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Medicare Part A ‘hospital insurance’ – coverage of inpatient care
Medicare Part A (hospital insurance) pays for a range of inpatient care in hospitals, skilled nursing facilities, and critical-access hospitals. Part A also covers some home healthcare and hospice services.
Medicare Part B – enrollee benefits and coverage costs
Medicare Part B provides coverage of services provided by doctors, outpatient hospital services and other healthcare providers, as well as some home health services and durable medical equipment.
Medicare Advantage (Part C) private health plans
Medicare Advantage plans provide Medicare-covered benefits through private insurance companies, which receive payments from Medicare to cover beneficiary medical costs.
Depending on the circumstances, Medicare will pay for both inpatient and outpatient substance use disorder (SUD) treatment. But there are some significant gaps in the coverage that Medicare provides for beneficiaries who are battling a drug or alcohol addiction.
Medicare Part B will cover some basic screening and outpatient treatment. And Medicare Part A will cover hospitalization for a SUD that has progressed to the point of needing inpatient care. But there are a wide range of in-between substance use treatments that are not covered by Medicare.
And Medicare is not subject to the Mental Health Parity and Addictions Equity Act, which means that the program is not required to cover mental health and substance use disorder treatment at the same level that it covers medical/surgical treatments. So Medicare’s utilization management, coverage exclusions, and reimbursement rates can be more stringent for SUD treatment, which is not the case for Medicaid or most private health insurance plans.
If inpatient SUD treatment is deemed reasonable and medically necessary, Medicare covers it just as they would any other hospitalization.
The beneficiary will be responsible for paying their Part A deductible ($1,556 in 2022), and can get up to 60 days of inpatient treatment. If inpatient treatment is still considered medically necessary after that, Medicare will cover up to 30 additional days with the beneficiary paying $389 per day in 2022. After 90 days, the beneficiary would start using up their lifetime reserve days if they remained in inpatient care.
Medicare does not have a limit on the number of times a beneficiary can receive inpatient care in a general hospital. But if care is provided in a psychiatric hospital, there is a lifetime cap of 190 days that can be covered by Medicare.
Medicare Part B covers some basic outpatient screening and treatment for substance use disorders. But although Medicare provides solid coverage for inpatient treatment, there are some significant outpatient treatment approaches that aren’t covered by Medicare.
Medicare beneficiaries have access to a fully covered alcohol misuse screening once per year. Based on the outcome of that screening, Part B will also pay for up to four primary care counseling sessions with a provider who accepts assignment with Medicare.
Medicare Part B also covers “Screening, Brief Intervention, and Referral to Treatment,” (SBIRT) if it’s considered “reasonable and necessary.” SBIRT is designed to provide intervention and treatment for people who are in the early stages of a substance use disorder, or who might be at risk of developing one.
The outpatient primary care counseling can be provided in an office setting or via telehealth, as both are covered under Medicare Part B. And Part B also covers opioid addiction services provided by a Medicare-enrolled opioid treatment program.
Although Medicare covers inpatient and basic outpatient SUD treatment, there are a number of more intensive outpatient treatment approaches that aren’t covered by Medicare.
For example, outpatient SUD treatment has to be provided in a primary care setting, hospital outpatient program, Medicare-enrolled opioid treatment program, or a community mental health center. Care received at a freestanding SUD treatment facility will not be covered.
And for people who need a higher level of outpatient care — but who aren’t sick enough to need inpatient SUD treatment — Medicare’s coverage has some significant gaps. Specifically, the program lacks comprehensive coverage for intensive outpatient programs, partial hospitalization programs, and residential programs for people in need of SUD treatment.
Intensive outpatient programs provide between nine and 19 hours of skilled treatment per week. But the types of facilities and professionals who most often provide this type of care are not covered by Medicare. So although an intensive outpatient program may be available in a beneficiary’s community and recommended for their treatment, coverage under Medicare may not be available.
Partial hospitalization, which is also referred to as a day treatment program, is the next step up from an intensive outpatient program. Partial hospitalization provides at least 20 hours of skilled treatment per week, but allows the person to return to their own home each night, rather than staying in the hospital. Medicare does cover partial hospitalization for mental health care, but not if the primary diagnosis is a substance use disorder.
Partial hospitalization programs can be effective for some people with substance use disorders, but Medicare does not provide coverage unless the person also has a primary mental health diagnosis other than the substance use disorder.
Residential programs for SUD treatment are a step above partial hospitalization but a step below inpatient care. The patient lives at the residential facility for what can be an extended period of time, but does not need the level or intensity of care that would be provided during an inpatient stay. However, Medicare does not cover residential programs for SUD treatment.
Medicare does cover skilled nursing facility (SNF) care following an inpatient hospitalization. But the patient must have a need for physical or occupational therapy, which would mean that the preceding hospital stay and the therapy in the SNF would have to be related to something other than a SUD.
Medicare Advantage plans are required to cover the same services that Original Medicare (ie, Parts A and B) covers, but the specifics of the coverage can vary considerably.
Medicare Advantage plans create their own provider networks, and the out-of-pocket costs for various treatments will be quite different from one plan to another. (Note that Medigap plans cannot be used to cover out-of-pocket costs under Medicare Advantage, as Medigap only works with Original Medicare).
But Advantage plans are able to offer additional benefits, beyond what Original Medicare covers, particularly for enrollees who have chronic medical conditions.
In some areas, there may be Medicare Advantage Special Needs Plans (SNPs) that are specifically designed for people with chronic addiction to alcohol or drugs, although these do not appear to be widely available.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.