Fundamentals of Medicare

Section 2: Medicare Basics

Medicare Part B—Medical Insurance

Table of Contents

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Medicare Part B—Medical Insurance

Medicare Part B is considered Medical Insurance. When seeking medical care outside of a hospital or SNF stay, the beneficiary has a wide range of covered services under Medicare Part B. This care can be provided in the office of a physician or in a hospital outpatient setting. In addition, services may be treated in freestanding sites such as dialysis centers and rehabilitation facilities.

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Part B Costs

As with most services under Medicare, there are costs that a beneficiary is responsible for when they have services that are covered under Part B.

  • The Part B deductible is based on a calendar year. A deductible is charged against most of the medically necessary services each year and is the patient’s responsibility (this deductible amount is subject to change every year). Certain services are not subject to deductible and/or coinsurance. Once the deductible is satisfied, Medicare pays most covered, medically necessary Part B services, but applies a patient responsibility known as coinsurance.
  • The coinsurance amount is calculated differently depending on whether Part A MAC or the Part B MAC processes the service. Generally, the Part B MAC will apply a coinsurance (patient’s responsibility) of 20 percent of the Medicare approved amount on the claim. The Part A MAC coinsurance calculations changed with the implementation of the outpatient prospective payment system (OPPS).

OPPS was implemented in 2000. This system changed the way outpatient hospital services are reimbursed and how a patient’s coinsurance is calculated.

Note: This guide was not designed to provide detailed information on the OPPS. Information on the OPPS can be found on the CMS website.

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Medicare Deductible, Coinsurance and Premium Rates

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Covered Part B Services

Medicare Part B covers a wide range of services that can be rendered in different settings, such as physicians’ services, outpatient hospital services, preventive services and DME.

It is important to note that Medicare claims for Part B services may be sent to the MAC, or the DME MAC, depending on the service and where the service was rendered.

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Covered Physicians’ Services

Covered physicians’ services include, but are not limited to:

  • Hospital visits and consultations
  • Office visits and consultations
  • Surgery
  • Anesthesia
  • Diagnostic tests
  • Second opinions
  • Professional fees

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Covered Outpatient Services

The beneficiary must be enrolled in Medicare Part B in order to be covered for services provided on an outpatient basis.

In general, there is no limit to the number of outpatient services a beneficiary may receive. Exceptions to this rule include preventive services, which may only be covered at specific time intervals between each service. These services will be discussed in detail later in this section.

Covered outpatient hospital services include, but are not limited to:

  • X-rays and other radiology services
  • Laboratory tests
  • Emergency room visits
  • Outpatient clinic visits
  • Certain drugs and medications
  • Diagnostic services
  • Dialysis in the facility or home
  • Other medical services, i.e., influenza vaccine, hepatitis B vaccine, etc.
  • Medical supplies, such as casts, splints, and equipment

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Other Part B Covered Services

In addition, Medicare provides many services that are not associated with an inpatient hospital or SNF stay, and that are not a part of a home health or hospice program.

These outpatient services range from transportation by ambulance to DME for use in the home. All items and services must be ordered by a physician and be medically necessary in order for Medicare to make payment. Certain items in this category are billed to the Part B program (ambulance) or the DME MAC.

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Ambulance

Ambulance services may be covered if transportation by any other means would endanger the patient’s health. To be covered, ambulance services must be medically necessary and reasonable.

Covered services are from an institution to the patient’s home when the home is within the locality of the institution or where the home is outside of the locality and the institution is the nearest one with appropriate facilities. The locality refers to the service area surrounding the institution from where people normally come or expected to come for hospital or skilled nursing services.

Occasionally, the institution to which the patient is initially taken is found to have inadequate facilities for treating him/her, and he/she is then transported to a second institution having appropriate facilities. In such cases, transportation by ambulance to both institutions would be covered provided the institution to which he/she is being transferred is determined to be the nearest one with appropriate facilities. The term “appropriate facility” means that the institution is generally equipped to provide the needed hospital or skilled nursing care for the illness or injury involved. It is the institution, its equipment, its personnel and its capability to provide the services necessary to support the required medical care that determine whether it has appropriate facilities. The fact that a more distant institution is better equipped than the closest facility does not automatically make the closest institution an “inappropriate facility.” In addition, the staff/admitting privileges of a specific physician or a physician in a specific specialty do not have any bearing on the determination of an appropriate facility.

