How Does Medicare Cover Hospital Stays?

Medicare coverage for hospital stays can be confusing. In order to understand what costs you might be responsible for, you need to understand a number of administrative factors.

1. In-patient vs. Out-patient

A hospital stay is classified as either in-patient or out-patient by the hospital based on the clinical assessment of your physician. It has nothing to do with whether you stay overnight at the hospital.

Among a variety of factors, it has to do with whether your condition requires your care in the hospital for two or more days (otherwise called midnights to signify that your condition required that you remain in the hospital for at least 48 hours that included two midnights). A formal in-patient admission must meet the two midnight rule.

If you are not formally admitted as an in-patient, your stay is considered out-patient. Again, as an out-patient you could still stay overnight.

There is nothing about your clinical care at a hospital that would enable you to determine if you have been admitted as an in-patient or not. In order to confirm that status, you need to ask, particularly since the Medicare coverage for that care is different for in-patient versus out-patient status.

2. Observation status

A form of out-patient care is Observation status. This is used to allow clinical care while your medical condition and needs are being more fully assessed. This, too, could involve an overnight stay while your physician determines if it is necessary to admit you as an in-patient or discharge you. If your observation status extends for more than 24 hours, the hospital should provide notice to you of that status and explain why you are remaining as out-patient. This notice is called the Medicare Outpatient Observation Notice (MOON).

The status of your care determines which portion of your Medicare benefits is responsible to pay for that stay. If you have traditional Medicare, the care is divided into 2 coverages for hospital care:

1. Part A covers the hospital costs for an in-patient stay.
2. Part B covers the costs for physician services for in-patient or out-patient care, and it covers all hospital costs for out-patient care.

Each Medicare part has its own deductibles and coinsurances. The Part A deductible is $1,316 for each benefit period. Please note, this is a benefit period and not a year. A benefit period begins when you enter the hospital and ends when you have been out of the hospital for at least 60 consecutive days. If you are in and out of the hospital within that 60 day period, you only pay the deductible once. However should you return to the hospital on day 61 or on any other day after that, you will have to pay a new deductible. Additionally, after you have met the deductible, you pay nothing for the first 60 days of in-patient, but pay $329 coinsurance for each day between 61-90 days. After 90 days, you pay $658 per lifetime reserve day. You have a total of 60 reserve days over your lifetime. Beyond the lifetime reserve days, you pay all costs.

For Part B, the yearly deductible is $183. Once that is met, Medicare will pay for 80% of the allowed charges, leaving you responsible for 20% of those allowed charges. If you have a secondary insurance, that policy will cover the remaining 20% after you satisfy any deductibles and copays that might apply to that policy. If you don’t have a secondary, you are responsible for the 20% remaining.

If you have a Medicare Advantage Plan, the costs for your hospital care are not universal. Each plan determines its own requirements of coverage, so you need to contact your plan to learn what deductibles and copayments you might be responsible to pay.

Hospital care is costly. All of the costs discussed here are for Medicare-participating hospitals and providers. It can be very helpful to understand your plan’s financial requirements before you access that care.

Medical Billing 101: Levels of Service

In an effort to help MEDucate patients about some of the basics of their health insurance benefits, here is an overview of how doctors bill their office visits.

The cost of a visit to a doctor is dependent on a variety of factors:

Is this a consultation?
Is this a new patient visit?
Is this a yearly well visit?
Is this a visit with an established patient with specific health complaints?

Each of these visits is defined by its own set of procedure codes that are used to identify the service type for the purpose of submitting those claims to health insurance companies for payment. In addition, these service classifications are further delineated by codes to specify the intensity and complexity of the service provided. In all cases except for yearly well visit procedure codes, there are five levels of service available to be used, ranging from minimal time and basic clinical involvement to significant time and complex clinical management. Accordingly, the cost for each of these services increases as its level of clinical management increases.

Why is this important for you to know?

Given that almost every health insurance policy includes a deductible, policy holders can be subject to shouldering significant costs for their care until their deductibles are reached. For people who don’t seek medical care very often, those deductibles might not be met in a given year. That means that those people could be self-funding their care, and therefore, could benefit from controlling their medical costs in any ways that they can.

