Medicare Part A — Hospital Insurance: Inpatient, Skilled Nursing, Hospice & Home Health

Medicare Part A is hospital insurance: it pays for inpatient hospital stays, care in skilled nursing facilities after a qualifying hospital stay, hospice care for terminally ill beneficiaries, and some home health services. For most Americans, Part A is premium-free at age 65 because they or a spouse have at least 40 quarters of Medicare-covered work. For the outpatient side, see Medicare Part B. The coverage, however, is not unlimited. Part A still uses a benefit-period or "spell of illness" structure, with a substantial inpatient deductible for each benefit period. In 2026, that deductible is $1,736 per benefit period; hospital coinsurance is $434 per day for days 61-90 and $868 per day for lifetime reserve days. Skilled nursing facility care is free for the first 20 covered days, then $217 per day for days 21-100. Hospice care generally has only small statutory copays, but the election usually means Medicare stops paying for curative treatment of the terminal illness itself. Understanding these rules before hospitalization or discharge planning begins can prevent major surprise bills.

Current Law (2026)

Legal Authority

• 42 U.S.C. § 1395c — Program description: Part A provides basic protection against costs of hospital, related post-hospital, home health, and hospice care for individuals age 65+ eligible for Social Security retirement benefits, and certain individuals under 65 with disabilities or end-stage renal disease
• 42 U.S.C. § 1395d(a) — Scope of benefits: inpatient hospital services, post-hospital extended care, hospice care, and specified home health services under Part A
• 42 U.S.C. § 1395e — Deductibles and coinsurance: the inpatient hospital deductible and daily coinsurance for extended stays are set by the Secretary annually; the beneficiary pays the deductible once per benefit period; daily coinsurance begins on day 61 of inpatient care; the Secretary sets amounts each year based on a statutory formula tied to the daily cost of an inpatient day
• 42 U.S.C. § 1395f — Conditions of payment: payment is made only to certified providers; a physician or other authorized practitioner must certify that inpatient or post-hospital care is medically necessary; for many SNF stays a 3-day prior inpatient hospital stay is required; for hospice, a physician must certify that the patient is terminally ill with a life expectancy of 6 months or less if the illness runs its normal course
• 42 U.S.C. § 1395i — Federal Hospital Insurance Trust Fund: Part A is funded through a dedicated trust fund financed by the 1.45% Medicare Hospital Insurance payroll tax on employees and employers (2.9% for self-employed); the Trust Fund's long-term solvency is regularly projected by the Medicare trustees

How It Works

Part A uses a benefit-period structure, not an annual deductible — the most important distinction to understand before a hospitalization. Each benefit period begins on inpatient admission and ends 60 consecutive days after the last day of inpatient or skilled nursing care; you can have multiple benefit periods in one year and owe the $1,736 deductible for each one. Time spent under observation status as an outpatient generally does not count toward the 3-consecutive-day qualifying inpatient stay required for skilled nursing facility (SNF) coverage — a distinction that frequently surprises patients whose hospital status shifts mid-stay. The 60 lifetime reserve days (days 91–150 of an extended hospitalization, at $868/day in 2026) are a lifetime total across all hospitalizations, not 60 per event or per year. Medicare Advantage plans and certain CMS payment models can waive the 3-day SNF prerequisite — confirm which rules govern your specific coverage before discharge planning. Home health services may be covered under Part A, Part B, or both depending on the service setting; the detailed sections below cover each benefit category.

How the Benefit Periods Work

The benefit period is the central concept of Part A coverage. A benefit period begins when you are admitted as a hospital inpatient and ends when you have been out of inpatient care (hospital or SNF) for 60 consecutive days. There is no limit on the number of benefit periods you can have in your lifetime — but you pay a new deductible for each one.

Example: If you are hospitalized for a hip replacement on January 1, discharged January 5, and then admitted again for a complication on January 30, you're still in the same benefit period and generally do not owe a new Part A deductible. But if you're hospitalized January 1, discharged January 10, and readmitted on March 15 after more than 60 days out of inpatient or SNF care, a new benefit period has started and a new $1,736 deductible applies.

