Because the terms “Medicaid” and “Medicare” sound similar to the uninitiated, the two programs are often confused or are considered to be different names for the same program. Even when the programs are differentiated by the scope of their coverage and purposes, the overlap often causes confusion ─ especially concerning nursing homes ─ causing some to mistakenly believe Medicare will pay for the cost of any impending nursing home stay. The fact that Medicare does, sometimes, pick up some of the costs early in a nursing home stay only serves to perpetuate the myth and add to the confusion.
Medicare is a primary health insurance program for people age 65 and older. There is also automatic Medicare eligibility for certain classes of disabled persons who are deemed eligible for Social Security Disability (SSD).
Medicare is not designed to cover the full cost of all necessary medical expenses but is considered to be the primary insurer determining the scope of its coverage and payment before any secondary insurer is required to pay.
The difference between what Medicare pays and the full cost is known unofficially as “Medigap.” If the retiree retains an employer-sponsored retirement plan, it will become a secondary insurer to fill the gap, less any plan copays; however, if a retiree does not have a secondary insurer, the retiree can pursue a specific Medigap policy to cover the difference. The poorest, unable to afford such policies, often apply for Medicaid to serve as their backstop. Medicare recipients who also qualify for Medicaid are referred to as “dual eligibles.”
In 2003, Congress enacted the Medicare Prescription Drug program[1] to provide an automatic private insurance program heavily subsidized by the government to provide help for seniors with the high cost of prescription drugs, which up to that point had not been previously covered by Medicare. For dual eligibles, Medicaid has served as a funding source for prescription drugs not covered by Medicare. After the implementation of Medicare Part D, Medicare shifted the responsibility of payment for drugs prescribed to dual eligibles from Medicaid to Medicare; but it did not have any impact on the Medicaid copayment nor did it require the dual eligible patients to pay the Part D insurance premium for coverage.
Aside from Medicare’s coverage of prescription drugs of nursing home patients outlined above, Medicare also pays for a portion of some stays in a nursing home that are essentially considered rehabilitative extensions of previous hospital visits. Despite the high cost of nursing home stays, they are a relative bargain compared to the even higher cost of a hospital stay. Through a strict set of guidelines, Medicare acknowledges that recovery in a nursing home is more cost effective than in a hospital. Medicare requires that, before coverage can commence for nursing home stay, a patient must have been hospitalized for three consecutive days (excluding date of discharge) and be subsequently admitted to the nursing home within 30 days from the discharge date.
Custodial care is not a sufficient need for Medicare coverage. The patient must require “skilled care”[2] which must be administered by a doctor or nurse that is considered medically necessary in order to avoid deterioration of a patient’s health.
Merely being unable to perform activities of daily living, the usual threshold for the payment of nursing home expenses by a long-term care insurance policy, is not enough to qualify for Medicare coverage. Under the theory that Medicare is only to be funding a likelihood of improvement in the recovery process from the illness that precipitated hospitalization, it will only pay for the nursing home stay when skilled care services such as physical therapy, wound dressing, or catheter insertion is required.[3]
Custodial care, even though provided by a skilled professional, is not sufficient unless they are also providing the skilled care services necessary before coverage is authorized. There must be a doctor’s order for these services. Doctors, for the most part, know and understand these rules and are usually the patient’s strongest ally in making sure the regulations are followed (i.e., keeping the patient the requisite three consecutive days in the hospital before discharge, writing an order for rehabilitative skilled care, and referring a patient to a skilled nursing facility) so Medicare will pick up the tab for early expenses of a nursing home stay. But even then, Medicare has its limits.
Medicare only covers up to 100 days of skilled care in a nursing home stemming from a particular spell of illness ─ a term defined by statute.[4]
Even then, Medicare is not a full ride for the whole 100 days. Medicare picks up the full cost for the first 20 days, and the patient is responsible for the first $144.50 per day (in 2012) as co-insurance during the remaining 80 days.
“Adapted from the “Medicaid Planning Guidebook” To order a copy click here.“