Section 2: Medicare Basics

Inpatient Hospital Care

Table of Contents

• Inpatient Hospital Care
• Inpatient Benefit Days and Cost-Sharing
  • Full Days—Renewable
  • Coinsurance Days—Renewable
  • Lifetime Reserve Days—Nonrenewing
  • Inpatient Psychiatric Hospital Days
  • Inpatient Psychiatric Benefit Days Reduction
  • Determining Cost-Sharing Amounts
  • Medicare Deductible, Coinsurance and Premium Rates
  • Inpatient Hospital Services
    • Covered Services
    • Private Rooms
    • Noncovered Services
    • Reimbursement Systems
    • Inpatient Services Paid Per Diem

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Inpatient Hospital Care

Under Medicare Part A, inpatient hospital care in an acute care hospital, CAH, IRF, IPF, or LTCH; cancer or children’s hospital can be covered if certain conditions are met.

The patient must require care that can only be provided in a hospital, and a doctor must formally admit the beneficiary as an inpatient for treatment of an illness or injury. Generally, a person is considered an inpatient with the expectation that he/she will remain at least overnight, even if it later develops that he/she can be discharged or transferred to another hospital and does not use a hospital bed overnight.

In addition, the facility must have signed a provider agreement with Medicare to be a participating hospital.

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Inpatient Benefit Days and Cost-Sharing

Part A coverage in a hospital has a limited number of days (90 renewable and 60 nonrenewable) which can be paid by Medicare. Certain types of days are renewable and certain days are nonrenewable. When a patient starts a new benefit period, they are entitled to a full set of renewable days. If necessary, such as when these days are exhausted, the beneficiary is entitled to use any “available” nonrenewable days.

Benefit days are not transferable to family members, and unused renewable days are not carried over to a new benefit period. In other words, if a beneficiary has renewable days remaining in a prior benefit period and a new benefit period begins, those days the beneficiary did not use in the prior benefit period will not be added to the new benefit period.

"Cost-sharing” refers to the monetary amount that is the beneficiary’s responsibility, such as Medicare deductibles and coinsurance amounts.

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Full Days—Renewable

A beneficiary has 90 available days per benefit period, which are renewed when the beneficiary begins a new benefit period. The first 60 medically-necessary days are called “full days.” These days are considered to be “paid in full” since there is no cost to the beneficiary after the inpatient hospital deductible unless the patient also receives noncovered services. The inpatient hospital deductible is charged once per benefit period and the deductible amount changes annually.

Example:

• Mr. Miller has been in the hospital many times during his current benefit period and has used all but five days of this benefit period’s renewable days. He is able to be home for 75 days in a row, and therefore is granted a new benefit period.

Can Mr. Miller’s remaining five days be added to the days in his new benefit period?
No, once a new benefit period begins, any unused renewable days in a prior benefit period are forfeited.

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Coinsurance Days—Renewable

The next 30 days are called “coinsurance days.” Medicare pays for these medically-necessary days with the exception of the beneficiary’s coinsurance responsibility. The coinsurance amount is charged per day, and this amount changes annually.

Example:

• Mrs. Jackson has not been in a hospital or SNF since 2021.

If Mrs. Jackson is admitted as an inpatient to your hospital today, how many renewable benefit days will she have available?
Since she has not been an inpatient since 2021, she has a full benefit period available and can use her 60 full days followed by her 30 coinsurance days, if needed.

If Mrs. Jackson is only an inpatient for three days before being discharged, but is readmitted 20 days later, can she be charged another inpatient deductible?
No, the inpatient deductible can only be charged to a beneficiary once per benefit period. Mrs. Jackson would have 57 of her 60 full days to use, followed by her 30 coinsurance days, if needed.

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Lifetime Reserve Days—Nonrenewing

Every beneficiary is granted 60 LTR days when he/she becomes enrolled in Medicare Part A that can be used for an extended hospital stay. LTR days are only available for use after the renewable 90 days have been used in the current benefit period.

