HOSPITAL INSURANCE
This section tells you about:
     *    The Prospective Payment System 
     *    Medicare Hospital Insurance 
     *    When You Are A Hospital Inpatient 
     *    Skilled Nursing Facility Care 
     *    Home Health Care 
     *    Hospice Care 

THE PROSPECTIVE PAYMENT SYSTEM
      Medicare pays for most inpatient hospital care under the
Prospective Payment System (PPS).  Under PPS, hospitals are paid
fixed amounts based on the principal diagnosis for each Medicare
hospital stay.  The payment categories are called Diagnosis
Related Groups, or DRGs.  In some cases, the Medicare payment
will be more than the hospital's costs; in other cases, the
payment will be less than the hospital's costs.  In special
cases, where costs for necessary care are unusually high or the
length of stay is unusually long, the hospital receives
additional payment.  But even if Medicare pays the hospital less
than the cost of your care, you do not have to make up the
difference.
     It is important to remember that the PPS system does not
change your Medicare hospital insurance protection as described
in this handbook.  PPS does not determine the length of your stay
in the hospital or the extent of care you receive.  The law
requires participating hospitals to accept Medicare payments as
payment in full, and those hospitals are prohibited from billing
the Medicare patient for anything other than the applicable
deductible and coinsurance amounts, plus any amounts due for
noncovered items or services, such as television, telephone or
private duty nurses.
MEDICARE HOSPITAL INSURANCE 
     Medicare hospital insurance helps pay for four kinds of
medically necessary care:  (1) inpatient hospital care; (2)
inpatient care in a skilled nursing facility following a hospital
stay; (3) home health care; and (4) hospice care.
     There is a limit on how many days of hospital or skilled
nursing facility care Medicare helps pay for in each benefit
period.  But, your hospital insurance protection is renewed every
time you start a new benefit period.
     Skilled nursing facility care is the only type of nursing
home care that Medicare covers.  Medicare does not pay for care
that is primarily custodial.  (See page XX for an explanation).
Benefit Periods
     A benefit period is a way of measuring your use of services
under Medicare hospital insurance.  Your first benefit period
starts the first time you enter a hospital after your hospital
insurance begins.  A benefit period ends when you have been out
of a hospital or other facility primarily providing skilled
nursing or rehabilitation services for 60 days in a row
(including the day of discharge).  There is no limit to the
number of benefit periods you can have for hospital and skilled
nursing facility care.  However, special limited benefit periods
apply to hospice care (see page XX).
     Here are two examples of how the benefit period works:
     Example 1: Mrs. Jones enters the hospital on January 5th. 
     She is discharged on January l5th.  She has used l0 days of
     her first benefit period.  Mrs. Jones is not hospitalized
     again until July 20th.  Since more than 60 days elapsed
     between her hospital stays, she begins a new benefit period,
     and her hospital insurance coverage is completely renewed.
     Example 2:  Mrs. Smith enters the hospital on August 14th. 
     She is discharged on August 24th.  She also has used 10 days
     of her first benefit period.  However, she is then
     readmitted to the hospital on September 20th.  Since fewer
     than 60 days elapsed between hospital stays, Mrs. Smith is
     still in her first benefit period and the first day of her
     second admission is counted as the 11th day of hospital care
     in that benefit period.  Mrs. Smith will not begin a new
     benefit period until she has been out of the hospital (or
     skilled nursing facility) for 60 consecutive days.     
     Medicare hospital insurance helps pay for most but not all
of the services you receive in a hospital or skilled nursing
facility or from a home health agency or hospice program.  There
are covered services and noncovered services under each kind of
care.  Covered services are services and supplies that hospital
insurance pays for.
     Hospitals, skilled nursing facilities, home health agencies
and hospices are participating providers under the Medicare
hospital insurance program.  They submit their claims directly to
Medicare--you cannot submit claims for their services. The
provider will charge you for any part of the hospital insurance
deductible you have not met and any coinsurance payment you owe.
     When a hospital, skilled nursing facility, home health
agency, or hospice sends Medicare a hospital insurance claim for
payment, you get a Medicare Benefit Notice that explains the
decision made on the claim.  If you have any questions about the
notice, get in touch with the office shown on the notice.

