The Centers for Medicare & Medicaid Services (CMS) sets the parameters for Medicare benefit coverage of health care services.  Medicare coverage was initially designed as an acute care insurance program.  Over the years, it has evolved to include more preventive services. Medicare benefit coverage is divided into three Parts: A, B, and D.

Part A is often referred to as Medicare hospital insurance and it includes:

  • Skilled nursing care
  • Nursing home care
  • Inpatient hospital stays
  • Hospice care
  • Some home health services

Part B provides coverage for non-hospital physician services such as:

  • Doctor visits
  • Preventive care such as exams, shots, and screenings
  • Outpatient services
  • Medical supplies
  • Tests and x-rays
  • Ambulance services
  • Durable Medical Equipment (DME)
  • Some mental health services
  • Partial hospitalization
  • Second opinion before surgery
  • Limited outpatient prescription drugs (e.g., certain drugs that are administered in a doctor’s office)

Part D

To address the growing use of prescription drug therapy and the increasing financial burden beneficiaries faced paying for outpatient retail drug coverage, new Medicare legislation was enacted.  The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 introduced the Part D prescription drug insurance benefit.  Implemented in 2006, Part D helps beneficiaries pay for Medicare-covered outpatient retail prescription drugs. To administer the Part D insurance benefit, CMS contracts with department-certified private companies to sell coverage to beneficiaries.  Medicare beneficiaries interested in purchasing Part D insurance may elect to enroll in these CMS authorized private plans. Enrollment in a Part D plan requires payment of monthly premiums and often requires annual deductibles, co-payments, and sometimes coinsurance. Over the years, as beneficiary needs and insurance industry standards have evolved, Medicare coverage has expanded.  The Part D coverage described above is one such amendment.  Additionally, in 2011, the Affordable Care Act (ACA) enhanced Medicare’s coverage of preventative services and introduced the annual wellness visit. Medicare provides payment for this visit and for the creation of a personalized prevention plan including completion of a health risk assessment.  The ACA also eliminated some cost-sharing for many of the preventive services covered by Medicare, making preventative care less expensive for beneficiaries.