Medicare covers surgery, but the coverage mechanism is complex, depending heavily on whether the procedure is performed on an inpatient or outpatient basis. This distinction dictates which part of Original Medicare pays for the service and significantly influences the patient’s out-of-pocket costs. The federal coverage framework ensures that most medically necessary surgeries are covered, but beneficiaries retain specific financial responsibilities.
Coverage Under Original Medicare Parts A and B
Original Medicare is divided into Part A (Hospital Insurance) and Part B (Medical Insurance). The location of the surgery determines which part is responsible for the bill. To be covered, the procedure must meet the “medically necessary” standard, meaning a physician determines it is required to diagnose or treat a health condition.
Part A: Inpatient Surgery Coverage
Part A covers inpatient surgical procedures, which involve a formal admission to a hospital with a physician’s order, typically expecting a stay of two or more midnights. This coverage includes facility costs, such as the semi-private room, nursing care, operating room use, and necessary drugs and supplies administered during the stay.
Coverage operates on a “benefit period” structure, beginning the day a patient is admitted and ending when they have been out of the hospital or skilled nursing facility for 60 consecutive days. The Part A deductible applies per benefit period. Inpatient surgery is fully covered for the first 60 days of a benefit period after the deductible is met.
Part B: Outpatient Surgery Coverage
Part B covers most services performed outside of a formal inpatient admission, including outpatient surgeries in hospital outpatient departments or ambulatory surgical centers. This part pays for the professional services of the surgeon, anesthesiologist, and other physicians involved in the procedure. Part B also covers diagnostic tests and medical equipment required before or during the surgery.
Outpatient procedures like cataract removal or many arthroscopic knee surgeries fall under Part B. Even if a patient remains in the hospital overnight, they are considered an outpatient if they were not formally admitted with a physician’s inpatient order.
Understanding Your Out-of-Pocket Responsibilities
While Original Medicare covers the majority of the cost for medically necessary surgery, beneficiaries are responsible for out-of-pocket expenses, including deductibles and coinsurance. These costs apply differently depending on whether Part A or Part B is involved and are separate from monthly premiums.
For inpatient surgery covered by Part A, the beneficiary must pay a deductible per benefit period. After this deductible is met, the patient pays nothing for the first 60 days of the hospital stay. Coinsurance amounts begin for stays extending beyond 60 days, with the daily cost increasing substantially for days 61 through 90.
For services covered under Part B, including the surgeon’s fee and outpatient facility charges, a separate annual deductible must be met before coverage begins. Once the Part B deductible is satisfied, the patient is responsible for a 20% coinsurance of the Medicare-approved amount for most services. This 20% coinsurance applies to the entire cost of the outpatient surgery and associated physician fees, without an annual limit on out-of-pocket spending. Many beneficiaries purchase Medicare Supplement Insurance (Medigap) to manage these unpredictable Part A and Part B deductibles and coinsurance costs.
How Medicare Advantage Plans Alter Coverage
Medicare Advantage (MA) Plans, or Part C, are offered by private insurance companies approved by Medicare, providing an alternative way to receive Part A and Part B benefits. These plans must cover all the same medically necessary surgical services as Original Medicare, but they change the rules of access and cost-sharing.
Most MA plans, such as Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs), utilize provider networks, which may restrict the choice of surgeon and hospital. Elective surgical procedures frequently require prior authorization from the plan before the service can be rendered. This utilization management step ensures the service meets the plan’s medical criteria.
A significant difference from Original Medicare is the inclusion of a Maximum Out-of-Pocket (MOOP) limit for Part A and Part B services. Once a beneficiary’s spending reaches this annual limit, the plan covers 100% of the remaining costs. MA plans typically feature different cost-sharing structures, such as copayments for each hospital day or outpatient service, rather than the deductibles and coinsurance structure of Original Medicare.
Procedures Medicare Typically Does Not Cover
Medicare does not cover all medical procedures, particularly those that do not meet the standard of being medically necessary for the treatment of an illness or injury. These exclusions apply to certain types of elective or routine services.
Cosmetic surgery is a common exclusion unless the procedure is required to correct a malformed body part resulting from an accidental injury or a congenital defect. For instance, a facelift for aesthetic reasons is not covered, but reconstructive surgery following a mastectomy would be.
Most routine dental care, including cleanings, fillings, and tooth extractions, is not covered by Original Medicare. Exceptions exist when dental services are inextricably linked to the success of a covered medical treatment, such as a necessary tooth extraction prior to an organ transplant. Additionally, Medicare excludes coverage for experimental or investigational procedures that have not yet been approved for general use.