These days are not renewable with a new benefit period. Once all the LTR days are used, a beneficiary no longer has LTR days available for future inpatient hospital stays.

LTR days cannot be used in a SNF swing bed.

Similar to coinsurance days, Medicare pays for LTR days with the exception of the beneficiary’s coinsurance responsibility. The LTR cost-sharing amount is charged per day, and this amount changes annually.

Example:

• Mr. Washington has not been an inpatient in a hospital or SNF since early last year, when he used 110 days as an inpatient in a hospital. Upon admission to your hospital, his eligibility file indicates that he has 60 full days and 30 coinsurance days available, but only 40 LTR days available.

Why doesn’t Mr. Washington have 60 LTR days available?
During his inpatient hospital stay last year, Mr. Washington used his 90 renewing days (60 full and 30 coinsurance days) plus 20 of his LTR days (90 + 20 = 110 days). Since LTR days cannot be renewed, he has only 40 LTR days remaining.

The provider must notify the beneficiary that they can elect not to use their LTR days. This notification must be as of or prior to the date that their 90 renewable days (60 full days and 30 coinsurance days) are exhausted.

A beneficiary does not have to use their LTR days when their full and coinsurance days are exhausted, nor do they have to use their LTR days in a span of 60 days in a row. However, if they choose not to use their LTR days or to save some days for a later hospital stay, the beneficiary will have to pay privately or utilize another insurance policy. Unless the beneficiary has signed a written notification that they elect not to use their LTR days during a specific inpatient hospital stay, the provider can use LTR days for stays when appropriate.

A beneficiary has the right to retroactively choose not to use their LTR days. A retroactive election not to use the LTR days must be filed within 90 days following the beneficiary’s discharge from the hospital unless benefits are available from a third party payer to pay for the services and the hospital agrees to the retroactive election. In that case, the beneficiary may file an election not to use the LTR days later than 90 days following discharge.

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Inpatient Psychiatric Hospital Days

Medicare covers up to 190 inpatient days in a free-standing IPF in a beneficiary’s lifetime. Inpatient psychiatric days are not a separate set of benefit days available to the beneficiary but rather the term is used to describe the maximum number of days that a beneficiary can be covered in a free-standing IPF as an inpatient in his/her lifetime.

Since there are a total of 150 inpatient hospital benefit days that can be used in any benefit period (60 full days, 30 coinsurance days and 60 LTR days), only 150 inpatient psychiatric days can be used during any single benefit period. When this occurs, a beneficiary will have to start a new benefit period in order to use the remaining 40 days allowed in a free-standing IPF. The 190 day maximum benefit applies only to free-standing IPFs and not to IPFs within a hospital as a distinct part unit.

Since inpatient psychiatric hospital benefit days parallel the inpatient hospital benefit, the same inpatient deductible, coinsurance and LTR cost-sharing charges apply. If a beneficiary has no days remaining in their current benefit period, the psychiatric hospital stay cannot be covered.

Example of Applying Cost-Sharing to Psychiatric Hospital Stays

• A beneficiary meets his inpatient hospital deductible in an acute care hospital and uses 50 days. He is then admitted as an inpatient to a free-standing IPF 45 days later (still within the same benefit period). He already satisfied the deductible for this benefit period during the acute care hospital stay and is not responsible for another for this stay. He has 10 full days, 30 coinsurance days and any remaining LTR days available. If we assume all 60 LTR days are available, he has a total of 100 days available for use in this IPF. He would have to enter into a new benefit period to obtain new renewable days.
• A beneficiary has been an inpatient in an acute care hospital for three inpatient stays during the same benefit period and, in total, has used 75 inpatient hospital days. She is then admitted to a free-standing IPF a month later (still within the current benefit period). She already satisfied the deductible for this benefit period and is not responsible for another for this stay. She has no full days, 15 coinsurance days and any remaining LTR days available. If we assume all 60 LTR days are available, she has a total of 75 days available for use in this IPF. She would have to enter into a new benefit period to obtain new renewable days.