The lifetime reserve days are 60 additional inpatient days that every Medicare beneficiary gets once in their lifetime, usable after exhausting the 90-day regular benefit in a spell of illness. Once you use them, they're gone. In practice, very few Medicare beneficiaries have hospitalizations lasting more than 90 days, so most people never need to use — or even think about — lifetime reserve days. But for catastrophic extended illness (ICU stays, complex post-surgical recovery), they matter.

Skilled Nursing Facility (SNF) Coverage

Part A covers "post-hospital extended care services" — commonly called skilled nursing facility care — but only under specific conditions:

1. The patient must have had a "qualifying hospital stay" — at least 3 consecutive days as an inpatient (not counting the discharge day)
2. The SNF must be Medicare-certified
3. The care must require skilled nursing or skilled rehabilitation services (not just "custodial care" — assistance with daily activities)
4. The SNF stay must begin within 30 days of the qualifying hospital stay

The "3-day qualifying stay" rule is a frequent source of confusion. If you are held for observation in the hospital rather than formally admitted as an inpatient, those observation days generally do not count toward the 3-day qualifying stay for Original Medicare SNF coverage. This distinction has prompted litigation, notice requirements, and newer appeal rights for some patients whose status is changed from inpatient to outpatient observation.

Custodial care exclusion: Part A does not cover long-term custodial care — care that primarily consists of assistance with activities of daily living (bathing, dressing, eating, toileting) without requiring skilled medical or rehabilitative services. Medicare SNF coverage ends when the patient's condition stabilizes to the point where skilled care is no longer necessary. At that point, continued nursing home care is the patient's own expense (or Medicaid's, for those who qualify after spending down assets). For end-of-life planning, see Advance Directives.

Hospice Care Under Part A

Medicare hospice coverage is a significant benefit for terminally ill beneficiaries and their families. To qualify:

• A physician must certify that the patient has a terminal illness with a life expectancy of 6 months or less if the disease runs its normal course
• The patient must elect hospice care and agree to forgo Medicare coverage for curative treatment of the terminal diagnosis
• The hospice must be Medicare-certified

Once elected, Medicare covers virtually all care related to the terminal condition: nursing care, physician services, medical equipment, medications for pain and symptom management, short-term inpatient respite care, grief counseling, and social work services, all coordinated through the hospice organization. Beneficiary cost-sharing is minimal: up to $5 per outpatient prescription for symptom control or pain relief drugs and 5% of the Medicare-approved amount for inpatient respite care.

The hospice election can be revoked at any time — the patient can return to standard Medicare coverage and seek curative treatment. Patients who outlive the initial certifications can continue receiving hospice care through successive benefit periods, with recertification by the attending physician.

How It Affects You

If you or a family member is approaching 65: Note that enrolling in any part of Medicare — including Part A — ends your ability to contribute to an HSA. Plan your final HSA contributions carefully. Confirm whether Part A enrollment will be automatic. People already receiving Social Security or Railroad Retirement Board benefits are generally enrolled automatically in Medicare Parts A and B. If you are not already receiving those benefits, you usually must enroll during your Initial Enrollment Period. Premium-free Part A generally does not carry a late-enrollment penalty, but people who must buy Part A can face a surcharge if they enroll late.

If you're planning for a major surgery or hospitalization: Know your current benefit period status. If you've been hospitalized or in covered SNF care recently, your benefit period may still be open, meaning no new deductible. If a new benefit period has started, you owe the $1,736 deductible again. For hospitalizations likely to extend beyond 60 days, model the daily coinsurance exposure using the 2026 rates: $434 per day for days 61-90 and $868 per day for lifetime reserve days.

