Medicare and secondary health insurance options


My Father is currently doing PD and is on Medicare (Part A, B, D) and COBRA right now. The COBRA coverage will lapse on 4/1/13, and we will be left with no secondary insurance. I was wondering:

  1. How much is peritioneal dialysis per month if we have to pay the cost out of pocket (we live in San Francisco, CA if the location makes a difference)?

  2. Do we pay 20% of the amount that Medicare negotiates with the dialysis center, or 20% of the commercial rates on the bill?

  3. Are the rates that Medicare pays to the dialysis center fixed, or on a graduated scale?

  4. We have an option of obtaining small group health insurance through my Father’s LLC, but the cost will be over $1,000 per month. If the cost of out of pocket dialysis is cheaper than the small group health insurance, is there any reason why we should still choose to purchase small group health insurance?

Thanks in advance for any advice!

When the COBRA coverage ends, Medicare will become primary and the dialysis clinic will have to accept Medicare’s allowed charge for his PD as payment in full. This will mean that the clinic can only bill the Medicare Part B deductible and 20% coinsurance. It must discount its commercial charge to what Medicare allows. In addition, Medicare has a Part A deductible and daily co-pays for lengthy hospital stays so it’s best if he could have insurance to cover those as well. Medicare can pay a higher rate based on certain facility and patient characteristics so I can’t tell you what the exact amount the clinic can get from Medicare or what your father will owe with Medicare alone. Ask billing staff at your dialysis clinic (or in the corporate office) what the Medicare allowed charge is for his PD. If he can get insurance that will pay Medicare Part A and Part B deductibles and any copays or coinsurance, whether through a Medigap plan or the insurance he can get through the LLC, it will help to pay for dialysis and other doctors, hospitals, and other medical services he may need. Although it sounds like a lot of money, $1,000 a month may be less than having to pay all of those expenses out-of-pocket.

Contact your state insurance department to find out if your father can get a Medigap plan and what other options he may have besides the plan that has the $1,000 premium since he’s losing his COBRA coverage. Is your father under 65? How long has he had Medicare Part B? Federal law protects people 65 and older who get Medicare Part B for 6 months and allow them to buy a Medigap plan to help pay the Medicare deductible and 20% coinsurance. Some states have extended this protection for people under 65 who are losing employer sponsored insurance. Finally, the HIPAA law that protects patient privacy also allows “portability of health insurance” which means people covered by insurance who are changing from an insurance they’ve had long enough can buy other insurance even if they have a pre-existing condition if they buy that other insurance before they’ve had a gap in insurance of 63 days so timing is everything. His COBRA plan should give him a “creditable coverage” notice that proves he’s had the other insurance long enough. He should ask his current insurance for that to assure that he can’t be denied other individual coverage (which will be secondary to Medicare) if he can’t get a Medigap plan.