Ambulance services to a physician’s office are usually not covered. However, if an ambulance is transporting the patient to a hospital, stops at a physician’s office due to a dire need for professional attention and immediately thereafter continues on to the hospital, payment can be made for the entire trip.

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Prosthetics and Medical Devices

Prosthetics and certain medical devices may be covered if the item replaces the function of a permanently inoperative or malfunctioning body organ or all or part of an internal body organ.

Some examples of covered prostheses and medical devices are:

  • Pacemakers.
  • Artificial limbs.
  • Colostomy and ileostomy supplies.

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Durable Medical Equipment

DME is equipment that a doctor prescribes for a patient for use in the home. Some examples of covered DME are:

  • Wheelchairs
  • Specialty beds

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Rehabilitation Services

Physical therapy, occupational therapy, and speech-language pathology may be covered in a variety of settings from the outpatient hospital setting to an ORF, CORF, or SNF, as well as in the home under home health or hospice. Outpatient therapy must be restorative in nature and must be rendered under a treatment plan. This treatment plan must be established by a physician or a NPP. The physical therapist, occupational therapist or speech-language pathologist who will be rendering the service can establish a treatment plan. The plan of care will contain at a minimum the following information: diagnoses; long-term treatment goals; and type, amount, duration and frequency of therapy services. Medicare will no longer cover therapy after a beneficiary has hit a permanent plateau, that is, the doctor has determined that additional therapy will not give the patient an increase in function. In most circumstances, Medicare does not pay for maintenance therapy.

A doctor must certify that the plan of treatment plan has been established and is being followed and periodically review the plan of treatment.

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Preventive Services

Medicare began covering preventive services in 1981, beginning with PPV. Over the years, Medicare has been adding preventive services to keep beneficiaries healthy. CMS has initiated public awareness campaigns and works with other agencies in the Department of Health and Human Services to promote preventive services.

Medicare preventive services are not always covered in full, and some have specific qualifications for coverage and are subject to medical review.

Some services have different coverage guidelines for screening and diagnostic testing. A service is usually considered diagnostic when a beneficiary is considered at high-risk (has a personal or family history of the condition the test detects), there are symptom(s) of the condition, or there is reasonable suspicion of the condition based on a medical evaluation.

Preventive services covered by Medicare include, but are not limited to the following:

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Bone Mass Measurement Tests

A bone mass measurement test can be covered for beneficiaries who fall into one of the five categories listed below:

  • A woman with low levels of estrogen who, based on her medical history and other findings, is at risk for osteoporosis;
  • A person with spine abnormalities shown by x-ray to indicate osteoporosis, low bone mass or spinal fracture;
  • A person receiving (or expecting to receive) long-term steroid therapy;
  • A person with an overactive parathyroid gland;
  • A person being monitored for response to osteoporosis drug therapy.

The bone mass test must be ordered in writing by a doctor and be reasonable and necessary for the individual patient. In addition, the test must be performed by a qualified provider or under the general supervision of a doctor and using equipment approved by the FDA for bone mass testing.

Medicare will cover a bone mass measurement test once every 23 months. However, this test can be covered more frequently if medically necessary. Coinsurance and deductible are waived.

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Cardiovascular Disease Screenings

The cardiovascular disease screening is covered for all asymptomatic beneficiaries. A 12-hour fast is required prior to testing. The frequency of when this test can be performed is:

  • Two screening tests per year for beneficiaries diagnosed with pre-diabetes
  • One screening per year if previously tested but no diagnoses of pre-diabetes, or if never tested.
  • No coinsurance and no deductible are applied.

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Colorectal Cancer Screening Tests

Certain tests and procedures can be covered for the early detection of colorectal cancer. A doctor’s order is required for any of these tests.

A fecal-occult blood test is covered once every 12 months for beneficiaries age 50 and older. No Part B deductible or coinsurance is charged to the beneficiary.

A flexible sigmoidoscopy is covered once every 48 months for beneficiaries age 50 and older. Coinsurance and deductible are waived. A colonoscopy is covered once every 24 months for beneficiaries at high-risk. There is no age requirement. Coinsurance and deductible are waived. Colonoscopies are covered for average risk beneficiaries as long as the colonoscopy is not done within 10 years of a previous colonoscopy or within four years of a flexible sigmoidoscopy.