If you're considering a nursing home or rehab facility stay: Verify the qualifying hospital stay requirement before assuming Medicare will cover the stay. If the hospital says you are under observation rather than admitted as an inpatient, ask for the required written notice and confirm how that status affects SNF eligibility. As of 2025, some patients also have appeal rights when a hospital changes their status from inpatient to outpatient observation. Without a valid qualifying inpatient stay or an applicable waiver, Original Medicare generally will not cover the SNF stay under Part A.

If you're a family considering hospice for a terminally ill loved one: Hospice provides coordinated medical, emotional, and practical support with minimal Part A cost-sharing. The election usually means Medicare will not pay for curative treatment of the terminal illness and related conditions, but Medicare can still cover care unrelated to that terminal condition. If a patient's condition improves or treatment goals change, the hospice election can be revoked.

State Variations

Medicare Part A is a federal program — coverage, eligibility, deductibles, and coinsurance are uniform across all states. However, states play a significant role in post-acute care through Medicaid: many nursing home residents who exhaust their Medicare SNF benefit (or never qualified for it) transition to Medicaid coverage for long-term custodial care. See Medicaid LTC Spend-Down for the asset requirements. Medicaid eligibility for nursing home care requires "spending down" assets to Medicaid financial limits — thresholds that vary by state but are generally below $2,000 in countable assets for an individual. States operate their Medicaid programs within federal guidelines, so nursing home coverage terms, quality standards, and available facilities vary significantly by state.

Implementing Regulations

• 42 CFR Part 406 — Hospital insurance eligibility, enrollment, premiums, and entitlement rules for Medicare Part A

• 42 CFR Part 409 — Hospital Insurance Benefits (55 sections — the definitional core of Medicare Part A coverage, specifying exactly what services Medicare pays for under the hospital insurance benefit and the scope of each covered service category; establishes the benefit rules that determine whether a service qualifies for Part A payment):

  Inpatient hospital services (Subpart A, §§ 409.10–409.22):

  • § 409.10 — Included services: inpatient hospital or CAH services include bed and board; nursing services; surgical services; use of hospital facilities; medical social services; drugs and biologicals ordinarily provided by hospitals (§ 409.13); supplies, appliances, and equipment (§ 409.14); intern/resident services (§ 409.15); other diagnostic or therapeutic services; and PT/OT/speech-language pathology (§ 409.17)
  • § 409.11 — Bed and board: Medicare pays in full for semiprivate (2-4 bed) and ward accommodations; if a patient requests a private room and the hospital has semiprivate rooms available, Medicare does not pay the additional private room charge — the patient pays the difference; only when no semiprivate rooms are available (medically necessary private room) does Medicare cover private room costs
  • § 409.13 — Drugs and biologicals: Medicare covers drugs and biologicals during an inpatient stay only if they (1) represent the hospital's customary practice to provide, (2) are ordinarily furnished by the hospital for patients who need them, and (3) are either necessary for the treatment of the patient or are for the convenience of the patient under the physician's specific orders; routine patient care drugs qualify; experimental or investigational drugs generally do not
  • § 409.18 — Transplant services: Medicare pays for kidney transplantation only in approved renal transplantation centers; heart, liver, lung, and other organ transplants are subject to separate CMS approval processes and coverage criteria under related regulations

  Post-hospital extended care services — SNF (Subpart B, §§ 409.20–409.36):

  • § 409.20 — Coverage criteria: posthospital SNF care is covered only if (1) the patient was hospitalized for at least 3 consecutive days (not counting the discharge day) as an inpatient — the "3-day qualifying stay" requirement; (2) the SNF stay begins within 30 days of hospital discharge; (3) the patient requires daily skilled nursing care or skilled rehabilitation services (physical, occupational, or speech therapy); and (4) the care is provided in a Medicare-certified SNF
  • § 409.21 — Nursing care: Medicare covers nursing care in an SNF when provided by or under the supervision of a registered nurse; the patient must need skilled nursing care at least once a day; "skilled" means services requiring professional judgment and technical skills beyond those of an average non-medical person — wound care, IV medication administration, and complex physical therapy qualify; general supervision and custodial care do not