WHEN YOU ARE A HOSPITAL INPATIENT
     Medicare hospital insurance helps pay for inpatient hospital
care if all of the following four conditions are met:  (1) a
doctor prescribes inpatient hospital care for treatment of your
illness or injury, (2) you require the kind of care that can only
be provided in a hospital, (3) the hospital is participating in
Medicare,* and (4) the Utilization Review Committee of the
hospital or a Peer Review Organization does not disapprove your
stay.
     If you meet these four conditions, Medicare will pay** for
up to 90 days of medically necessary inpatient hospital care in
each benefit period.
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*Under certain conditions, Medicare helps pay for emergency
inpatient care you receive in a non-participating hospital.
**Medicare pays for only limited care in an inpatient psychiatric
hospital (see page xx).  The hospital can tell you about these
limits.
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     During 1990, from the 1st day through the 60th day in a
hospital during each benefit period, hospital insurance pays for
all covered services except the first $592.  This is called the
hospital insurance deductible.  (A deductible is an amount you
owe before Medicare begins paying for services and supplies
covered by the program.)  The hospital may charge you the
deductible only for your first admission in each benefit period. 
If you are discharged and then readmitted before the benefit
period ends, you do not have to pay the deductible again.  And if
you paid a hospital deductible in December of 1989, you do not
have to pay a deductible again in January if you are still a
patient in or are readmitted to a hospital in January of 1990.
     From the 61st through the 90th day in a hospital during each
benefit period, hospital insurance pays for all covered services
except for $148 a day.  This daily amount is called hospital
insurance coinsurance. The hospital charges you the $148. 
     Hospital reserve days (explained below) can help with your
expenses if you need more than 90 days of inpatient hospital care
in a benefit period.
     Medicare hospital insurance does not help pay for your
doctor's services even though you receive them in a hospital. 
Doctors' services are covered under Medicare medical insurance. 
Page XX tells how Medicare helps with doctor bills.
Major services covered when you are a hospital inpatient
Medicare hospital insurance pays for these services:
     o    A semiprivate room (2 to 4 beds in a room)
     o    All your meals, including special diets
     o    Regular nursing services
     o    Costs of special care units, such as intensive care or
          coronary care unit
     o    Drugs furnished by the hospital during your stay
     o    Blood transfusions furnished by the hospital during
          your stay
     o    Lab tests included in your hospital bill
     o    X-rays and other radiology services, including
          radiation therapy, billed by the hospital
     o    Medical supplies such as casts, surgical dressings, and
          splints
     o    Use of appliances, such as a wheelchair
     o    Operating and recovery room costs, including hospital 
          costs for anesthesia services
     o    Rehabilitation services, such as physical therapy, 
          occupational therapy, and speech pathology services
Some services not covered when you are a hospital inpatient
Medicare hospital insurance does not pay for these services:
     o    Personal convenience items that you request such as a
          telephone or television in your room
     o    Private duty nurses
     o    Any extra charges for a private room unless it is
          determined to be medically necessary
NOTE:  If you disagree with a decision on the amount Medicare
will pay on a claim or whether services you receive are covered
by Medicare, you always have the right to appeal the decision.
(See page xx.)
Hospital Inpatient Reserve Days
     We said earlier that Medicare helps pay for your care in a
hospital for up to 90 days in each benefit period.  But Medicare
hospital insurance includes an extra 60 hospital days you can use
if you have a long illness and have to stay in the hospital for
more than 90 days.  These extra days are called reserve days.   
Once you use a reserve day you never get it back.  Reserve days
are not renewable like your 90 hospital days in each benefit
period.
     During 1990, hospital insurance pays for all covered
services except $296 a day for each reserve day you use.  You are
responsible for paying this $296.
     You have only 60 reserve days in your lifetime, and you can
decide when you want to use them.  After you have been in the
hospital 90 days, you can use all or some of your 60 reserve days
if you wish.  But you do not have to use your reserve days right
away if you do not want to.  Some private insurance plans help
pay Medicare hospital bills for illnesses that keep beneficiaries
in the hospital for more than 90 days.
     If you do not want to use your reserve days, you must tell
the hospital in writing before your 90th day.  Otherwise, the
extra days you need to be in the hospital will automatically be
taken from your reserve days.
Coverage of Blood Under Hospital Insurance
     Hospital insurance helps pay for blood (whole blood or units
of packed red blood cells), blood components, and the cost of
blood processing and administration. If you receive blood as an
inpatient of a hospital or skilled nursing facility, hospital
insurance will pay for these blood costs, except for any
nonreplacement fees charged for the first 3 pints of whole blood
or units of packed red cells per calendar year.  The
nonreplacement fee is the charge that some hospitals and skilled
nursing facilities make for blood which is not replaced.