A barium enema is only covered as an alternative to a flexible sigmoidoscopy or colonoscopy and only for beneficiaries age 50 and older. This test is covered once every 48 months or once every 24 months for beneficiaries at high-risk. The beneficiary is charged coinsurance and the deductible is waived.

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Diabetic Self-Management Training Services

A diabetes outpatient self-management and training service is a program that educates beneficiaries in the successful self-management of diabetes. This program must include education about self-monitoring of blood glucose, diet and exercise, and how to use those skills for self-management of diabetes. In addition, an insulin treatment plan is developed for patients who are insulin-dependent diabetics.

Outpatient self-management training services can be covered by Medicare when they are furnished by a certified provider who meets certain quality standards and if the doctor who is managing the beneficiary’s diabetic condition certifies that such services are needed. The doctor must develop a comprehensive plan of care related to the patient’s diabetic condition to ensure therapy compliance or to provide the individual with the necessary skills and knowledge, including skills related to the self-administration of injectable drugs, to manage their condition. The beneficiary is charged a coinsurance and deductible.

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Glaucoma Screening

Medicare covers a dilated eye examination once every 12 months for all beneficiaries who are at high-risk for glaucoma. High-risk includes those beneficiaries who have diabetes and who have a family history of glaucoma.

The screening must be done or supervised by an eye doctor who is legally allowed to perform this service in the state where the service is rendered. The beneficiary is charged coinsurance and deductible for this service.

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Hepatitis B Vaccination

A Hepatitis B vaccination/shot is covered if the beneficiary is at high or intermediate risk for Hepatitis B. Risk factors can include having ESRD or hemophilia. Coinsurance and deductible are waived.

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Influenza Vaccination (Flu Shot)

A flu shot is covered on a yearly basis and does not need to have a doctor’s order. A beneficiary can get a flu shot in a facility setting or at a doctor’s office. No Part B deductible or coinsurance is charged to the beneficiary as this service is considered “paid in full” based on Medicare’s payment to the facility.

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Initial Preventive Physical Examination

For new beneficiaries enrolled in the Medicare program, a one-time preventive, physical exam is covered within the first 12 months of their Part B coverage. The exam includes:

  • Medical history
  • Blood pressure check
  • Weight and height
  • Physician may also give a vision test and an EKG
  • Coinsurance and deductible are waived.

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Mammography

Screening mammograms are covered every 12 months for all women aged 40 and older. Diagnostic mammograms may be covered more often based on the patient’s condition. No doctor’s order is necessary for a screening mammogram. One baseline mammogram is covered for women age 35 to 39. Diagnostic mammograms can be covered for men.

Screening mammograms have no Part B deductible applied. However, the beneficiary is charged coinsurance. For diagnostic mammograms, the beneficiary is charged coinsurance and deductible.

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Medical Nutrition Therapy

Medicare covers medical nutrition therapy services for people with diabetes or renal diseases to help them manage their conditions.

MNT must be prescribed by a physician for purposes of disease management, this benefit includes:

  • An initial assessment of nutrition and lifestyle assessment
  • Nutrition counseling
  • Information regarding managing lifestyle factors that affect diet
  • Follow-up visits to monitor progress managing diet

Medicare covers three hours of one-on-one counseling services the first year, and two hours each year after that. If the beneficiary’s condition, treatment, or diagnosis changes, he or she may be able to receive more hours of treatment with a physician’s referral. A physician must prescribe these services and renew their referral yearly if continuing treatment is needed into another calendar year.

Medical nutrition therapy services include individual medical nutrition therapy delivered via an interactive telecommunications system.

Coinsurance and deductible are waived.

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Pap Smear

Screening Pap smears, including a pelvic exam and breast exam, are covered every two years. Women at a high-risk for cervical or vaginal cancer can have a Pap smear every year. A doctor’s order is necessary for a Pap smear.

Coinsurance and deductible are waived for Pap smears, pelvic exams, and clinical breast exams.

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Pneumococcal Pneumonia Vaccine

A PPV shot is covered under Medicare for beneficiaries considered high-risk of being infected. The high-risk category includes those patients 65 years of age and older who have a chronic illness or who have a weak immune system.

Usually, one vaccination will last the remainder of the beneficiary’s lifetime. However, another vaccination may be administered to beneficiaries at the highest risk of serious pneumococcal infection. In addition, a patient may be revaccinated if at least five years have passed since his/her last PPV shot or if the beneficiary is uncertain about his/her vaccination history during the past five years.

