the Medicare Advantage plan unless the patient is in hospice.
4. Medicare Advantage plans may provide benefits through vision plans, but routine vision care is for healthy patients without existing medical conditions or complaints. Some vision plans allow you to coordinate benefits with medical plans to reduce the patient’s out-of-pocket responsibility.

If you would like to learn more about the differences between traditional Medicare and Medicare Advantage plans, contact Dianne Boulay, one of PECAA’s Billing and Coding Advisors. As a PECAA Max member, you can receive expert advice from Dianne and PECAA’s other Member Business Advisors at no additional cost! Not a PECAA Member? Contact us to learn how PECAA can help your practice thrive.