     You are responsible for the nonreplacement fees for the
first 3 pints or units of blood furnished by a hospital or
skilled nursing facility.  If you are charged nonreplacement
fees, you have the option of either paying the fees or having the
blood replaced.  If you choose to have the blood replaced, you
can either replace the blood personally or arrange to have
another person or a blood assurance plan replace it for you.  A
hospital or skilled nursing facility cannot charge you for any of
the first 3 pints of blood you replace or arrange to replace. 
(If you have already paid for or replaced blood under Medicare
medical insurance during the calendar year, you do not have to
meet those costs again under Medicare hospital insurance.  See
page xx an for explanation of coverage of blood under Medicare
medical insurance.)
Care In A Psychiatric Hospital
     Hospital insurance helps pay for no more than 190 days of
inpatient care in a participating psychiatric hospital in your
lifetime.  Once you have used these 190 days, hospital insurance
does not pay for any more inpatient care in a psychiatric
hospital.
     Also, there is a special rule that applies if you are in a
participating psychiatric hospital at the time your hospital
insurance starts.  Social Security can give you information about
this special rule.
Care in a Foreign Hospital
     Medicare generally does not pay for hospital or medical
services outside the United States. (Puerto Rico, the U.S. Virgin
Islands, Guam, American Samoa, and the Northern Mariana Islands
are considered part of the United States, along with the 50
States and the District of Columbia.)   However, it helps pay for
care in qualified Canadian or Mexican hospitals in three
situations.  These are: (1) you are in the U.S. when an emergency
occurs and a Canadian or Mexican hospital is closer than the
nearest U.S. hospital that can provide the emergency services you
need,* (2) you live in the U.S. and a Canadian or Mexican
hospital is closer to your home than the nearest U.S. hospital
that can provide the care you need, regardless of whether or not
an emergency exists, and (3) you are in Canada traveling by the
most direct route to or from Alaska and another State and an
emergency occurs that requires that you be admitted to a Canadian
hospital.
 ______
*Medicare may not pay if you leave the United States for purposes
other than to obtain medical treatment (for example, where the
foreign hospital is more accessible simply because your departure
was part of a vacation or business trip and you were already
involved in the process of travel), even though the medical
emergency occurred within United States territory.
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     When hospital insurance covers your inpatient stay in a
Canadian or Mexican hospital, your medical insurance can cover
necessary doctors' services and any required use of an ambulance. 
If the hospital does not submit the claim to Medicare, Social
Security can help you get Medicare payment for the covered
services you receive.  If you are planning to travel outside the
United States, you may want to inquire about the availability of
special short-term health insurance for foreign travel.
Care in a Christian Science Sanatorium
     Medicare hospital insurance helps pay for inpatient hospital
and skilled nursing facility services you receive in a
participating Christian Science sanatorium if it is operated or
listed and certified by the First Church of Christ, Scientist, in
Boston.  
SKILLED NURSING FACILITY CARE
     Medicare hospital insurance helps pay for inpatient care in
a Medicare-participating skilled nursing facility following a
hospital stay if your condition requires daily skilled nursing or
rehabilitation services which, as a practical matter, can only be
provided in a skilled nursing facility.
     A skilled nursing facility is a specially qualified facility
which has the staff and equipment to provide skilled nursing care
or rehabilitation services and other related health services. 
Most nursing homes in the United States are not skilled nursing
facilities, and many skilled nursing facilities are not
participating in Medicare. In some facilities, only certain
portions participate in Medicare.  If you are not sure whether a
facility or a particular portion of a facility participates in
Medicare as a skilled nursing facility, ask someone at the
facility.  If staff at the facility cannot tell you, ask Social
Security to check with the Health Care Financing Administration.
     Hospital insurance helps pay for care in a skilled nursing
facility if all of the following five conditions are met: 
     (1)  you have been in a hospital at least three days in a
          row (not counting the day of discharge) before your
          transfer to a participating skilled nursing facility,
     (2)  you are transferred to the skilled nursing facility
          because you require care for a condition which was
          treated in the hospital,
     (3)  you are admitted to the facility within a short time
          (generally within 30 days) after you leave the
          hospital,
     (4)  a doctor certifies that you need, and you receive,
          skilled nursing or skilled rehabilitation services on a
          daily basis, and 
     (5)  the Medicare intermediary or the facility's Utilization
          Review Committee does not disapprove your stay.
