Updates to beneficiary cost sharing under four parts of Medicare (A, B, C, and D)

by Judith L. Kares, JD

Medicare recently posted CY 2017 updates to premiums, deductibles, and coinsurance for Original Medicare (Parts A and B), as well as average premiums for Parts C and D. In this note, we will focus on eligibility, scope of coverage, effective dates, premiums, and other cost-sharing amounts under each part.

Part A eligibility, premium, and cost-sharing updates

Under Original Medicare, beneficiaries have considerable choice of providers from which to receive covered services. Medicare Part A provides coverage for inpatient facility (e.g., hospital, skilled nursing facility [SNF], home health, hospice) services. There are three broad coverage categories under which individuals within the U.S. can become eligible for Medicare Part A:

• By reason of age (65);
• By reason of disability; and
• By reason of end-stage renal disease (ESRD)

Most individuals (99%) within the U.S. who have worked enough quarters (40) pay no premiums and are automatically eligible for Medicare Part A when they meet applicable coverage criteria. Enrollees age 65 and over who have fewer than 40 quarters of coverage and certain persons with disabilities must pay a monthly premium to receive coverage under Part A:

• Individuals with 30–39 quarters of coverage who meet certain additional requirements are subject to a reduced monthly premium rate ($226 in 2016; $227 in 2017).
• Those with fewer than 30 quarters of coverage must pay the full monthly premium ($411 in 2016; $413 in 2017).

The inpatient benefit under Part A is a “per benefit period” benefit and varies depending upon the type of entity to which the patient has been admitted. The first benefit period after a patient becomes eligible for Part A begins on the first day the patient is admitted to an inpatient hospital (broadly defined to include both acute and specialty facilities) or a SNF. That benefit period will continue until the patient remains outside the inpatient setting (including both hospitals and SNFs) for a period of 60 consecutive calendar days, with one caveat: An inpatient SNF stay will only prevent the benefit period from closing as long as the patient continues to receive skilled care. Once skilled care is discontinued, the 60-consecutive day period can begin to run, at the end of which, the benefit period will close. A new benefit period begins the next time a patient is admitted to the inpatient setting, broadly defined, as noted above.

The concept of benefit period is essential, because the inpatient benefit in both hospitals and SNFs is a per-benefit-period benefit, as set out below.

For inpatient hospitals, there are 90 regular inpatient covered days per benefit period, including:

• Full benefit days--days 1–60 (during which the patient is an inpatient in a hospital), for which the patient will be subject to a single inpatient deductible ($1288 in 2016; $1316 in 2017); and
• Coinsurance benefit days—days 61–90 (during which the patient is an inpatient in a hospital), for which the patient will be subject to a daily coinsurance equal to 25% of the then current inpatient deductible ($322 in 2016; $329 in 2017).

Regular benefit days renew each time an old benefit period ends and a new benefit period begins. That is, once a new benefit period begins, the beneficiary once again has 90 regular inpatient hospital covered days.

All beneficiaries eligible for Part A also have 60 inpatient hospital lifetime reserve days (LRD), which they may draw upon once their regular inpatient hospital covered days are exhausted. For each LRD used, the patient will be subject to a daily coinsurance equal to 50% of the then current inpatient deductible ($644 in 2016; $658 in 2017). The hospital is required to provde notice to beneficiaries when they are about to exhaust their regular benefit days and to permit them to elect not to use their LRDs, with an understanding of the financial consequences if they choose not to use them.

For SNFs, there are 100 covered inpatient SNF days per benefit period, including

• Days 1–20, during which the patient has no cost sharing responsibility; and
• Days 21–100, for which the patient will be subject to a daily coinsurance equal to 12.5% of the then current deductible ($161.00 in 2016; $164.50 in 2017).

The deductible amount that applies to a particular inpatient hospital stay is based upon the deductible in effect on the date of admission. The coinsurance applicable to both inpatient hospital and SNF stays will depend upon the coinsurance amounts in effect on the individual days of that stay.

Examples:

1 Assume that a patient eligible for Medicare Part A who had not been admitted to an inpatient hospital since becoming eligibile for Medicare was admitted to an inpatient hospital on December 20, 2016, and discharged on January 6, 2017. The patient would be liable for a per-benefit-period deductible, based upon the date of admission, which in this case would be $1288.

2 Same facts as above, but assume that the patient had already met his or her per benefit period deductible and had already used 60 covered inpatient hospital days during that benefit period. In that case the patient would owe 12 days of coinsurance based upon the 2016 coinsurance daily rate of $322 per day and 5 days of coinsurance based upon the 2017 daily rate of $329, for a total of $5509.

To read the complete, detailed article, including information on Medicare Parts B, C, and D, on Medicare Compliance Watch, click here.