Medicare Part A
Skilled Nursing Facility Coverage
Medicare Part B
Home Health Benefit
Appealing Medicare Parts A and B Decisions
Help with Paying for Medicare
Medicare Advantage (Medicare Part C)
Medicare Managed Care
Prescription Drug Coverage (Medicare Part D)
Medicare is the federal government's principal health care insurance program for people 65 years of age and over. In addition, the program covers people of any age who are permanently disabled or who have end-stage renal disease (people with kidney ailments that require dialysis or a kidney transplant). The Medicare program insures 39 million Americans and spends $213 billion a year on their care. Medicare is an entitlement program, meaning it is not based on financial need.
Although Medicare was originally conceived as a program that would relieve older persons of the burden of paying for health care, Medicare beneficiaries now pay a greater percentage of their incomes for out-of-pocket health care expenses than they did before Medicare was enacted in 1965. In addition to paying a monthly premium, Medicare recipients are often required to pay a portion of the cost of the services they receive in the form of a deductible or co-insurance amounts. Deductibles, co-insurance amounts and premiums increase each January. In addition, there are many services and items, such as long-term nursing home or in-home care that Medicare does not cover. To help with this cost-sharing and the items that Medicare does not cover, Medicare beneficiaries often purchase private insurance policies called "Medigap" policies.
For the most part, Medicare pays only for "acute" care -- care that the program's administrators view as reasonable and necessary to diagnose or treat an illness or injury. In other words, the program does not pay for most preventive or chronic health care.
Medicare consists of four major programs: Part A, which covers hospital stays; Part B, which covers physician fees; Part C, which permits Medicare beneficiaries to receive their medical care from among a number of delivery options; and the recently-added Part D, which covers prescription medications.
For more on the basics of Medicare, Medicare.gov has a booklet designed for friends and family of Medicare members. To download the booklet, click here.
There are two parts of Medicare, each with their own eligibility requirements. Medicare Part A is available for anyone who is over age 65 or who is permanently disabled andwho is eligible for Social Security.
You are eligible for Medicare Part A if you:
Medicare Part B is available for anyone over age 65 regardless of Social Security eligibility.
TOPMedicare Part A
Medicare Part A covers institutional care in hospitals and skilled nursing facilities, as well as certain care given by home health agencies and care provided in hospices.
Any person who has reached age 65 and who is entitled to Social Security benefits is eligible for Medicare Part A without charge. That is, there are no premiums for this part of the Medicare program.
Medicare pays for 90 days of hospital care per "spell of illness," plus an additional lifetime reserve of 60 days. A single "spell of illness" begins when the patient is admitted to a hospital or other covered facility, and ends when the patient has gone 60 days without being readmitted to a hospital or other facility. There is no limit on the number of spells of illness. However, the patient must satisfy a deductible before Medicare begins paying for treatment. This deductible, which changes annually, is $1,408 in 2020.
After the deductible is satisfied, Medicare will pay for virtually all hospital charges during the first 60 days of a recipient's hospital stay, other than telephone and television expenses. What Medicare covers includes:
However, Medicare will not pay for treatments or procedures that it considers medically unproven or experimental.
If the hospital stay extends beyond 60 days, the Medicare beneficiary begins shouldering more of the cost of his or her care. From day 61 through day 90, the patient pays coinsurance of $352 a day in 2020. Beyond the 90th day, the patient begins to tap into his or her 60-day lifetime reserve. During hospital stays covered by these reserve days, beneficiaries must pay coinsurance of $704 per day in 2020. This reserve is not reset after each "spell of illness." Once it has been exhausted, the beneficiary will receive coverage for only 90 days when the next spell of illness occurs. However, studies show that the average length of a hospital stay covered by Medicare is eight days.
Medicare Part A also pays for stays in psychiatric hospitals, but payment is limited to a total of 190 days of inpatient psychiatric hospital services during a beneficiary's lifetime.
Fighting a Hosptial Discharge
If you are admitted to a hospital as a Medicare patient, the hospital may try to discharge you before you are ready. While the hospital can't force you to leave, it can begin charging you for services. Therefore, it is important to know your rights and how to appeal. Even if you don't win your appeal, appealing can buy you crucial extra days of Medicare coverage.
Since July 1, 2007, notice requirements for Medicare patients being discharged from the hospital went into effect. The notices give Medicare patients information about their discharge and appeal rights. Previously hospitals were required to give patients a written notice before discharge called "Hospital-Issued Notice of Non-Coverage" (HINN). Hospitals may still give HINNs in certain circumstances, but the new rules require hospitals to give two notices to patients of their rightsone right after admission and one before discharge.
