MEDICARE: PART A BENEFITS

Part A of Medicare provides benefits for expenses incurred in hospitals, skilled-nursing facilities and hospices. Some home health care benefits are also covered. For benefits to be paid, the facility or agency providing benefits must participate in the Medicare program. Virtually all hospitals are participants, as are most other facilities or agencies that meet the requirements of Medicare.

Part A of Medicare along with Part B provides a high level of benefits for medical expenses. However, as is described in the next few pages, deductibles and copayments may be higher than in prior group or individual coverage. In addition, certain benefits that were previously provided may be excluded or limited. For this reason, persons without supplemental retiree coverage from prior employment may wish to consider the purchase of a medigap policy in the individual marketplace.

Hospital Benefits
Part A pays for inpatient hospital services for up to 90 days in each benefit period (also referred to as a spell of illness). A benefit period begins the first time a Medicare recipient is hospitalized and ends only after the recipient has been out of a hospital or skilled-nursing facility for 60 consecutive days. A subsequent hospitalization then begins a new benefit period.

In each benefit period, covered hospital expenses are paid in full for 60 days, subject to an initial deductible of $792 in 2001. This deductible is adjusted annually to reflect increasing hospital costs. Benefits for an additional 30 days of hospitalization are also provided in each benefit period, but the patient must pay a daily copayment ($198 in 2001) equal to 25 percent of the initial deductible amount. In addition, each recipient also has a lifetime reserve of 60 additional days that may be used if the regular 90 days of benefits have been exhausted, but once a reserve day is used, it cannot be restored for use in future benefit periods. When using reserve days, patients must pay a daily copayment ($396 in 2001) equal to 50 percent of the initial deductible amount.

There is no limit on the number of benefit periods a person may have during his or her lifetime. However, there is a lifetime limit of 190 days of benefits for treatment in psychiatric hospitals.

Covered inpatient expenses include the following:

-Room and board in semiprivate accommodations. Private rooms are covered only if required for medical reasons.

- Nursing services (except private-duty nurses).

- Use of regular hospital equipment, such as oxygen tents or wheelchairs.

- Drugs and biologicals ordinarily furnished by the hospital.

- Diagnostic or therapeutic items or services.

- Operating room costs.

- Blood transfusions after the first three pints of blood. Patients must pay for the first three pints of blood unless they get donors to replace the blood.

- There is no coverage under Part A of Medicare for the services of physicians or surgeons.

Skilled-Nursing Facility Benefits
In many cases, a patient may no longer require continuous hospital care but may not be well enough to go home. Consequently, Part A provides benefits for care in a skilled-nursing facility if a physician certifies that skilled-nursing care or rehabilitative services are needed for a condition that was treated in a hospital within the past 30 days. In addition, the prior hospitalization must have lasted at least three days. Benefits are paid in full for 20 days in each benefit period and for an additional 80 days with a daily copayment ($98 in 2001) that is equal to 12.5 percent of the initial hospital deductible. Covered expenses are the same as those described for hospital benefits.

A skilled-nursing facility may be a separate facility for providing such care or a separate section of a hospital or nursing home. The facility must have at least one full-time registered nurse, and nursing services must be provided at all times. Every patient must be under the supervision of a physician, and a physician must always be available for emergency care.

One very important point should be made about skilled-nursing facility benefits: Custodial care is not provided under any part of the Medicare program unless skilled-nursing or rehabilitative services are also needed.

Home Health Care Benefits
If a patient can be treated at home for a medical condition, Medicare pays the full cost for an unlimited number of home visits by a home health agency. Such agencies specialize in providing nursing and other therapeutic services. To receive these benefits, a person must be confined at home and be treated under a home health plan set up by a physician. No prior hospitalization is required. The care needed must include skilled-nursing services, physical therapy, or speech therapy. In addition to these services, Medicare also pays for the cost of part-time home health aides, medical social services, occupational therapy, and medical supplies and equipment provided by the home health agency. There is no charge for these services other than a required 20 percent copayment for the cost of such durable medical equipment as iron lungs, oxygen tanks, and hospital beds. Medicare does not cover home services furnished primarily to assist people in activities of daily living such as housecleaning, preparing meals, shopping, dressing, or bathing.

If a person has only Part A of Medicare, all home health care services are covered under Part A. If a person has both Parts A and B, the first 100 visits that commence within 14 days of a hospital stay of at least three days are covered under Part A. All other home health visits are covered under Part B.

Hospice Benefits
Hospice benefits are available under Part A of Medicare for beneficiaries who are certified as being terminally ill persons with a life expectancy of six months or less. While a hospice is thought of as a facility for treating the terminally ill, Medicare benefits are available primarily for services provided by a Medicare-approved hospice to patients in their own homes. However, inpatient care can be provided if needed by the patient. In addition to including the types of benefits described for home health care, hospice benefits also include drugs, bereavement counseling, and inpatient respite care when family members need a break from caring for the ill person.

To qualify for hospice benefits, a Medicare recipient must elect such coverage in lieu of other Medicare benefits, except for the services of the attending physician or services and benefits that do not pertain to the terminal condition. There are modest copayments for some services.

The benefit period consists of two 90-day periods followed by an unlimited number of 60-day periods. These periods can be used consecutively or at intervals. A beneficiary may cancel the hospice coverage at any time (for example, to pursue chemotherapy treatments) and return to regular Medicare coverage. Any remaining days of the current hospice benefit period are lost forever, but the beneficiary can elect hospice benefits again. However, the beneficiary must be recertified as terminally ill at the beginning of each new benefit period.

Exclusions
There are some circumstances under which Part A of Medicare does not pay benefits. In addition, there are times when Medicare acts as the secondary payer of benefits. Exclusions under Part A include the following:

Services outside the United States and its territories or possessions. There are a few exceptions to this rule for qualified Mexican and Canadian hospitals. Benefits are paid if an emergency occurs in the United States and the closest hospital is in one of these countries. In addition, persons living closer to a hospital in one of these countries than to a hospital in the United States may use the foreign hospital even if an emergency does not exist. Finally, there is coverage for Canadian hospitals if a person needs hospitalization while traveling the most direct route between Alaska and another state in the United States. However, this latter provision does not apply to persons vacationing in Canada.

- Elective luxury services, such as private rooms or televisions.

- Hospitalization for services not necessary for the treatment of an illness or injury, such as custodial care or elective cosmetic surgery.

- Services performed in a federal facility, such as a veterans' hospital.

- Services covered under workers' compensation.

Under the following circumstances, Medicare is the secondary payer of benefits:

- When primary coverage under an employer-provided medical expense plan is elected by (1) an employee or spouse aged 65 or older or (2) a disabled beneficiary.

- When medical care can be paid under any liability policy, including policies providing automobile no-fault benefits.

- In the first 30 months for end-stage renal disease when an employer-provided medical expense plan provides coverage. By law, employer plans cannot specifically exclude this coverage during this 30-month period.

- Medicare pays only if complete coverage is not available from these sources and then only to the extent that benefits are less than would otherwise be payable under Medicare.