  Home health services (Subpart C, §§ 409.40–409.50):

  • § 409.40–409.48 — Home health benefit criteria: Medicare covers home health only for patients who are homebound (leaving the home requires considerable effort) and under a physician's plan of care; covered services include part-time or intermittent skilled nursing care, physical/occupational/speech therapy, home health aide services (when accompanying skilled care), and medical social services; there is no 3-day hospital stay requirement for home health under Part A (or Part B, which also covers home health)

  Hospice care (Subpart D, §§ 409.60–409.62):

  • § 409.60 — Hospice benefit: Medicare covers hospice care when a physician certifies that the patient has a terminal illness with a life expectancy of 6 months or less if the illness runs its normal course; the patient must elect the hospice benefit and agree to receive palliative (comfort) care rather than curative treatment for the terminal illness; hospice provides a comprehensive package — physician services, nursing, counseling, aide services, social work, pastoral care, respite care, and bedridden patient supplies; the trade-off is that Medicare stops paying for curative treatment of the terminal condition itself (though treatment for other unrelated conditions continues)

  Benefit period structure (§§ 409.60–409.64 cross-reference with Part 409 and 42 CFR § 409.102): Medicare Part A pays within a "benefit period" (spell of illness) framework — coverage resets each time a patient has been out of the hospital or SNF for 60 consecutive days; there is no limit on the number of benefit periods; the structure creates the Part A deductible that applies per-benefit-period rather than annually — for 2026, the deductible is $1,736 per benefit period.

• 42 CFR Part 412 — Prospective Payment Systems for Inpatient Hospital Services (180 sections — the operational backbone of Medicare hospital payment, covering every inpatient PPS as well as quality-linked payment adjustments):

