Medicare is health insurance for people 65 or older, certain people under 65 with disabilities, and people of any age with End-Stage Renal Disease. There are two main options for receiving Medicare coverage: Original Medicare (including Part A, Hospital Insurance, and Part B, Medical Insurance) and Medicare Advantage (also referred to as Medicare Part C). As we saw in previous modules, there are significant differences between these two choices that should be carefully considered when a person becomes eligible to enroll.
Medicare Part A covers in-patient care in hospitals and other facilities. In this module, we will delve more deeply into the details of Medicare Part A coverage and costs to the patient. It should be noted that the dollar amounts and other information mentioned in this course are of 2018, but are subject to change.
Enrollment, Premiums and Coverage
Most people who are receiving Social Security benefits will automatically get Part A when they turn 65. For those receiving Social Security disability benefits, coverage may begin before age of 65. If a person does not fall into any of the “automatic enrollment” categories, she must sign up for Part A on her own. It is important to note that having Medicare Part A, either under Original Medicare or a Medicare Advantage Plan, satisfies the requirements for health coverage under the Affordable Care Act.
Premiums
A Medicare participant is not required to pay monthly premiums for Part A coverage if the recipient or a spouse earned 40 credits by paying requisite amounts of Medicare taxes in each of 40 quarters. If not eligible for premium-free coverage, a recipient can purchase Part A coverage by paying the monthly premiums. The cost of these premiums increases if the recipient does not enroll in Part A during the initial eligibility period. As such, it is usually advisable to enroll in Medicare as soon as a person becomes eligible.
Part A covers a variety of services related to in-patient health care. While all these services are covered for patients with Medicare, each service may require the payments of co-payments, co-insurance and deductibles, that differ depending on the type of service, the nature of the provider, and whether the patient has Original Medicare, a Medicare Advantage Plan, Medigap, or employer or union coverage.
Amount of Coverage
When Medicare Part A does pay for services, the patient is responsible for 20% of the Medicare-approved costs for the provided services. Note that “Medicare-approved costs” are not the same as the amounts billed by the hospital to people without insurance. Medicare rates are negotiated by Medicare and may be much less than private pay rates. Because of the government’s negotiating leverage in that it pays for so many patients, the rates Medicare pays to hospitals are often half of less than half of the private pay rates and are even substantially lower than those negotiated by private insurance companies.[1] Interestingly, Medicaid, which pays for indigent people’s healthcare, pays even lower rates.[2]
Even when covered by Part A, however, the patient is often responsible for co-pays, co-insurance and other costs, though these may be mitigated by additional insurance, including supplemental policies and Medicaid. These costs to the patient vary by service.
Covered Services
Now, let’s look at what types of services are covered under Part A.
Blood
Medicare coverage for blood transfusions depends on the source of the blood. If the hospital obtains it from a blood bank at no charge, there is no charge to the patient and no requirement to replace it. If the hospital buys the blood, the patient must either pay the hospital costs for the first 3 units of blood received in a calendar year or donate replacement blood (or arrange to have it donated by another person).[3]
Home health services
Home health services that are ordered by a physician as medically necessary and that are provided by a Medicare-certified home health agency will be fully covered by Medicare. Such services may only be provided to a patient who is homebound, which means that either:
- She has trouble leaving her home without help because of illness or injury, or
- She is advised not to leave her home because of her condition and is normally unable to leave her home because it is a major effort.
Related Medicare-covered equipment may be paid for completely or in part by Part B as we will see in Module 4.
Hospice Care
Hospice care is end-of-life care provided to maximize the comfort of terminally ill patients. It is covered by Medicare Part A for a patient who is medically certified as terminally ill with a life expectancy of 6 months or less. Coverage includes materials and services for pain relief and symptom management including drugs, medical services, nursing, social services, certain durable medical equipment, aides, spiritual and grief counseling and other services. Hospice care may be provided in the patient’s home or in a residential facility such as a nursing home.
If the patient requires hospice care for symptoms that cannot be addressed at home, the patient must enter a Medicare-approved facility such as a hospice facility or hospital. Where the patient can live at home, Medicare also may cover “respite care,” which provides up to five days of care in a hospital or other approved facility to give the caregiver who tends to the patient at home some time to rest. The patient is, however, responsible for 5% of the Medicare-approved amount for in-patient respite care.
Payment for Hospice care
There is no cost to the patient for hospice care. There is, however, a small copayment, of up to $5 per prescription, for drugs for pain and symptom management. If a drug is not covered under hospice benefits, it may be paid for under Medicare Part D.
Elective Surgery
Medicare Part A does NOT cover elective surgery or hospitalizations associated with elective surgery. This includes most types of plastic or cosmetic surgery unless it is necessary to correct a medical problem or the effects of an injury.[4] One notable exception is cataract surgery which is covered under Part B.[5]
Hospital Care
Medicare covers semi-private rooms, meals, general nursing, drugs, and other hospital services and supplies as part of inpatient treatment. This includes care obtained in acute care hospitals, critical access hospitals, inpatient rehabilitation facilities and long-term care hospitals. It also may cover inpatient care as part of a qualifying clinical research study. Inpatient mental health care in a psychiatric hospital is likewise covered.