Within two days of admission to a hospital, the hospital must give you a notice called "An Important Message from Medicare about Your Rights" (IM) explaining your discharge and appeal rights. You must read the notice, sign it, and date it. Two days before discharge, the hospital must give you another copy of the IM. If you are in the hospital for three days or less, the hospital only needs to give you one notice.
Once you receive a discharge decision and you are not ready to leave, you should immediately contact your local Medicare Quality Improvement Organization (QIO). A QIO is a group of doctors and other professionals who monitor the quality of care delivered to Medicare beneficiaries. They are paid by the federal government and not affiliated with a hospital or HMO. The phone number should be on the IM.
It is very important to contact the QIO right away. You must contact the QIO by noon on the first business day after you receive the discharge notice. If you do this, you will not have to pay for your care while you wait for your discharge to be reviewed. If you don't contact the QIO by noon, the hospital can begin charging you on the third day after you receive the discharge notice.
Once you request a QIO review, the hospital is required to give you a "Detailed Notice of Discharge." You should receive the notice no later than noon the day after you request a QIO review. The detailed notice explains the medical reason behind the discharge.
The QIO will conduct a review of the discharge. The QIO doctors will review the medical necessity, appropriateness, and the quality of hospital treatment furnished to you. The hospital cannot discharge you while the QIO is reviewing the discharge decision, and you will not have to pay for the additional days in the hospital. If you don't agree with the QIO's decision, you can ask it to reconsider. It must issue a decision within three days.
If, after the reconsideration, the QIO still agrees with the hospital's decision, you can appeal to an administrative law judge (ALJ). You will probably need legal counsel to help you through this process. You can appeal the ALJ's decision to the Department of Health and Human Services, Departmental Appeals Board (DAB). Finally, if you don't agree with the DAB decision, you can appeal to federal court as long as at least $1,000 is at stake.
States may have their own discharge protections. You can find the law in your state from the QIO in your state. Click here for a list of QIOs by state.
TOPSkilled Nursing Facility Coverage
Medicare Part A covers up to 100 days of "skilled nursing" care per spell of illness. However, the conditions for obtaining Medicare coverage of a nursing home stay are quite stringent. Here are the main requirements:
As soon as the nursing facility determines that a patient is no longer receiving a skilled level of care, the Medicare coverage ends. And, beginning on day 21 of the nursing home stay, there is a significant copayment equal to one-eighth of the initial hospital deductible ($176 a day in 2020). This copayment will usually be covered by a Medigap insurance policy, provided the patient has one.
A new spell of illness can begin if the patient has not received skilled care, either in a skilled nursing facility (SNF) or in a hospital, for a period of 60 consecutive days. The patient can remain in the SNF and still qualify as long as he or she does not receive a skilled level of care during that 60 days.
Nursing homes often terminate Medicare coverage for SNF care before they should. Two misunderstandings most often result in inappropriate denial of Medicare coverage to SNF patients. First, many nursing homes assume in error that if a patient has stopped making progress towards recovery then Medicare coverage should end. In fact, if the patient needs continued skilled care simply to maintain his or her status (or to slow deterioration) then the care should be provided and is covered by Medicare.
Second, nursing homes may wrongly believe that care requiring only supervision (rather than direct administration) by a skilled nurse is excluded from Medicare's SNF benefit. In fact, patients often receive an array of treatments that don't need to be carried out by a skilled nurse but which may, in combination, require skilled supervision. In these instances, if the potential for adverse interactions among multiple treatments requires that a skilled nurse monitor the patient's care and status, then Medicare will continue to provide coverage.
When a patient leaves a hospital and moves to a nursing home that provides Medicare coverage, the nursing home must give the patient written notice of whether the nursing home believes that the patient requires a skilled level of care and thus merits Medicare coverage. Even in cases where the SNF initially treats the patient as a Medicare recipient, after two or more weeks, often, the SNF will determine that the patient no longer needs a skilled level of care and will issue a "Notice of Non-Coverage" terminating the Medicare coverage.
Whether the non-coverage determination is made on entering the SNF or after a period of treatment, the notice asks whether the patient would like the nursing home bill to be submitted to Medicare despite the nursing home's assessment of his or her care needs. The patient (or his or her representative) should always ask for the bill to be submitted. This requires the nursing home to submit the patient's medical records for review to the fiscal intermediary, an insurance company hired by Medicare, which reviews the facilities determination.
