What Is Medicare’s Outpatient Coverage?
Medicare Part B provides coverage for a variety of outpatient services, such as emergency room visits and tests that are billed by the hospital. When you receive these services, you are generally responsible for your annual deductible, then 20% coinsurance, the Medicare-approved cost for the services provided by doctors or other healthcare providers.
In addition, there is typically a required copayment for each service you receive while you are an outpatient at a hospital, excluding certain preventative services. While Medicare Part B covers outpatient services, the copayment for outpatient hospital services is generally capped at an amount equal to the Medicare Part A inpatient hospital stay deductible ($1,600 in 2023).
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What’s the Difference Between Inpatient and Outpatient Care?
Outpatient services are treatments or services that are administered in a hospital or medical facility. You can still be considered an outpatient if you remain in a hospital overnight for observation, as long as you are not admitted. Outpatient services are covered by Medicare Part B.
When you are formally admitted into the hospital on a doctor’s orders, you are classified as an inpatient. Then, any care you receive is considered inpatient care until you are released from the hospital. Inpatient care is covered under Medicare Part A.
For example, if you go to the emergency room for an illness, you are considered an outpatient. The doctor may require you to remain in the hospital overnight for observation. If you are then released, you have only received outpatient care. However, if the doctor then admits you to the hospital, any care received from that point on is classified as inpatient care.
What Types of Outpatient Services Does Medicare Cover?
Medicare outpatient coverage typically pays 80% of the Medicare-approved amount for outpatient services after meeting your Part B annual deductible. This includes coverage for various services, including doctor’s visits, outpatient surgeries, durable medical equipment, and more. Here’s a look at the details.
Medicare recipients are entitled to an annual wellness visit, which allows one to develop or update a personalized care plan designed to prevent diseases and disabilities. There is no cost for this visit, and the Part B deductible does not apply.
However, it’s important to note that this appointment does not include a physical exam. If you receive an exam or tests during your wellness visit, the Part B deductible typically applies, and you may have to pay a coinsurance amount.
For example, during a wellness visit, your doctor may ask you to complete a health risk assessment questionnaire. They may then review it with you and perform a cognitive risk assessment. In this case, there is no cost. However, if the doctor decides you need an exam or orders other tests, you may be responsible for some out-of-pocket costs.
As long as the doctor accepts Medicare assignment (meaning that they’ve agreed to accept the Medicare-approved amount as payment in full), your financial responsibility is limited to the Part B deductible and 20% coinsurance for your doctor’s visit.
Specialist Visits and Services
In addition to your primary care doctor, you may need to consult with a specialist. This may occur when you have an illness or injury that requires specialized expertise. Some common specialists covered by Medicare Part B include:
- Physical therapists
- Mental health counselors
- Occupational therapists
- Speech-language pathologists
- Clinical psychologists
- Clinical social workers
When you are placed in the hospital on observation status, this means that the healthcare provider wants to monitor you before determining whether you need to be admitted as an inpatient. While you’re under observational care, you’re still considered an outpatient, even if you remain in the hospital under observation for several days.
This may occur when medical professionals are unsure whether you need hospital admission. If your condition improves, they may send you home. If it worsens, they may admit you. Symptoms warranting observational care include unexplained nausea, vomiting, severe headache, fever, kidney stones, or breathing problems.
Outpatient observational care is covered under Medicare Part B as long as a doctor deems it medically necessary. If you are formally admitted to the hospital, the coverage switches to Part A.
Outpatient surgery, also known as ambulatory surgery or same-day surgery, does not require the patient to remain in a hospital overnight. Surgeries that are typically performed on an outpatient basis include gallbladder removal, cataract surgery, hernia repairs, and tonsillectomies.
These surgeries are covered under Medicare Part B as long as they are deemed medically necessary. After you’ve reached your deductible, Medicare Part B covers 80% of the cost of the surgery, as well as any lab tests, drugs, or other services you receive as part of your treatment.
Durable Medical Equipment (DME)
Durable medical equipment (DME) helps you complete your daily activities and withstand repeated use. Some examples include blood sugar meters, canes, walkers, crutches, wheelchairs, nebulizers, and oxygen equipment.
Medically necessary DME is covered under Medicare Part B. After you pay your deductible, you are responsible for 20% coinsurance (as long as your provider accepts Medicare assignment). Depending on the type of equipment you need, Medicare may require you to either rent or buy it, or it may let you choose your preference.
Medicare Part B covers certain drugs and biologicals (such as vaccines) you receive as Part of your procedure or service and would normally not administer yourself. This includes drugs that are infused using durable medical equipment. Traditionally, Medicare Part B covered insulin when your doctor determines you need an insulin pump. As of July 1, 2023, the Medicare Part B deductible does not apply to insulin administered with a pump, and a month’s supply cannot exceed $35.
Other common examples include injectable osteoporosis drugs, drugs used to treat nausea during chemotherapy, and immunosuppressive drugs given along with a Medicare-approved organ transplant.
