The following terms and their definitions are necessary for a complete understanding of Medicare and Medicare supplement.
appeal —An appeal is a special kind of complaint insureds can make if they disagree with any decision about their health-care services—for example, if Medicare doesn’t pay at all or doesn’t pay enough for a service the insured received or would like to receive. This complaint is made to the Medicare health plan or to the Original Medicare plan. There is a special process that must be used to make the complaint.
Approved amount —The fee Medicare sets as reasonable for a covered medical service. It may be less than the actual amount charged. Approved amount is sometimes called “approved charge.”
Assignment —In the Original Medicare plan, this means a doctor agrees to accept Medicare’s fee as full payment. If insureds are in the Original Medicare plan, it can save them money if their doctor accepts assignment. They still pay their share of the cost of the doctor visit.
Benefit period —The way that Medicare measures insureds’ use of hospital and skilled nursing facility services. A benefit period begins the day the insured goes into a hospital or skilled nursing facility. The benefit period ends when the insured has not received hospital or skilled nursing care for 60 days in a row. If the insured goes into the hospital after one benefit period has ended, a new benefit period begins. The insured must pay the inpatient hospital deductible for each benefit period. There is no limit to the number of benefit periods an insured can have.
Coinsurance —The percent of the Medicare-approved amount that insureds must pay after they pay the deductible for Part A and/or Part B. In the Original Medicare plan, the coinsurance payment is a percentage of the cost of the service (like 20 percent).
Copayment —In some Medicare health plans, the amount that insureds pay for each medical service, like a doctor’s visit. A copayment is usually a set amount paid for a service–for $5 or $10 for a doctor visit. Copayments are also used for some hospital outpatient services in the Original Medicare plan.
Deductible —The amount that must be paid for health care before Medicare begins to pay, either for each benefit period for Part A, or for each year for Part B. These amounts can change every year.
Durable medical equipment —Medical equipment that is ordered by a doctor for use in the home. These items must be reusable, such as walkers, wheelchairs, or hospital beds.
End-stage renal disease (ESRD) —Kidney failure that is severe enough to require lifetime dialysis or a kidney transplant.
Fiscal intermediary (also called intermediary) —A private company that has a contract with Medicare to pay Part A and some Part B bills.
Grievance —A complaint about the way a Medicare health plan is giving care. For example, insureds may file a grievance if they have problems with the health-care facility (such as cleanliness), staff behavior, or operating hours. Likewise, insureds many file a grievance if they have problems calling the plan. Note that a grievance is not the same as an appeal, which is the way to deal with a complaint about a treatment decision or a service that is not covered (see the definition of appeal) .
Guaranteed issue rights (also called “Medigap protections”) —Rights that insureds have in certain situations when insurance companies are required by law to sell or offer them a Medigap policy. In these situations, an insurance company can’t deny insureds insurance coverage or place conditions on a policy; it must cover them for all pre-existing conditions and cannot charge them more for the policy because of past or present health problems.
Health maintenance organization (HMO) —A type of Medicare managed care plan where a group of doctors, hospitals, and other health-care providers agree to give health care to Medicare beneficiaries for a set amount of money from Medicare every month. In an HMO, insureds usually must get all of their care from the providers that are part of the plan.
Homebound —Normally unable to leave one’s home. Leaving home takes considerable and taxing effort. A person may leave home for medical treatment or short, infrequent absences for non-medical reasons, such as a trip to the barber.
Home health agency —An organization that provides home care services, including skilled nursing care, physical therapy, occupational therapy, speech therapy, and care by home health aides.
Home health care —Skilled nursing care and certain other health care that a person gets in his or her home for the treatment of an illness or injury. Inpatient care —Health care that a person gets when admitted to a hospital.
Lifetime reserve days —Sixty days that Medicare will pay for when an insured is in a hospital for more than 90 days. These 60 reserve days can be used only once during a lifetime. For each lifetime reserve day, Medicare pays all covered costs except for a daily coinsurance.
Limiting charge —The highest amount of money an insured can be charged for a covered service by doctors and other health-care providers who don’t accept assignment. The limit is 15 percent over Medicare’s approved amount. The limiting charge only applies to certain services and does not apply to supplies or equipment.
Long term care —A variety of services that help people with health or personal needs and activities of daily living over a certain period. Long-term care can be provided at home, in the community, or in various types of facilities, including nursing homes and assisted living facilities. Most long-term care is custodial care. Medicare does not pay for this type of care.
Medicare —A health insurance program for people 65 years of age or older, certain younger people with disabilities, and people with end-stage renal disease (ESRD) (people with permanent kidney failure who need dialysis or a transplant).
Medicare-approved amount —The fee Medicare sets as reasonable for a covered medical service. This is the amount that the insured and Medicare pay a doctor or supplier for a service or supply. It may be less than the actual amount charged by a doctor or supplier. The approved amount is sometimes called the “approved charge.”
Medicare carrier —A private company that contracts with Medicare to pay Part B bills.
Medicare+Choice plans — Alternatives to the Original Medicare plan, these plans are health-care plans, such as Medicare managed care plans or Medicare private fee-for-service plans, offered by a private company and approved by Medicare. The name of these plans changed to Medicare Advantage by MMA 2003.