The review costs the patient nothing and may result in more Medicare coverage. While the review is being conducted, the patient is not obligated to pay the nursing home. However, if the appeal is denied, the patient will owe the facility retroactively for the period under review. If the fiscal intermediary agrees with the nursing home that the patient no longer requires a skilled level of care, the next level of appeal is to an Administrative Law Judge. This appeal can take a year and involves hiring a lawyer. It should be pursued only if, after reviewing the patient's medical records, the lawyer believes that the patient was receiving a skilled level of care that should have been covered by Medicare. If you are turned down at this appeal level, there are subsequent appeals to the Appeals Council in Washington, and then to federal court.
If the Medicare beneficiary has no more than six months to live, Medicare will pay for unlimited hospice care. This can be at home or in a hospice facility, and includes services not generally covered by Medicare. These services include home health aide and homemaker services, physical therapy, counseling, as well as physician and nursing services. There is also a provision for "respite care"--up to five consecutive days of inpatient care to give the patient's primary at-home caregiver some relief. The patient must pay 5 percent of the cost of this respite care.
Hospice benefit recipients are responsible for up to a $5 copayment for each prescription drug, but otherwise there are no deductibles or other copayments for this benefit. Bear in mind, however, that in electing hospice care, the beneficiary is choosing to receive noncurative medical and support services rather than treatment toward a cure for the terminal illness.
Because Medicare's hospice home care benefit does not cover full-time care, it is not an option unless there is a full-time caretaker in the home. For more details on Medicare's hospice care benefit, click here.
TOPMedicare Part B
Medicare Part B basically covers "outpatient" care: office visits to medical specialists, ambulance transportation, diagnostic tests performed in a doctor's office or in a hospital on an outpatient basis, physician visits while the patient is in the hospital, and various outpatient therapies that are prescribed by a physician. Part B also covers a number of preventive services. For more information, click here. In addition, Part B covers home health services if the beneficiary is not enrolled in Medicare Part A. (See The Medicare Home Health Benefit below.)
Medicare recipients who are eligible for Part A are automatically enrolled in Part B unless they opt out. Part B enrollees pay a monthly premium that is adjusted annually. This premium, which is $144.60 a month in 2020, pays for about one-quarter of Part B's actual costs; the federal government pays for the other 75 percent through general tax revenues. This cost-sharing makes Part B something of a bargain, and many Medicare recipients buy it unless their present or former employer provides comparable coverage.
Beginning in January 2020, higher income beneficiaries will pay higher Part B premiums. Following are the higher premium rates:
Moreover, there is a financial incentive not to delay enrollment; those who wait to enroll in Part B after they become eligible for Medicare will pay a penalty. For each year that an individual puts off enrolling, his or her monthly premium increases by 10 percent -- permanently. Thus, a person who waits five years to enroll in Part B will pay premiums 50 percent higher than she otherwise would. (This penalty does not apply if the individual is covered by an employer group plan that is available only to current employees.)
The specifics of what is covered and what is not covered under Part B are complex and change periodically in response to efforts to contain health care costs. Following are some of the items that are excluded from coverage:
Medicare Part B recipients must satisfy an annual deductible of $198 (in 2020). Once the deductible has been met, Medicare pays 80 percent of what Medicare considers a "reasonable charge" for the item or service. The beneficiary is responsible for the other 20 percent.
However, in most cases what Medicare calls a "reasonable charge" is less than what a doctor or other medical provider normally charges for a service. Whether a Medicare beneficiary must pay part of the difference between the Medicare-approved charge and the provider's normal charge depends on whether or not the provider has agreed to participate in the Medicare program.
If the provider participates in Medicare, he or she "accepts assignment," which means that the provider agrees that the total charge for the covered service will be the amount approved by Medicare. Medicare then pays the provider 80 percent of its approved amount, after subtracting any part of the beneficiary's annual deductible that has not already been met. The provider then charges the beneficiary the remaining 20 percent of the approved "reasonable" charge, plus any part of the deductible that has not been satisfied.
Some states either require all licensed physicians to participate in the Medicare program or require even non-participating providers to accept the Medicare-approved rate as full payment.
But many states have no such requirements. If a Medicare beneficiary in one of these states is treated by a non-participating provider who is charging more than the Medicare-approved rate, the beneficiary must pay the usual 20 percent of the Medicare-approved charge plus an additional 15 percent of the Medicare-approved amount (called a "limiting charge").
It is against the law for providers in any state to charge Medicare patients more than an additional 15 percent of the Medicare-approved charge.
Example: Doctor Jones bills Mrs. Smith $150 for an office visit that Medicare says should cost only $100. Mrs. Smith must pay Dr. Jones $35 -- 20 percent of the approved charge ($20) plus an additional 15 percent of the approved charge ($15).
