Q: What inpatient hospital care does Medicare cover?
Part A covers medically necessary inpatient hospital care, which is care that you receive as a formally admitted hospital inpatient. You must be formally admitted into the hospital by a physician for your care to be considered inpatient. You may face different costs if you are a hospital outpatient or on observation status. If you are a hospital inpatient, Part A covers: a semi-private hospital room and meals; general nursing care; medically necessary medications; other hospital services and supplies. Medicare does not cover: private duty nursing; a private room (unless medically necessary or if it is the only room available); personal care items (such as razors or socks); a television or telephone in your room.
After meeting your Part A deductible, Original Medicare pays in full for the first 60 days of your benefit period. After day 60, you will pay a daily hospital coinsurance. Part B continues to cover any outpatient provider services you receive while in the hospital. You usually owe a separate 20% coinsurance for these services. You are covered for up to 90 days each benefit period in a general hospital, plus 60 lifetime reserve days. A benefit period begins the day you are admitted to a hospital as an inpatient, or to a skilled nursing facility (SNF), and ends the day you have been out of the hospital or SNF for 60 days in a row. The 60 lifetime reserve days can be used only once, and you will pay a coinsurance for each one. Medicare Advantage plans can sometimes have different costs and co-pays and you should check on these directly with your plan.
Q: What are “observation services” as it relates to Medicare Part A coverage?
Observation services are short-term outpatient services received when you are in the hospital for monitoring purposes and/or to determine whether you should be admitted as an inpatient. It is important to know that if you are receiving observation services (sometimes referred to as observation status), you have not been formally admitted to the hospital as an inpatient, even if you are given a room or stay overnight.
Under Medicare law, patients must have an inpatient stay in a short-term acute care hospital spanning at least 3 consecutive days (not counting the day of discharge) for Medicare to pay for a subsequent stay in a SNF. Outpatients can stay for multiple days and nights in hospital beds and receive medical and nursing care, diagnostic tests, treatments, medications, and food, just as inpatients do. However, although the care received by patients in observation status can be similar to the medically necessary care received by inpatients, outpatients who need follow-up care do not qualify for Medicare coverage in a SNF. As a result, the Medicare beneficiary ends up being responsible for paying for the SNF stay.
Since March 8, 2017, the NOTICE Act has required hospitals to inform patients who are receiving outpatient observation services for more than 24 hours that they are outpatients, not inpatients. Hospitals must use the Medicare Outpatient Observation Notice (MOON) and provide an oral explanation. While receiving notice informs patients of their status, the law does not give patients hearing rights or count the time in the hospital for purposes of SNF coverage. The Center for Medicare Advocacy has been working as part of a coalition pushing for legislative changes. The Improving Access to Medicare Coverage Act of 2019 counts the time Medicare beneficiaries spend in observation toward the 3-day stay requirement, so that Medicare patients who spend 3 days in a hospital, regardless of inpatient/observation designation, can access post-acute care in a SNF when needed.