Services not covered by Medicare for hospital inpatients include private-duty nursing, a television or phone in the room, personal care items and non-medically necessary private rooms.
Payment for hospital care
Part A requires payment of a deductible of $1,340 for days 1-60 for each benefit period. A “benefit period” in Original Medicare begins on the day of admission to the facility and ends when no inpatient hospital care has been received for 60 consecutive days.
For days 61-90 of each benefit period, the patient is responsible for $335 per day co-pay towards the care. If a patient required a hospital stay longer than 90 days, Medicare will still pay for part of the care, with 2 caveats:
- The patient’s copay is $670 per day; and
- Each day over 90 days consumes one of the patient’s 60 “lifetime reserve days.” Once the patient exhausts all 60 reserve days, Medicare will not cover any of the hospital costs. After the lifetime reserve days are used up, the patient is solely responsible for all costs for each day she is in a hospital.
Let’s take a look at an example:
Assume that Betty, who receives Medicare Part A, enters a hospital on January 1. She is released on January 21 (20 days). She then is re-admitted on April 1 and stays until June 15 (75 days). She is then admitted again on September 1 and stays until the following March 4 (184 days). You may want to pause the video and see if you can figure out what she’s responsible for based on these rules.
Let’s look at the solution:
– The 20-day stay between January 1 and January 21 is entirely covered by Medicare since it is less than 60 days. However, she is responsible for a $1,340 deductible.
– For the April to June stay, she must pay a $1,340 deductible. Plus, she must pay $335 per day for each day over 60 in the benefit period, for a total of $5,025.
– For the September to March stay, she again must pay a $1,340 deductible. This covers the first 60 days. She must pay $335 per day for the next 30 days, for a total of $10,050. Plus, the next 60 days are covered, but she must pay $670 per day, for a total of $40,200. The last 34 days are not covered at all and she will be billed at the hospital’s going rate.
At this point, you might be thinking that hospital stays can get really expensive for Medicare recipients and, of course, you’d be right. Still, it must be noted that such lengthy hospital stays are rare. Moreover, supplemental insurance such as Medigap, Medicare Savings Programs, Medicaid and status as a Qualified Medicare Beneficiary[6] can all help to reduce or eliminate the patient’s responsibilities under these Medicare rules.[7]
Mental Health and Psychiatric Facility Care
Part A covers stays in psychiatric hospitals under similar rules to those governing other hospital stays. However, inpatient psychiatric care in a freestanding psychiatric hospital is limited to a cap of 190 days over the course of a lifetime.
Nursing Home Care
After a patient is discharged from a hospital, he or she may require the services of an inpatient skilled nursing facility to improve or maintain the patient’s current condition. This could include the need for daily services such as intravenous injections or physical therapy. Medicare will cover semi-private rooms, meals, skilled nursing and rehabilitative services, and other medically necessary services and supplies, after the patient has completed a 3-day minimum, medically necessary, inpatient hospital stay for a related illness or injury.
Still, it must be noted that Medicare will only pay for nursing home care where the stay is temporary and rehabilitative in nature. Medicare does not pay for long term nursing home stays or custodial care that may be necessary due to permanent or long-term infirmity due to advanced age, injury or perpetual illness. If it appears that a nursing home stay is permanent or not rehabilitative, then Medicare may drop coverage. Moreover, Medicare will not cover nursing home stays longer than 100 days in all cases.
Where Medicare does cover nursing home care, it pays the entire amount for the first 20 days. After 20 days, the patient is responsible for co-insurance of $167.50 per day. After 100 days or when Medicare determines that the stay is permanent or not rehabilitative, the patient is responsible for the full cost.
Once Medicare drops coverage for a nursing home stay, the patient’s long-term care insurance (if the patient has it) or Medicaid (if the patient is eligible) may pick up coverage. When applying for Medicaid for a person who is in a nursing home where the start of the stay was paid by Medicare, the date that Medicare dropped coverage is often known as the pick-up date, as that is the point wherein Medicaid is being asked to pick up the costs dropped by Medicare.
While Original Medicare and Medicare Advantage Plans may differ with regard to costs to patients for some types of services, Medicare Advantage Plans may not charge more than Original Medicare for skilled nursing facility care services.
Conclusion
Medicare Part A, whether administered through Original Medicare or a Medicare Advantage Plan, provides full or partial coverage for services provided at in-patient hospital, hospice, and skilled nursing facilities as well as some home health care services. Most of these have limits on the duration of coverage within a single benefit period and some have lifetime limits on coverage.
[1] http://money.cnn.com/2014/04/21/news/economy/medicare-doctors/index.html
[2] http://www.academyhealth.org/blog/2017-01/private-vs-public-prices
[3] https://medicare.com/coverage/what-does-medicare-pay-for-blood/
[4] https://www.gomedigap.com/blog/medicare-supplement-cover-surgery/
[5] https://www.ehealthmedicare.com/medicare-coverage-articles/medicare-cataracts-surgery/
[6] http://www.medicareadvocacy.org/old-site/InfoByTopic/MedicareSavingsPrograms/MedicareSavingsProgsMain.htm
[7] https://www.medicareinteractive.org/get-answers/cost-saving-programs-for-people-with-medicare/medicare-savings-programs-qmb-slmb-qi/medicare-savings-program-basics