     All conditions must be met.  But it is especially important
to remember the requirement that you must need skilled nursing
care or skilled rehabilitation services on a daily basis.
     Skilled nursing care means care that can only be performed
by, or under the supervision of, licensed nursing personnel. 
Skilled rehabilitation services may include such services as
physical therapy performed by, or under the supervision of, a
professional therapist.  The skilled nursing care and skilled
rehabilitation services you receive must be based on a doctor's
orders.
     Hospital insurance will not pay for your stay if you need
skilled nursing or rehabilitation services only occasionally,
such as once or twice a week, or if you do not need to be in a
skilled nursing facility to get skilled services.  Also, hospital
insurance will not pay for your stay if you are in a skilled
nursing facility mainly because you need custodial care (see page
XX).
     When your stay in a skilled nursing facility is covered by
Medicare, hospital insurance helps pay for up to 100 days each
benefit period, but only if you need daily skilled nursing care
or rehabilitation services for that long.
      If you leave a skilled nursing facility and are readmitted
within 30 days, you do not have to have a new three day stay in
the hospital for your care to be covered.  If you have some of
your 100 days left and you need skilled nursing or rehabilitation
services on a daily basis for further treatment of a condition
treated during your previous stay in the facility, Medicare will
help pay.
     In each benefit period, hospital insurance pays for all
covered services for the first 20 days you are in a skilled
nursing facility.  During 1990, for the 21st through the 100th
day, hospital insurance pays for all covered services except for
$74.00 a day.  You may be charged up to this amount by the
skilled nursing facility.
     Hospital insurance does not cover your doctor's services
while you are in a skilled nursing facility.  Medicare medical
insurance covers doctors' services.  Page XX tells you how
Medicare helps with doctor bills.
Major services covered when you are in a skilled nursing facility
Medicare hospital insurance pays for these services:
     o    A semiprivate room (2 to 4 beds in a room)
     o    All your meals, including special diets
     o    Regular nursing services
     o    Rehabilitation services, such as physical,
          occupational, and speech therapy
     o    Drugs furnished by the facility during your stay
     o    Blood transfusions furnished to you during your stay
          (see page XX for information about coverage of blood)
     o    Medical supplies such as splints and casts
     o    Use of appliances such as a wheelchair
Some services not covered when you are in a skilled nursing
facility
     Medicare hospital insurance does not pay for these services:
     o    Personal convenience items that you request such as a
          television in your room
     o    Private duty nurses
     o    Any extra charges for a private room, unless it is
          determined to be medically necessary 
     o    Custodial nursing home care services

NOTE: If you disagree with a decision on the amount Medicare will
pay on a claim or whether services you receive are covered by
Medicare, you always have the right to appeal the decision. (See
page XX.)
HOME HEALTH CARE 
     If you need skilled health care in your home for the
treatment of an illness or injury, Medicare pays for covered home
health services furnished by a participating home health agency. 
A home health agency is a public or private agency that
specializes in giving skilled nursing services and other
therapeutic services, such as physical therapy in your home.  (A
facility that mainly provides skilled nursing or rehabilitation
services cannot be considered your home.)
     Medicare pays for home health visits only if all of the
following conditions are met: 
     (1)  The care you need includes intermittent skilled nursing
          care, physical therapy, or speech therapy, 
     (2)  You are confined to your home, 
     (3)  You are under the care of a physician who determines
          you need home health care and sets up a home health
          plan for you, and
     (4)  The home health agency providing services is
          participating in Medicare.
     Once these conditions are met, either hospital insurance or
medical insurance will pay for all medically necessary home
health services.  When you no longer need intermittent skilled
nursing care, physical therapy, or speech therapy, Medicare will
pay for home health services if you continue to need occupational
therapy.  
     Medicare home health services do not include coverage for
general household services, meal preparation, shopping, or other
home care services furnished mainly to assist people in meeting
personal, family, or domestic needs.
     To determine whether you can get services under the Medicare
home health benefit, ask your physician to refer you to a
Medicare participating home health agency.  The home health
agency will evaluate your case to advise you about whether you
meet the requirements for Medicare coverage.  Home health
agencies do not charge for this evaluation.
