Thought Leadership Healthquake™: Unveiling the Impact of Medicare Eligibility Clauses in Commercial Health Insurance Policies

Unveiling the Impact of Medicare Eligibility Clauses in Commercial Health Insurance Policies: Essential Financial Information for Patients and Healthcare Providers

The intricate realm of health insurance poses numerous challenges for both patients and healthcare providers. Navigating a web of rules, policies, and administrative obligations can be overwhelming for all parties involved. Adding to the complexity, patients often bear the burden of high out-of-pocket expenses, including premiums, deductibles, copays, and coinsurance, while providers face the risk of delayed or incomplete payments from insurance companies. In this dynamic landscape, understanding the nuances of health insurance is crucial for both patients seeking coverage and healthcare providers aiming to deliver quality care.

Of late, we’ve noticed a growing insurance payor trend that may adversely affect certain patients and their healthcare providers financially – a commercial insurance policy clause called Medicare Estimation (also known as Medicare Entitlement).

Medicare Estimation refers to the process used by health insurance companies to estimate the amount they would have paid if the patient had elected Medicare Part B coverage, and/or received services from a Medicare-participating provider. It allows commercial insurance (including COBRA) to reduce the covered amount, thereby reducing payment to the provider and increasing patients’ financial responsibility.

Medicare Estimation may be applied by commercial insurance in the following instances:

  1. When patients are eligible for Medicare, but do not elect Medicare Part B coverage, often due to other primary coverage, or for personal reasons
  2. When Medicare-eligible patients receive services from providers who have opted out of the Medicare program (Opt-out provider status means that neither the physician, nor the beneficiary submits the bill to Medicare for services rendered. Instead, the beneficiary pays the physician out-of-pocket and neither party is reimbursed by Medicare).

This practice is supported by the Centers for Medicare and Medicaid Services (CMS)1. Detailed information can be found here:


Here are a few scenarios illustrating how it can play out:

Scenario 1: Mr. Smith has primary insurance through his employer but is also eligible for Medicare. He decides not to enroll in Medicare Part B because he is satisfied with his employer-based coverage. However, Mr. Smith undergoes a medical procedure that his insurance company considers a Medicare-covered service. In this case, the insurance company may invoke Medicare estimation to determine the amount they would have paid if Medicare Part B were active. The EOB will refer to the amount Medicare would have paid, which is significantly less than most commercial insurance contracts pay. In most cases the surgeon will be paid substantially less than expected, and the patient will be responsible for substantially more than usual or expected.

Scenario 2: Mrs. Johnson decides not to enroll in Medicare Part B because she is covered under her spouse’s COBRA plan. She requires a durable medical equipment (DME) item, which is typically covered by Medicare. The insurance company will process the claim according to the primary insurance, but the EOB will likely include an estimation amount based on Medicare guidelines. The DME supplier will receive substantially less and the patient will be responsible for substantially more.

Scenario 3: Mrs. Phillips has Medicare Part B but knowingly chose to have hip replacement surgery with a provider who has opted out of the Medicare program. In this scenario, the patient paid out-of-pocket up front for this service, but likely expected to be partially reimbursed by their commercial insurance. If and when Medicare Estimation is invoked, the patient may not be reimbursed at all.

These scenarios are by no means comprehensive. It is worth noting that we at Fellow Health Partners have seen Medicare Estimation applied on patient Explanation of Benefits (EOBs) in inconsistent and unexpected ways – even within the same payor – so that it is almost impossible to predict how an individual patient and/or provider will be affected financially. While we are constantly assessing the situation and seeking patterns, at this time we’re finding Medicare Estimation EOBs to be “consistently inconsistent” – which implies variability in training of insurance adjusters, and/or their own interpretation of how Medicare Estimation should be applied.

Fellow Health Partners’ Accounts Receivable Manager Lorraine Catapano has seen Medicare Estimation applied for many years, but reports that up until recently it was only sporadic.

Our group was struggling with the big operational lift that came with trying to do our own billing while scaling and setting up a new entity. FHP has been a shining star…

Accounts Receivable Manager Lorraine Catapano

Now that the industry is forced to deal with this new paradigm, the best response we are left with is to help patients and providers protect themselves financially as much as possible. Here’s what we recommend to our healthcare practices and their patients.

Protecting Yourself: Tips for Patients:

  1.  Understand your insurance coverage: Familiarize yourself with the details of your health insurance plan, including coverage limitations and exclusions which will be detailed in your certificate of coverage (COC). This will help you make informed decisions and avoid surprises.
  2. Question your insurance carrier: If you have doubts or concerns about the Medicare estimation process, don’t hesitate to reach out to your insurance company for clarification. Understanding their policies will empower you to make informed decisions. Ask if your insurance will cover you at commercial rates for future services rendered by a specific provider, or if Medicare Estimation will apply. Be sure to get a reference number for the call, noting the name of the agent you spoke with as well as the date and time of your call, in case you later find yourself in a dispute and need to reference the information that was provided.
  3. Seek professional advice: If you find the Medicare estimation process confusing or encounter issues with your insurance claims, consider consulting an insurance specialist or a Medicare counselor. They can provide personalized guidance and help you navigate complex situations.
  4. Consider enrolling in Medicare Part B when eligible: While individual circumstances may vary, enrolling in Medicare Part B when eligible can provide you with additional coverage options and potentially reduce the need for Medicare estimation in the future.

Protecting Yourself: Tips for Healthcare Providers:

  1. If a commercial insurance patient has Medicare Part A but not B, their election to not enroll in Part B may adversely affect your reimbursement. Train your staff to look out for this particular combination in coverage so that you are aware of possible financial risks.
  2. Should you identify a commercial patient who elected to not enroll in Part B but wants to continue services with you, ensure they understand they are at risk of significant financial responsibility, via direct conversation or intake paperwork. Encourage them to contact their insurance company to confirm their financial coverage for each encounter or procedure, and advise them to capture the details of that call as well as reference #, agent name, date and time of call.

By working together and taking proactive steps, patients and providers can navigate the intricacies of Medicare Estimation, protecting the interests of both parties to ensure fair and appropriate reimbursement for healthcare services while meeting healthcare needs.