Routine revaccinations of people age 65 and older that are not at high risk are not appropriate.

The PPV shot may be administered without a physician’s order and without a physician’s supervision.

No Part B deductible or coinsurance is charged to the beneficiary as this service is considered “paid in full” upon Medicare’s payment to the facility.

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Prostate Cancer Screening

Annual prostate cancer screening tests can be covered for beneficiaries age 50 and older. Covered tests include a digital rectal exam and a PSA screening.

Each screening test is covered once every 12 months. Coinsurance and any remaining Part B deductible are both charged to the beneficiary for the digital rectal exam but not for the PSA test.

For more information about Medicare preventive services, visit the CMS website on Preventive Services or CMS IOM Publication 100-04 Medicare Claims Processing Manual , Chapter 18, Sections 20, 30, 40, 80, 90, 100, and 110.

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Noncovered Part B Services

The Medicare program is not all encompassing. It does not include coverage for every type of service that can be provided by a medical professional. The original intent of the program was to provide acute and skilled care. It has only been in recent years that preventive services have been added to the program. Unfortunately, the Medicare program does not, as a rule, provide reimbursement for items that many beneficiaries often require, such as hearing aids.

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Routine Services

In general, services that are deemed routine in nature are not covered. This includes, but is not limited to:

  • Routine exams, including yearly exams
  • Routine tests
  • Routine dental services

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Other Noncovered Services

  • Homemaker services (services that provide assistance with the activities of daily living)
  • Long-term care in a nursing home
  • Experimental drugs, procedures and treatments
  • Custodial care
  • Acupuncture
  • Hearing aids and exams (there are exceptions to this exclusion)
  • Eyeglasses and eye exams (there are exceptions to this exclusion)
  • Cosmetic surgery (there are exceptions to this exclusion)
  • Certain immunizations

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Part B Coverage When Inpatient Stay is Not Covered Under Part A

When payment cannot be made under Medicare Part A for an inpatient of a participating hospital or a SNF, certain services can be paid for under Medicare Part B benefit. This situation is commonly called inpatient Part B, which can apply when the patient has used up all of the days in their current benefit period (benefits exhaust), the patient is not enrolled in Medicare Part A (but is enrolled in Medicare Part B), the inpatient stay is deemed not medically necessary, or the patient did not meet all of the technical and medical requirements for coverage (SNF).

The swing bed benefit is a Part A-only benefit. If the beneficiary exhausts 100 days of SNF care in a swing bed, the beneficiary then would be covered by the hospital Part B benefit and billed under the regular hospital number.

A list of the Part B services that can be covered when an inpatient stay cannot be covered under Part A is below. Please note that the patient must meet the coverage criteria for each, and that not all of the following services are allowed as inpatient Part B services in all facility types. In addition, not all of the services below are billed to National Government Services.

Coverage guidelines can be located in CMS IOM Publication 100-02 Benefit Policy Manual, Chapters 6, 8, 11, 14, and 15.

  • Ambulance services
  • Bone mass measurement tests
  • Colorectal cancer screening
  • Diabetes self-management
  • Diagnostic X-ray tests, diagnostic laboratory tests and other diagnostic tests
  • Epoetin Alfa (EPO)
  • Hepatitis B vaccine
  • Hemophilia clotting factors
  • Influenza vaccine (flu shot)
  • Immunosuppressive drugs
  • Leg, arm, back and neck braces, trusses and artificial legs, arms and eyes including adjustments, repairs and replacements required because of breakage, wear loss, or a change in the patient’s physical condition
  • Oral anticancer drugs and anti-emetics
  • Oral drug prescribed for use as an acute anti-emetic used as part of an anti-cancer chemotherapeutic regimen
  • Outpatient physical, occupational therapy and outpatient speech-language pathology services
  • PPV
  • Prostate cancer screening
  • Prosthetic and orthotic devices (other than dental) which replace all or part of an internal body organ or the function of a permanently inoperative or malfunctioning internal body organ, including replacement or repairs of such devices
  • Screening mammography services
  • Screening pap smears and pelvic exams
  • Surgical dressings
  • Splints, casts and other devices used for reduction of fractures and dislocations
  • Therapy (physical therapy, occupational therapy and speech-language pathology)
  • X-ray, radium and radioactive isotope therapy (including materials and services of technicians)

Revised 6/3/2024