In the case of the office visit, ensuring that the visit has been coded appropriately could translate into hundreds of dollars of savings. For instance, if a visit to your doctor was scheduled to exam your throat for throat pain, and that visit lasted 10 minutes, it should have been billed at a lower service level and fee than it would have been billed at had that visit lasted 30 minutes and included more comprehensive evaluation and procedures including strep cultures, ear wax removal, blood draws and other diagnostic tests. According to government studies, physicians frequently upcode (code at a higher level than justified by the clinical notes for the encounter) which results in higher reimbursement for the doctor, and thus potentially translates into higher costs for the patient.

Copays Aren’t Just for Office Visits Anymore

Almost everyone is now familiar with copays. These are the flat fee charges that insurance companies require that patients pay each time they have a visit a doctor. When copays were first instituted, they applied only when a patient actually saw a doctor. Now these fees encompass of variety of services. Here are some points to keep in mind when trying to determine if you are responsible to pay a copay.

Office Visits

If your insurance plan requires copays, you will be responsible to pay a copay each and every time you have an office visit. This visit could be with the doctor, or if could be with a nurse, nurse practitioner, or physician’s assistant. If your provider is billing an office visit procedure code, you will be responsible to pay your copay. If your visit to the office is simply for a blood draw or an immunization, an office visit procedure code should not be billed and therefore, you may not be responsible for a copay.

Yearly Physicals

One exception to the “copay for each visit” rule is yearly well visits/physicals. Most insurance policies do not apply a copay to this one yearly visit (note: for women, your policy might entitle you to a copay-free well-woman visit in addition to a yearly check-up with an internist). Refer to your policy, your insurance card, or speak with a customer service representative to confirm if copays are applied to yearly well visits under your plan.


It is becoming increasingly more common to see copays that scale in cost by the place of service. Depending on whether you see your primary care physician or a specialist, the copays could vary, often significantly. Additionally, some policies require that you select a primary care physician and list that person on your records. If you fail to do this, every visit to every doctor, whether the doctor is your internist or a specialist, will be charged at the higher specialist copay rate. If this is a stipulation of your plan, be sure to register your PCP with your insurer to avoid the higher copays.

Emergency Room and Urgent Care Visits

Almost all policies require a copay for a visit to an ER or Urgent Care Center. In most instances, the copay for an ER visit will be substantially higher than that for the Urgent Care Center. It’s a good idea to locate Urgent Care Centers in your network that are close to both your home and office. Knowing this in advance will enable you to access urgent care more quickly and at lower cost.


This is the one area that has been experiencing rapid growth. More and more, insurers are applying copays to tests that are conducted not only in doctors’ offices but also in labs and other facilities. There is no way to easily know if your plan applies such copays to tests without calling your insurer and asking the customer service representative. When investigating copays in this area, you need to be sure to be very specific with your questions. It is advisable to obtain the procedure codes and the diagnosis codes that your provider will bill for these tests in advance of receiving them. Share those codes with your insurer and have the customer service representative confirm which tests will have copays and what the copay will be for each test.

All of this advance legwork will help you avoid medical bill problems that could culminate in expensive medical debt. If this process seems too confusing, enlist the help of a medical claims advocate. These patient advocates will know the questions to ask your insurer in order to confirm your financial responsibility for medical services.

When a Doctor Says There Is a Problem With Your Insurance, Be Careful

Insurance companies are continually updating their systems to confirm coverage for their subscribers. They are looking to see if there is any reason that a patient might be covered by another insurer. Their goal….to avoid making payments for services that should have been covered and paid by another insurance company.

It is in everyone’s best interests that confirmation of active coverage happens no later than the time at which the services are provided. However, sometimes, unbeknownst to the patient, policies are terminated retroactive to an earlier date. That means that patients could have received medical services that had been paid by the insurer, that are now being taken back from the provider.

Why is this important to you?

If you provide, unintentionally or not, incorrect billing information to a medical provider or facility, and that provider is paid, you might eventually receive a bill from the provider for those services. This is how the process works:

When an in network provider initially submits a claim to the company they think is the primary insurance for their patient, that claim is paid according to the contract the doctor has with the insurer (also known as the contracted rate). In almost all cases, the amount billed to the insurer (Billed Fee) is higher than the amount paid by the insurer (Paid Fee).

If the insurer takes the money back from the provider because at some point the insurer learns that the policy either terminated or that another insurer was supposed to have been primary for that patient, if there is no other insurance to bill, the provider will bill you for the service. Just how much you will be billed is the question….and this is exactly what you need to be cautious about.

