Annual Out of Pocket Costs With Traditional Medicare and Employer Provided Coverage

Hello Beth,

The Medicare claim processing waiting game is driving me nuts. The 30 month COB period with my employer’s insurance as primary and Medicare Part B as secondary ended on 12-31-14. It was a sweet ride while it lasted, with my only out of pocket costs being the monthly Medicare Part B premium. This compared quite nicely to my employer’s $2000 deductible and 15% copay up to an annual $4000 out of pocket max.

I’ve got online access to my Medicare account and I’m waiting the see claims processed for my home hemodialysis. I saw these in 2014 on my employer’s health insurance provider’s web site, pretty much billed weekly by DaVita through my HHD clinic.

When can I expect to see claims processed and the 20% not paid by Medicare to fall to my employer’s insurance subject to the $2000 annual deductible and $4000 out of pocket max? Additionally, can I expect to reach that $4000 out of pocket max during 2015?

You’re right. Having Medicare Part B with an employer group during the first 30 months eliminates the out-of-pocket costs the employer plan requires people to pay since the employer plan is billed more and pays more than Medicare. Although DaVita billed your plan weekly, I believe dialysis clinics bill Medicare claims monthly after the month of service is ended. Medicare is required to wait a certain amount of time before paying any claim. For “clean” electronic claims (those with nothing unusual about them), Medicare waits 13 days (26 days for paper claims). Medicare is required to pay “clean” claims within 30 days. Medicare routinely covers 3 HD treatments a week. If you’re doing daily dialysis and receiving more than 3 treatments a week, Medicare requires your physician to submit medical justification with the claim for additional treatments. That may be delaying claim filing and/or payment. Here’s the manual chapter that describes Medicare’s claim payment process (not ESRD specific).

Here’s the Medicare Claims Processing Manual that discusses dialysis billing:

The Medicare allowable for HD is around $250/treatment and is a consolidated or bundled payment that includes several drugs, supplies, and labs that may have been billed separately to your employer plan. The 20% should be around $50/treatment. I have heard that DaVita and other dialysis providers bill a commercial rate to employer plans that is significantly higher than $250/treatment. Some Medicare Administrative Contractors (insurance companies that pay Medicare claims) pay for more than the 3 treatments a week Medicare routinely allows when medically justified. If Medicare doesn’t cover and pay for all the treatments you get, DaVita may bill your employer plan at its commercial rate for treatments Medicare doesn’t cover. This may take longer for DaVita to get paid as much as it will by Medicare and your employer plan. Here’s information on “consolidated billing” (what’s included in the Medicare bundle of services for dialysis):

Review your employer plan policy and talk with your plan about how it coordinates with Medicare as a secondary payer and if the deductible is part of the out-of-pocket, which I suspect it is. If your plan has a $2000 deductible before claims are paid, DaVita would bill you the $50/treatment until your deductible is met (plus any amount owed for extra treatments). After you have met the deductible, you would owe the 15% coinsurance/copay and your plan would pay the remaining 5% until you have met the $4000 out-of-pocket. Other medical bills would be applied to your out-of-pocket maximum too. Therefore, you should meet your out-of-pocket maximum this year. Once you do, your employer plan will pay 100%.

The best people to advise you about the status of Medicare and insurance claims and what you owe are DaVita’s billing personnel. They should be able to tell you information about your claim specifically, including when they filed the Medicare claim and how long it typically takes for Medicare to pay claims, if they’ve been paid by Medicare for January, if they’ve filed a claim with your employer plan for January. Ask if they expect to get payment from Medicare for all the treatments you do or if they expect to have to bill your employer plan for any treatments over 3 a week. This should help you know what to expect and whether the amount of the bills they expect you to get will present a financial hardship to you. If so, ask if you can make payments over time. DaVita and other dialysis providers have a form patients can complete to determine if any balances can be written off based on family income.

One thing that might make this easier to take is that your employer plan will pay significantly less this year than it did in previous years. This may help keep your employer’s premium costs lower, a factor that your employer may consider in raises, promotions, and other benefits.

Hello Beth,

Thanks for the prompt as well as information rich reply. I had a pretty good handle on my financial liabilities - Medicare payment amount, employers deductible, copay and out of pocket max, but did not have an awareness of the claims submission (DaVita - monthly) or the claims processing (Medicare) timing, as well as handling of my 5X weekly HHD treatments vs. standard 3X weekly.

As luck (or good planning) would have it, I have enough Flexible Spending Account (FSA) balance from 2014 of to cover 9 treatments at $50/treatment (not including the $147 annual Part B deductible), which would be enough to cover the first half of January 2015 of treatments. The FSA balance from 2014 can be used on eligible medical expenses incurred through March 15, 2015 but must be claimed by 4-30-15. That seems like plenty of time for Medicare processing of claims from January 2015.

If I don’t receive the “Patient Owed” balance(s) on January claims for dialysis treatments by 4-15-15 (two weeks to submit the claims to my FSA provider), I run the risk of “loosing”, e.g. “Use it, or loose it”, the entire 2014 FSA balance. What steps can I take, and when should I take them, to make sure this doesn’t happen?

I’d suggest talking with DaVita’s billing staff as soon as possible and asking if they foresee any reason why you would not receive a bill from DaVita before 4/15 so you can submit it to your FSA provider. I don’t know if this is possible but it would be good to ask if you can work with the same person for billing questions/issues. That way, they would know your situation and you would (hopefully) feel like you could trust him/her.