The Medicare Program
The Medicare program is a federal health insurance program whose beneficiaries include persons 65 years of age or older, disabled persons, and persons with chronic renal disorders. It is governed by the Centers for Medicare & Medicaid Service (CMS) of the U.S. Department of Health and Human Services. The Social Security Administration (SSA) offices across the country take applications for Medicare and provide general information about the program. The SSA is also responsible for any changes or termination of a patient’s Medicare enrollment.

The program was established by Congress in 1965 when it enacted Title XVIII of the Social Security Act, hereafter referred to as “the Act.” The Medicare program consists of two distinct parts.

Part A—Hospital Insurance
Hospital Insurance (Part A) helps pay for inpatient care in hospitals, critical access hospitals and skilled nursing facilities. It also covers hospice care and some home health care.

Part B—Medical Insurance
Medical Insurance (Part B) covers items and/or services that are medically necessary by a physician, outpatient hospital services, home health care, and a number of other medical services not covered by Part A benefits including durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

Enrollment for Part B coverage is voluntary. Individuals pay a monthly premium which can be deducted from monthly Social Security benefits. Individuals must meet an annual deductible* each calendar year before Part B benefits are paid.

* The Part B deductible for 2008 is $135 and is subject to change each year.

By law, Medicare does not cover supplies or services received outside of the United States. The United States includes the 50 states, District of Columbia, Commonwealth of Puerto Rico, Virgin Islands, Guam, American Samoa and the territorial waters adjoining these land areas. Review the Claim Filing Jurisdiction chapter of the Jurisdiction B DME MAC Supplier Manual for details on the geographical locations included in Jurisdiction B.

The Medicare Card
All beneficiaries receive a health insurance card showing whether they have Hospital insurance (Part A), Medical insurance (Part B), or both, and the effective date(s) of coverage. When a husband and wife are both covered, each will have a separate card and Medicare Claim Number (i.e., Health Insurance Claim Number [HICN]).

In order for Medicare claims to process correctly, the patient’s complete name, as it appears on the card, and the HICN should be correctly entered on all Medicare claims. To ensure accuracy, the supplier should view the actual card and record the information or make a photocopy for their records. Each patient’s health insurance card should be rechecked at least once a year since HIC numbers can change depending on the type of benefits a beneficiary is currently entitled to under the SSA. If the beneficiary insists the Medicare card is incorrect, the supplier should advise the beneficiary to contact their local servicing Social Security Field Office to obtain a new Medicare card. Information that does not match eligibility records will cause suspension or denial of claims.

Note: The letters at the end of the beneficiary’s HICN do not necessarily indicate the type of coverage they have. Example: 456-45-6456A does not mean the beneficiary has Part A only; or, 456 46 6456B does not indicate that this beneficiary has elected Part B benefits.

The Common Working Files
The Common Working File (CWF) is the system used by the CMS to verify entitlement and correct utilization of benefits. The CWF houses the records of all claims processed for all beneficiaries assigned to that site. When a claim is processed, the CWF checks its records to verify eligibility, days used, deductible and coinsurance status and other utilization edits. The CWF contains information regarding the beneficiary’s date of birth, date of death (if applicable), health maintenance organization (HMO) and hospice elections and other information used to determine the correct utilization of benefits.

When a contractor receives a claim, a query is sent to the CWF to verify the HICN and the name of the patient, as well as the appropriate utilization of benefits. Accurate reporting of the HICN is critical to the CWF.

Deductible and Coinsurance

Deductible
Each calendar year the patient must satisfy a deductible* before Medicare Part B payments can be made. The Part B deductible is subject to change each year. The total Medicare allowed amount on a claim is reduced by the amount of any remaining deductible prior to payment. Charges that are denied, or that are noncovered, do not count toward the deductible.

All individuals covered under Medicare are required to satisfy the full deductible amount regardless of when during the year their eligibility began. In other words, individuals who become eligible for Medicare in December are responsible for the full deductible amount.

* The Part B deductible for 2008 is $135.

Coinsurance
For most services, Medicare pays 80 percent of the allowed amount for covered services after subtracting any remaining deductible.

Medicare beneficiaries are responsible for the remaining 20 percent of the allowed amount (i.e., coinsurance payment) and any deductible subtracted on the claim. In some cases, a beneficiary’s supplemental insurance coverage will pay these amounts.

On assigned claims, it is recommended the supplier only collect the 20 percent coinsurance from the beneficiary at the time of delivery. This will allow for the accurate calculation of deductible status by Medicare and prevent any refund to the beneficiary of over-collected deductible amounts.

The CMS Internet-Only Manuals
The CMS Internet-Only Manuals (IOMs), part of the CMS Online Manual System , is used by the various CMS program components, partners, contractors, and state survey agencies to administer CMS programs. They are the CMS’ program issuances, day-to-day operating instructions, policies, and procedures that are based on statutes, regulations, guidelines, models, and directives. The IOMs are also a good source of Medicare and Medicaid information for the general public.