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From Health Law Daily, October 10, 2014

Medicare beneficiaries to pay an additional $1.1B in 2015 for hospital and SNF services

By Jay Nawrocki, MA

Medicare beneficiaries will have to pay a deductible of $1,260 for each spell of illness when admitted to a hospital during 2015. This is an increase of $44 from 2014 when the inpatient deductible was $1,216 for each spell of illness. The coinsurance amounts for 2015 were also increased for extended stays in a hospital or a skilled nursing facility (SNF). Beneficiaries will have to pay $157.50 for each day they spend in a SNF beginning on the 21st day of their stay (Notice, 79 FR 61309, October 10, 2014).

CMS estimates that Medicare beneficiaries will pay $17.4 billion in deductible and coinsurance amounts for inpatient and SNF services in 2015. This is an increase of $1.12 billion from 2014. Medicare beneficiaries will pay $10.5 billion out-of-pocket for inpatient services and $6.9 billion out-of-pocket for services received at a SNF during 2015. Many Medicare beneficiaries have Medicare supplemental insurance, commonly known as MediGap, which will pay these coinsurance amounts on their behalf.

Spell of illness. A beneficiary will have to pay the $1,260 deductible when admitted as an inpatient of a hospital for each spell of illness. A spell of illness begins on the first day a beneficiary is furnished inpatient hospital or SNF services by a qualified provider and ends when the beneficiary has been neither an inpatient of a hospital nor a SNF for 60 consecutive days. A beneficiary may have more than one spell of illness per year and therefore may be liable for more than one deductible payment per year. Under Part A, there is no limit to the number of spells of illness covered.

An individual may be discharged from and readmitted to a hospital or SNF several times during a spell of illness and still be in the same spell if 60 days have not elapsed between discharge and readmission. To determine the 60 consecutive day period, counting begins with the day the individual was discharged. A spell of illness cannot end while a beneficiary is an inpatient of a hospital or an inpatient of a SNF even if the hospital does not meet all of the requirements that are necessary for starting a spell of illness. Even though the spell of illness may not end, Medicare coverage may end if the beneficiary has been a hospital inpatient for more than 150 days or a resident of a SNF for more than 100 days.

Inpatient coinsurance amounts. Medicare Part A provides coverage for beneficiaries for up to 150 days of inpatient hospital services during a single spell of illness. The first 60 days are fully paid by Medicare, with the exception of the initial deductible amount of $1,260 during 2015 which is paid by the beneficiary. The next 30 days the beneficiary has to pay a coinsurance amount of $315 per day during 2015, up from $304 in 2014. The last 60 days of inpatient coverage are subject to a coinsurance amount double the coinsurance amount for days 61 through 90; for 2015 this amount is $630 per day. Days 91 through 150 are known as lifetime reserve days and may be used only once during a beneficiary’s lifetime.

SNF coinsurance. A patient covered under Medicare Part A is entitled to have payment made on his or her behalf for up to 100 days of covered SNF services in each spell of illness, subject to the coinsurance requirement. During 2015 the coinsurance amount is $157.50; up from $152 in 2014 and is payable by the beneficiary for each day they are a resident of the SNF starting on the 21st day. A day begins at midnight and ends 24 hours later. A part of a day, including the day of admission, counts as a full day. The day of discharge, death, or a day on which a patient begins a leave of absence, however, is not counted as a day. If admission and discharge or death occur on the same day, the day is considered a day of admission and counts as one inpatient day.

Deductible determination. Social Security Act sec. 1813 describes that the inpatient deductible is calculated by taking the previous year’s deductible and multiplying it by the percentage increase used to update the payment system for the upcoming year adjusted to reflect changes in real case-mix from the preceding year. The deductible for 2015 was calculated by multiplying the deductible for 2014 of $1,216 by 2.22 percent for the increase in payment under the inpatient prospective payment system and 1.5 percent for the real case-mix adjustment. The coinsurance amount for inpatient stays beginning on day 61 and ending on day 90 are one-fourth of that amount, or $315 in 2015, and the deductible for inpatient stays beginning on day 91 is half that amount or $630 in 2015. The SNF coinsurance amount is one-eighth of the inpatient deductible which for 2015 is $157.50.

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