New Health Care Law & Part D “Donut Hole” Rebate Checks

Recently, The Centers for Medicare & Medicaid Services (CMS) sent a mailing to Medicare beneficiaries titled “Medicare and the New Health Care Law-What It means for You.”  The purpose of this mailing is to advise Medicare recipients as to the benefits they may see as a result of the new health care law, The Affordable Care Act.  A copy of this publication can be found at

One of the first benefits available as a result of the passage of the new health care law will impact millions of seniors who receive Medicare Part D benefits.  If a Medicare beneficiary enters the Part D “donut hole” this year, the timeframe in the Part D prescription drug benefit where the Medicare recipient must pay 100% of his prescription costs until he hits catastrophic coverage, he will be eligible for a one-time $250 rebate check.  Medicare beneficiaries who are receiving Medicare Extra Help are not eligible to receive this rebate.  The first rebate checks will be mailed out in mid-June and will continue throughout the year as Medicare recipients enter the “donut hole.”  Checks will be mailed out to the Medicare recipient approximately one month after he enters the “donut hole.”  The $250 rebate is for 2010 only.

Next year, if a Medicare recipient enters the “donut hole,” he will receive a 50% discount for covered brand name Part D medications.  Additional savings will continue over the next 10 years with the coverage gap or “donut hole” closed in 2020.

CMS warns that “new opportunities for Medicare beneficiaries also bring new opportunities for scam artists to try to defraud seniors.”  As a result, seniors should be on the lookout for scams that request personal information in relation to this benefit.

Medicare Observation…I was a hospital outpatient?

Several months ago our office was contacted by a geriatric care manager who was looking for assistance for one of her clients.  Her client was in the hospital for at least 3 days and was discharged to a skilled nursing facility for rehabilitation.  Much to the family’s surprise, the rehabilitation center informed them that the resident did not qualify for the skilled nursing benefit under Medicare Part A because he was never considered an inpatient during his hospital stay. 

The Medicare Part A skilled nursing facility benefit may provide coverage for up to 100 days, with Medicare covering 100% of days 1-20 and 80% of days 21-100.  The 20% co-pay for days 21-100 may be covered by a Medicare supplemental health insurance policy.  The Medicare beneficiary must have been admitted to the hospital for three days within 30 days prior to the admittance to the skilled nursing facility to qualify for this benefit.

So what happens in this scenario?  Without the required 3-day inpatient admission, Medicare only covers some services that the resident receives under his Medicare Part B coverage.  This results in the majority of the cost of the rehabilitation center, such as room and board, falling on the resident to pay out of his own pocket.

Unfortunately, the practice of placing Medicare beneficiaries who are admitted to the hospital for several days and even weeks in observation status, making them really outpatients and not inpatients, is happening all over the country. To help clarify what Medicare considers outpatient services versus inpatient services, The Centers for Medicare & Medicaid Services (CMS) recently published a brochure titled “Are You a Hospital Inpatient or Outpatient?” which you can view .  CMS recommends that if a Medicare beneficiary is in the hospital ”more than a few hours” he inquire as to whether or not he is an inpatient.