Medicare managed care plan —Health-care choices (like HMOs) in some areas of the country. In most plans, insureds can only go to doctors, specialists, or hospitals on the plan’s list. Plans must cover all Medicare Part A and Part B health care. Some plans cover extras, like prescription drugs. Insureds’ costs may be lower than in the Original Medicare plan.
Medicare private fee-for-service plan —A private insurance plan that accepts people with Medicare. Insureds can go to any Medicare-approved doctor or hospital that accepts the plan’s payment. The insurance plan, rather than the Medicare program, decides how much it will pay and what insureds pay for the services they get. Insureds may pay more for Medicare-covered benefits. They may also have extra benefits the Original Medicare plan does not cover.
Medicare Summary Notice —A notice that insureds get after the doctor files a claim for Part A and Part B services in the Original Medicare plan. It explains what the provider billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay. You might also get a notice called a Notice of Utilization.
Medicaid —A joint federal and state program that helps with medical costs for some people with low incomes. Programs vary from state to state, but most health-care costs are covered if insureds qualify for both Medicare and Medicaid.
Medically necessary —Services or supplies that are proper and needed to diagnose or treat an insured of his or her medical condition. These services/supplies are provided for the diagnosis, direct care, and treatment of the medical condition; they meet the standards of good medical practice in the medical community of the insured’s local area; and they are not mainly for the insured’s or the doctor’s convenience.
Medicare Advantage plan —A Medicare program that gives the Medicare recipient more choices among health plans. Everyone who has Medicare Part A and Part B is eligible, except those who have end-stage renal disease (unless certain exceptions apply). Medicare Advantage plans were formerly called Medicare+Choice plans.
Medicare Part D plan —A plan that was newly implemented by MMA 2003 that created an opportunity for Medicare recipients to purchase Prescription Drug insurance. Part D plans have several components, including low income and limited asset advantages. Enrollment is not automatic, and the recipient must enroll in a stand-alone plan or in a Medicare Advantage plan that includes Part D coverage, if insureds desire coverage. Part D plans were made available, in full, on January 1, 2006.
Medigap policy —A Medicare supplement insurance policy sold by private insurance companies to fill “gaps” in Original Medicare plan coverage. Except in Massachusetts, Minnesota, and Wisconsin, there are ten standardized plans labeled Plan A through Plan J. Medigap policies only work with the Original Medicare plan.
Open enrollment period (Medigap) —A one-time only, six-month period after insureds enroll in Medicare Part B. Insureds must be age 65 or older, at which time they can buy any Medigap policy they want. They cannot be denied coverage or charged more due to health history during this time.
Original Medicare plan —A pay-per-visit health plan that lets an insured go to any doctor, hospital, or other health-care provider who accepts Medicare. The insured pays the deductible. Medicare pays its share of the Medicare-approved amount, and the insured pays his or her share of this amount (coinsurance). The Original Medicare plan has two parts—Part A (Hospital Insurance) and Part B (Medical Insurance).
Out-of-pocket costs —Health-care costs not covered by Medicare that insureds must pay on their own.
Plan of care —A plan written by a doctor that describes what kind of services and care an insured must receive for his or her health problem. Premium —The periodic payments to Medicare, to an insurance company, or to a health-care plan for health-care coverage. Preventive services —Health care to keep an insured healthy or to prevent illness, such as Pap tests, pelvic exams, yearly mammograms, and flu shots.
Primary care doctor —A doctor who is trained to give an insured basic care. The primary care doctor is the doctor an insured sees first for most health problems. The doctor makes sure that insureds get the care they need to stay healthy. The primary care doctor may also talk with other doctors and health-care providers about the insured’s care and refer the insured to them. In many Medicare managed care plans, insureds must see their primary care doctor before they can see any other health-care provider.
Quality improvement organization (QIO) —Groups of practicing doctors and other health-care experts paid by the federal government to check and improve the care given to Medicare patients. They must review an insured’s complaints about the quality of care given by inpatient hospitals, hospital outpatient departments, hospital emergency rooms, skilled nursing facilities, home health agencies, Medicare private fee-for-service plans, and ambulatory surgical centers.
Skilled nursing facilities —A level of care that must be given or supervised by registered nurses. All of an insured’s needs are taken care of with this type of service. Examples of skilled nursing care are intravenous injections, tube feeding, oxygen, and changing sterile dressings on a wound. Any service that could be safely done by an average non-medical person (or the insured him-or herself) without the supervision of a registered nurse is not considered skilled care.
State Health Insurance Assistance Program—A state program that gets money from the federal government to give free health insurance counseling and assistance to people with Medicare.
Urgently needed care —Care that an insured gets for a sudden illness or injury that needs medical care right away but that is not life threatening. The insured’s primary care doctor generally provides urgently needed care if the insured is in a Medicare health plan other than the Original Medicare plan. If the insured is out of the plan’s service area for a short time and cannot wait until he or she returns home for care, then the health plan must pay for urgently needed care.

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