Home health services covered by Medicare
Medicare pays for these services:
     o    Part-time or intermittent skilled nursing care (This
          can include eight hours of reasonable and necessary
          care per day for up to 21 consecutive days--or longer
          in certain circumstances.)
     o    Physical therapy
     o    Speech therapy
     If you need intermittent skilled nursing care, or physical
or speech therapy, Medicare also pays for:
     o    Occupational therapy
     o    Part-time or intermittent services of home health aides
     o    Medical social services
     o    Medical supplies
     o    Durable medical equipment (80 percent of approved
          amount)
Home health services not covered by Medicare
Medicare does not pay for these services:
     o    24-hour-a-day nursing care at home
     o    Drugs and biologicals
     o    Meals delivered to your home
     o    Homemaker services
     o    Blood transfusions
     Medicare pays the full approved cost of all covered home
health visits.  You may be charged only for any services or costs
that Medicare does not cover.  However, if you need durable
medical equipment, you are responsible for a 20 percent copayment
for the equipment.
     The home health agency will submit the claim for payment. 
You do not have to send in any bills yourself.
NOTE: If you disagree with a decision on the amount Medicare will
pay on a claim or whether services you receive are covered by
Medicare, you always have the right to appeal the decision.  (See
page XX.)

HOSPICE CARE
     A hospice is a public agency or private organization that is
primarily engaged in providing pain relief, symptom management
and supportive services to terminally ill people.
     Hospice care is a special type of care for people who are
terminally ill.  It includes both home care and inpatient care,
when needed, and a variety of services not otherwise covered
under Medicare.  Under the Medicare hospice benefit, Medicare
pays for services every day and permits a hospice to provide
appropriate custodial care, including homemaker services and
counseling.
     Medicare hospital insurance helps pay for hospice care if
all of the following three conditions are met: 
     (1)  a doctor certifies that a patient is terminally ill, 
     (2)  a patient chooses to receive care from a hospice
          instead of standard Medicare benefits for the terminal
          illness, and 
     (3)  care is provided by a Medicare-participating hospice
          program.
     Special benefit periods apply to hospice care.  Hospital
insurance pays for a maximum of two 90-day periods and one 30-day
period.*
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*Even if Medicare hospice benefit periods are exhausted, if a
patient wants and still needs hospice services, the hospice must
continue care.  The hospice may bill the patient for this
continued care.
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     o    Hospice benefit periods may be consecutive.  
     o    A beneficiary may disenroll from the hospice during any
          benefit period, return to regular Medicare coverage,
          then later re-elect the hospice benefit if another
          benefit period is available.  (But the remainder of the
          benefit period in effect at the time of disenrollment
          is lost.)
     There are no deductibles under the hospice benefit. The
beneficiary does not pay for Medicare-covered services for the
terminal illness, except for small coinsurance amounts for
outpatient drugs and inpatient respite care.  The patient is
responsible for five percent of the cost of outpatient drugs or
$5 toward each prescription, whichever is less.  For inpatient
respite care, the patient pays five percent of the
Medicare-allowed rate (approximately $4.13 per day in 1990).  The
rate varies slightly depending on the area of the country.
     Respite care under the hospice program is a short-term
inpatient stay in a facility for the sick Medicare beneficiary. 
Hospice respite care gives temporary relief to the person who
regularly assists with home care.  Each inpatient respite care
stay is limited to no more than five days in a row.
     While receiving hospice care, if a patient requires
treatment for a condition not related to the terminal illness,
Medicare continues to help pay for all necessary covered services
under the standard Medicare benefit program.
Services covered when provided by a hospice
Medicare hospital insurance pays for these services for
beneficiaries as part of hospice care:
     o    Nursing services
     o    Doctors' services
     o    Drugs, including outpatient drugs for pain relief and
          symptom management
     o    Physical therapy, occupational therapy and
          speech-language pathology
     o    Home health aide and homemaker services
     o    Medical social services
     o    Medical supplies and appliances
     o    Short-term inpatient care, including respite care 
     o    Counseling
     The Medicare hospital insurance hospice benefit does not pay
for treatments other than for pain relief and symptom management
of a terminal illness.
NOTE: If you disagree with a decision on the amount Medicare will
pay on a claim or whether services you receive are covered by
Medicare, you always have the right to appeal the decision. (See
page XX)
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