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Inpatient Psychiatric Benefit Days Reduction

If a beneficiary is an inpatient in an IPF at any point during the 150 days immediately preceding his/her Medicare entitlement date and is an inpatient in an IPF on the first day of entitlement, the inpatient psychiatric benefit days reduction applies. The reduction in benefits is only applicable during the patient’s very first benefit period and only if the patient’s inpatient stays were for the treatment or diagnosis of mental illness.

When the inpatient psychiatric benefit days reduction applies, the patient’s first benefit period is reduced by the number of days the patient was an inpatient in an IPF during the 150-day period immediately preceding the entitlement date. For example, if the patient met the conditions for the reduction rule and was an inpatient for 20 days prior to entitlement, the patient would only be eligible for 40 (not 60) full days, 30 coinsurance days and 60 LTR days.

For more information regarding the inpatient psychiatric benefit day reduction, refer to the CMS IOM Publication 100-02, Medicare Benefit Policy Manual, Chapter 4, Section 10. 

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Determining Cost-Sharing Amounts

Medicare Part A deductible and coinsurance amounts change on the calendar year, but are charged to the beneficiary per benefit period. The next year’s deductible and coinsurance amounts are published prior to December 31 each year.

Deductible and coinsurance amounts can be found on the CMS website. 

Did You Know? If you know only the inpatient deductible, coinsurance or the LTR cost-share for any given year, it is easy to figure out the other amounts, since they are all based on a formula. The LTR cost-share is always half of the inpatient deductible or double the coinsurance. Coinsurance is always a quarter of the inpatient deductible or half of the LTR cost-share. The inpatient deductible is always double the LTR cost-share or the coinsurance multiplied by four.

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Medicare Deductible, Coinsurance and Premium Rates

• MLN Matters® MM13365: Medicare Deductible, Coinsurance, & Premium Rates: CY
  2024 Update

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Inpatient Hospital Services

In general, the Medicare inpatient benefit pays for room and board and all ancillary services needed to treat the beneficiary’s illness or injury.

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Covered Services

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

• Semiprivate room
• All meals including special diets
• Regular nursing services
• Intensive care/coronary care units
• Drugs/medications
• Operating/recovery room costs
• Laboratory, X-ray and radiology services
• Blood transfusions
• Rehabilitation services
• Speech, physical and occupational therapy
• Other hospital services

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Private Rooms

Under the inpatient hospital benefit, Medicare Part A will pay for a semiprivate room. Private rooms can be covered under Medicare when it is medically necessary for the beneficiary to have a private room. In addition, a private room can be paid for when the beneficiary requires immediate hospitalization and the hospital has no semiprivate rooms available.

When a private room is requested by the beneficiary or is not medically necessary, Medicare will pay the semiprivate room rate. The beneficiary is responsible for the difference between the private and semiprivate room rates.

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Noncovered Services

Noncovered inpatient hospital services include, but are not limited to:

• Private duty nurses
• Personal convenience items such as television or telephone
• Noncovered services such as cosmetic surgery

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Reimbursement Systems

There is a variety of different payment methods for inpatient hospital services. Medicare payment to a hospital for inpatient services depends on the inpatient hospital type.

• Inpatient acute care hospitals are paid under the (IPPS. Reimbursement is based on DRGs.
• IPFs are paid under the IPF prospective payment system (PPS). Reimbursement is based on a fixed rate that is adjusted for many factors. Although payment is considered to be made under PPS, payment is very similar to that which is made on a per diem basis (described further below in this section).
• IRFs are paid under the IRF PPS. Reimbursement is based on CMGs.
• LTCHs are paid under the LTCH PPS. Reimbursement is based on LTC-DRGs.

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Inpatient Services Paid Per Diem

Hospitals not reimbursed under a PPS system are paid on a “per diem” basis. “Per diem” is Latin for “per day.” Hospitals reimbursed under this methodology are paid a set amount per patient per day of care. Hospitals paid on a per diem basis include:

• Cancer hospitals
• Children’s hospitals
• CAHs

Revised 5/31/2024