In December 2020, the Trump administration changed payment policy for hundreds of procedures that Medicare had previously covered on an inpatient basis only. To save money, over the next three years, Medicare will begin covering these procedures on an outpatient basis, where appropriate. What does that mean for people with Medicare?
This payment policy change should reduce Medicare spending, as the government pays less for outpatient services than for inpatient services. How the change in coverage will affect people with Medicare is not yet clear. It can be beneficial to receive care for many surgeries on an outpatient basis. Sometimes, however, inpatient care is preferable.
Here’s the catch: Hospitals can keep you overnight for several nights and still treat you as an outpatient. If you have Medicare supplemental coverage, it might not matter. You should have few if any out-of-pocket costs for your care. But, if you don’t have supplemental coverage, you could be liable for as much as 20 percent of the cost of your care and, depending upon where you live and the physician billing you, another 15 percent on top of that.
If you are planning to go to the hospital for a procedure and to stay overnight, it’s smart to speak to your doctor about your potential needs after you are discharged from the hospital. In particular, will you need home care, nursing home care or rehab services after your discharge?
You will only be eligible for coverage of rehab or nursing services if you are in the hospital three nights and treated as an inpatient. If you will need rehab or nursing services post discharge, you should confirm with your doctor that the hospital treats you as an inpatient. If you will need home care, Medicare comes home care for people meeting the eligibility criteria without a prior hospitalization requirement, but it could be harder to get an agency to take you as a patient if you have not been a hospital inpatient.
Keep in mind that if the hospital treats you as an outpatient, you will not qualify for covered rehab or nursing services should you need them.
The change in Medicare payment policy stems from technological advances that allow many more procedures to be done on an outpatient basis and significantly higher Medicare payments to hospitals for inpatient care relative to outpatient care for the same procedure. That makes no sense. Of course, moving to a new policy should be done in a way that does not hurt patients, either by depriving them of coverage for needed care or shifting more costs onto them.
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