In such "non-assignment" cases, Medicare pays the beneficiary 80 percent of the approved amount and the beneficiary must pay the provider the entire charge that is due. In the above example, however, not all of the charge is due: Doctor Jones is taking a loss (compared to his standard rate) of $35 in treating Mrs. Smith. Doctor Jones must accept this loss as the price of treating a Medicare patient.
Other physician practices that violate Medicare Part B's rules include:
Medicare patients do not have to share the cost of all services under Medicare Part B. Medicare pays for certain services in full, including diagnostic laboratory tests, home health services, second opinions on surgery (or third opinions if the two earlier opinions disagree), expenses for pneumococcal vaccine, and costs to kidney transplant donors. In all these cases, the $198 (in 2020) deductible does not apply and the 20 percent copayment is waived. On the other hand, Medicare will pay only 50 percent of the "approved" rate for the treatment of mental disorders on an outpatient basis.
TOPHome Health Benefit
If you qualify, Medicare will cover your home health benefits entirely, and while under the law there's no limit on the length of time you will be covered, in practice coverage is limited.
Nevertheless, Medicare home health benefits can mean the difference between you or a family member continuing to stay at home, or your health deteriorating until hospital care or nursing home placement become necessary.
You are entitled to Medicare coverage of your home health care if you meet the following requirements:
What you get: If you need an element of "skilled" care, then you will also be entitled to Medicare coverage of social services, part-time or intermittent home health aide services, and necessary medical supplies and durable medical equipment. You can receive up to 35 hours of services a week, although few beneficiaries actually get this level of service. You are entitled to the same level of services whether you are a member of an HMO or are enrolled in traditional fee-for-service Medicare.
What you pay: Nothing, with the exception of 20 percent of the cost of medical supplies and equipment, which is covered by some Medigap policies.
While the government insists that it has not changed the criteria for who is eligible for home care services, home health agencies have inevitably cut back on services they provide in order to make their own budgets balance.
What you can do: All this means that Medicare recipients must advocate for the services they need. If you have to appeal a termination of service, the good news is that most people who appeal Medicare home health benefits win their cases. At the first level of review, 39 percent are successful, and on appeal to an administrative law judge, 81 percent are successful. The bad news is that you have to pay privately for the care in order to have an appealable issue. This is because the issue on appeal is not the termination of a service, but the denial of Medicare payment for the service. As a result, many beneficiaries simply try to make do without the care or hire help on their own without the training and supervision provided by home health agencies.
Most Medicare beneficiaries are not informed of their appeal rights when given notice that their home health care benefits will be terminated. Attorneys have filed a nationwide class action suit on behalf of homebound seniors seeking advance notice of any termination of benefits for Medicare home health coverage, as well as notice of the ability to appeal such a denial before the termination occurs. If your benefits or those of a family member are reduced or terminated, you should take the following steps:
1. Ask your home health agency to explain the cutback and write down its answer. Ask the agency to give you written notice of the cutback or termination of service.
2. Ask your physician to call the agency to urge it not to cut back the services and to provide a letter verifying the level of care you need. This can be essential to whether you ultimately receive the benefits you deserve.
3. Consult your attorney or a Medicare assistance agency in your state to determine whether you likely would be successful on appeal.
4. If you decide to appeal, do so immediately, and arrange with the home health agency to pay privately for the services pending the result of the appeal.
TOPAppealing Medicare Part A and B Decisions
While the federal government makes the rules about Medicare, the day-to-day administration and operation of the Medicare program are handled by private insurance companies that have contracted with the government. In the case of Medicare Part A, these insurers are called "intermediaries," and in the case of Medicare Part B they are referred to as "carriers." In addition, the government contracts with committees of physicians -- quality improvement organizations (QIOs) -- to decide the appropriateness of care received by most Medicare beneficiaries who are inpatients in hospitals.
Sometimes an intermediary, carrier or QIO will decide that a particular treatment or service is not be covered by Medicare and will deny the beneficiary's claim. Many of these decisions are highly subjective and involve determining, for example, what is "medically and reasonably necessary" or what constitutes "custodial care." If a beneficiary disagrees with a decision, there are reconsideration and appeals procedures within the Medicare program. Once Medicare's review process has been exhausted, the matter can be taken to court if the amount of money in dispute exceeds either $1,000 or $2,000, depending on the type of claim. Medicare beneficiaries can represent themselves during these appeal proceedings, or they can be represented by a personal representative or an at