Prescription drugs that you can take on your own, also called self-administered drugs, are typically not covered by Medicare Part B but may be covered under your Medicare Part D prescription drug coverage.
How Medicare Covers Outpatient Care
Outpatient medical services are typically covered under Medicare Part B with some required cost sharing. Out-of-pocket costs for outpatient services generally include:
- Medicare Part B deductible: the amount you must pay each year before you begin receiving Medicare benefits ($226 in 2023)
- Coinsurance: Typically, 20% of the Medicare-approved amount is charged for each covered service provided by a doctor or other healthcare professional after you have met your deductible
- Copayment: An additional charge for each outpatient service received in a hospital setting (except for certain preventative services)
Generally, the total amount of your required copayments is capped at an amount equal to the Medicare Part A inpatient hospital deductible. However, if you receive outpatient services at a critical-access hospital, your costs may be higher and may exceed the total Part A deductible. In addition, if you receive services or items Medicare doesn’t cover, you are responsible for their entire cost.
How Medigap Coverage Helps
Medigap is a supplemental insurance policy sold by private companies. It can be used to help offset costs not covered by Medicare Part A and Part B, such as your coinsurance, copayment, or deductibles.
For example, if your doctor’s visit has a Medicare-approved cost of $300 and you’ve already met your annual deductible, your 20% coinsurance amount is $60. Your Medigap policy may cover this amount, leaving you with no out-of-pocket costs for the services you received.
How Medicare Advantage Covers Outpatient Care
Medicare Advantage plans are an alternative to Medicare provided by private insurers. These plans are guaranteed to offer the same coverage as Original Medicare and occasionally additional services. Further, it’s common for Medicare Advantage plans to include Medicare Part D prescription drug coverage.
Medicare Advantage plans may also have different cost-sharing structures. Your deductible and coinsurance requirements may vary depending on the plan you choose. For example, rather than paying 20% for your covered costs, your plan may require you to pay a set dollar amount instead. Medicare Advantage plans also have a maximum annual out-of-pocket cost for approved services. Once you hit this limit, you do not have to pay any more out-of-pocket costs for Part A and Part B covered services until the end of the plan year.
Limits to Medicare Outpatient Coverage
There are some types of outpatient treatments and services that Medicare Part B does not cover. Generally, these limitations are in place to protect covered individuals from getting unnecessary treatments or tests.
Criteria for Coverage
To be covered by Medicare, a service, treatment, or use of durable medical equipment must be deemed medically necessary by a doctor. Otherwise, you are responsible for the full cost.
For durable medical equipment to be covered under Medicare, both the prescribing doctor and the equipment supplier must be enrolled in Medicare.
This means that they have agreed to meet Medicare’s strict standards. Suppliers enrolled in Medicare must also accept assignment, which means they cannot charge you anything in excess of your Medicare deductible and required coinsurance (typically 20%). Medicare does not cover the cost if you purchase your equipment from a non-enrolled provider.
Limitations on Covered Services
Medicare does not cover the cost of services or supplies that are unreasonable or unnecessary. This includes hospital-provided services that could have been provided in a lower-cost setting, such as a patient’s home. Excessive therapy or diagnostic procedures may not be covered, as well as unrelated screening tests when the patient does not have symptoms to warrant them.
For each service billed to Medicare, the medical provider must indicate the specific patient complaint, symptom, or sign that makes the service both reasonable and necessary.
Excluded Outpatient Services
While Medicare Part B covers many outpatient services, some are specifically excluded. This includes (but is not limited to):
- Massage therapy
- Cosmetic surgery
- Chiropractic services
- Dental services
- Routine physical exams
- Hearing aids and fitting exams
- Eye exams for prescription glasses
- Long-term care (also called custodial care)
- Services and items provided outside the United States
- Personal comfort items and services (e.g., a TV or phone in your hospital room)
Many of these exclusions have exceptions, so it may be helpful to consult with your doctor or a Medicare professional to determine whether the services or items you need are covered.
What Are Your Options If Medicare Does Not Cover an Outpatient Service You Need?
If Medicare doesn’t cover an outpatient service you need, you may consider paying for it out-of-pocket. However, if it’s an expensive or recurring need, you may be able to save some money by seeking a Medicare Advantage plan that covers it.
In some cases, you may be able to speak to your healthcare provider about alternative forms of treatment. You might be able to switch to something that Medicare covers or find a less expensive treatment option that must be paid out-of-pocket.
What This Means for You
Understanding the rules related to Medicare outpatient coverage can help keep your healthcare costs as low as possible. Whether you have Original Medicare with or without Medigap, or a Medicare Advantage plan, it’s important to know which services are covered and what you’re responsible for paying.
When receiving medical treatment in a hospital setting, confirming whether you are classified as an inpatient, outpatient, or observational patient may also be helpful. You may also try to confirm your Medicare coverage with your doctor or hospital before receiving treatment or equipment. This could help you avoid unexpected bills or give you a chance to request any necessary changes to your treatment plan.