Initially the doctor or facility was willing to accept the contracted rate (Paid Fee) from the insurer. Now that it has been determined that the coverage was not in effect at the time the services were provided, rather than just bill the patient the amount that was taken back from the insurer (Paid Fee), some doctors will bill the patient the higher billed amount (Billed Fee). While technically they are entitled to bill you their full rate because you didn’t have coverage at the time, ethically that billing practice is lacking and questionable. Particularly if you have been an established patient, it would be more acceptable that they just ask you to pay the contracted rate (Paid Fee)….after all, when you had insurance they accepted that payment in full.

Therefore, if this situation arises, study your bill. If you did have insurance at that time, provide that new information to the practice immediately so that they can bill the correct insurer. If you didn’t have coverage at the time, look to see how the charges were initially billed to the insurer. Determine what the practice is asking you to pay now. If there is a discrepancy between the two amounts, it would be worth a conversation with the practice to see if they would accept the contracted rate.

If you are unsure of how to interpret the bill or what to say to the practice, seek the assistance of a qualified medical claims advocate. These patient advocates are accustomed to negotiating medical bills and are often a successful road to reduce medical bill costs.

For more information on this topic, or any other financially-related health topic, visit Our medical claims advocates would be happy to provide guidance through a free consultation.

How to Make A High Deductible Health Plan Work For You

The cost of your health care extends beyond the price you pay for insurance premiums each month. Health insurance, whether it is provided as an employee benefit or is purchased independently from a state or federal Exchange, is only the tip of the iceberg when it comes to protecting you from costs you might need to bear. Nowadays, almost all health insurance plans carry a deductible, the amount of your health care you are required to fund each year before your insurance pays a dime. Additionally, high deductible health plans are becoming more common with employers and may be the only plans available on the Exchanges. This means that you, the subscriber, will shoulder responsibility for even higher costs of medical care. If you have a high deductible plan, it is in your best financial interest to understand exactly how your policy works. Here are 4 easy steps in ensure that you are getting the most from your high deductible health insurance benefits.

1. Take advantage of free services
While your plan might make you responsible for thousands of dollars of medical care, most plans include some level of routine “wellness” screenings that are free to you. These can include a yearly wellness check-up, mammography, vaccines, and colonoscopies, to name a few. You should confirm with your insurance provider which screenings are free to you, and then be sure that you avail yourself of them. Be careful to conduct these services with an in-network provider, and to investigate the definition for that screening, or that “free” service might cost you hundreds if not thousands of dollars. What one policy defines as a yearly wellness check-up might differ significantly from what your doctor includes as standard of care for that exam. The difference between those definitions could translate into significant cost for you to bear.

2. Shop the price
While pricing for medical services is anything but transparent, it is important that you ask the right questions to ensure that you avoid unexpected medical bills, or worse, incur medical debt. Before seeing a doctor or undergoing a test, ask the facility for the codes that will be billed for the services provided. Then contact your insurance provider and let them know which facility you will be visiting, provide them with the codes that will be billed for those services, and then ask them to let you know what cost, if any, you will be responsible to pay. Be sure to take detailed notes on the response, including the name of the representative and the date and time of the call, in case you run into a medical billing error. The insurer is the only party that can definitively confirm your financial responsibility for services under your policy.

3. Be aware of the start date for your plan year and start using benefits early
Since your deductible resets at the beginning of each plan year, it’s important to know exactly when that starts. Not all insurance plans begin on January 1. If you assume that your plan year starts January 1 when it actually starts October 1, you might mis-time scheduling free screenings. Or worse, you might not maximize the benefits your insurance would pay. If you know that you need an expensive procedure, it would be best to schedule it early in your plan year so that should you need care later in the year, you will already have met your deductible and your insurance should then pay for the subsequent care, minus any copays/coinsurances.

4. There are limits to your out-of-pocket costs
While high deductible plans can be expensive, they are not without limits. All 2017 plans on the Exchanges have a maximum for out-of-pocket expenses. Most employer plans, as well, limit your financial exposure. So it’s a good idea to confirm what those limits are at the start of the plan year…and be sure you seek in-network care, since limits don’t necessarily apply to out-of-network care.

For more information on this topic, or any other financially-related health topic, visit Our medical claims advocates would be happy to provide guidance through a free consultation.