  • Subpart D — Basic Methodology for Prospective Payment (§§ 412.60–412.115): the core IPPS formula — a relative weight (DRG weight) reflecting resource intensity multiplied by a standardized base payment amount, then adjusted for local wage costs (wage index), medical education burden, serving low-income patients, and high-cost outlier cases; the wage index splits hospitals into labor-related (about 68% of base rate) and non-labor portions; the national base rate is updated annually through the IPPS Final Rule using a market basket index minus a productivity adjustment
  • Subpart I — Adjustments to Payments Under the Prospective Payment System (14s): the four main quality-linked payment adjustment programs applied to IPPS rates — Hospital Readmissions Reduction Program (HRRP) (§ 412.152–412.154): hospitals with excess readmissions for specified conditions (AMI, heart failure, pneumonia, COPD, hip/knee replacement, CABG) receive a payment reduction up to 3%; Hospital Value-Based Purchasing (HVBP) (§ 412.160–412.167): aggregate payment pool redistributed based on TPS score (clinical care, safety, efficiency, patient experience domains); net neutral program — hospitals with above-median performance gain, below-median lose; Hospital-Acquired Condition Reduction Program (HACRP) (§ 412.170): bottom quartile of hospitals on HAC measures receive 1% payment reduction; Indirect Medical Education (IME) (§ 412.105): teaching hospitals receive an add-on payment of approximately 5.5% for each 10% increase in resident-to-bed ratio, compensating for the greater resource intensity of training cases; Disproportionate Share Hospital (DSH) (§ 412.106): hospitals serving low-income patients receive add-on payments; post-ACA, the formula splits into empirical DSH (75% reduced) plus an uncompensated care factor tied to national uninsured rates
  • Subpart G — Special Treatment of Certain Facilities Under the Prospective Payment System (13s): certain hospital categories are excluded from IPPS and receive cost-based or alternate payment: Cancer centers (§ 412.92), Sole community hospitals (SCHs) (§ 412.92), Medicare Dependent Hospitals (MDHs), and Rural Referral Centers (RRCs) qualify for special payment protections including hold-harmless provisions and higher base rates; Critical Access Hospitals (CAHs) are excluded from IPPS entirely and paid at 101% of reasonable cost under 42 CFR Part 413
  • Subpart L — Geographic Reclassification of Hospitals (23s): the Medicare Geographic Classification Review Board (MGCRB) allows hospitals to apply for reclassification to a higher-wage-index area, which increases their IPPS payment; process involves meeting proximity, commuting pattern, and wage-comparability criteria; reclassification elections affect all wage-index-sensitive payments including DSH and IME; the rural floor provision prevents a state's rural wage index from dropping below its rural average
  • Subpart M — Payment for the Capital-Related Costs of Inpatient Hospital Services (19s): Capital PPS — a separate prospective payment for hospital capital costs (depreciation, interest, lease costs on buildings and equipment) that runs parallel to IPPS operating payments; capital is paid based on a federal capital rate × DRG weight × case-mix index, with an old capital transition blend and exceptions for new and small hospitals; capital payments are adjusted for DSH status, IME, and location (large urban vs. other)
  • Subpart N — Payments for Inpatient Psychiatric Facility (IPF) Services (11s): IPF-PPS (§§ 412.400–412.432) — per-diem prospective payment for inpatient psychiatric services using a base per-diem rate adjusted for DRG patient classification, facility characteristics (teaching, rural, emergency department), patient age, and variable per-diem adjustments (highest on day 1, declining over the stay); IPF-PPS applies to distinct psychiatric units and freestanding psychiatric hospitals
  • Subpart O — Payment for Long-Term Care Hospital (LTCH) Services (24s): LTCH-PPS (§§ 412.500–412.560) — prospective payment for long-term acute care hospitals (average length of stay >25 days); uses LTCH-DRGs (MS-LTC-DRGs) with standard federal rate; short-stay outlier policy applies to LTCH admissions that are much shorter than the geometric mean LOS; site-neutral payment policy (since 2016) — LTCHs that admit patients who do not meet specified clinical criteria (ICU stay, ventilator use) are reimbursed at IPPS rates rather than LTCH-PPS rates; the site-neutral policy dramatically reduced LTCH admissions
  • Subpart P — Payments for Inpatient Rehabilitation Facility (IRF) Services (18s): IRF-PPS (§§ 412.600–412.670) — per-discharge payment for inpatient rehabilitation hospitals and distinct-part units; classifies patients into Case-Mix Groups (CMGs) based on motor and cognitive function (FIM/IRF-PAI assessment) and age; the "60% rule" (§ 412.622) requires that at least 60% of a facility's patients have one of 13 qualifying conditions (stroke, hip fracture, TBI, etc.) to qualify as an IRF; below 60% threshold, the facility is paid as a general acute care hospital at IPPS rates

• 42 CFR Part 418 — Hospice Care: Medicare's complete regulatory framework for hospice — eligibility, election, certification, coverage, conditions of participation, and payment (implementing Social Security Act § 1861(dd)):

  Eligibility and election (Subpart B — §§ 418.20–418.30):

  • § 418.20 — Eligibility: the patient must be entitled to Medicare Part A and certified as terminally ill (physician certifies life expectancy of 6 months or less if the illness follows its normal course); certification need not be to the day — it is a clinical judgment
  • § 418.21 — Duration: hospice coverage runs in election periods — 90 days + 90 days + unlimited 60-day periods; there is no cap on total days; at each recertification period boundary the physician must recertify continued terminal prognosis
  • § 418.22 — Certification of terminal illness: the hospice medical director or attending physician must provide written certification at admission and at each recertification; Medicare requires face-to-face encounter by a hospice physician or nurse practitioner before the third benefit period (180-day recertification) and all subsequent recertifications — CMS has used face-to-face documentation as an audit trigger for potentially extended enrollments
  • § 418.24 — Election: the patient (or legal representative) signs an election statement choosing hospice and waiving the right to Medicare payment for curative treatment of the terminal illness; the election waiver is the defining legal moment — from that point, Medicare pays for palliative services, not curative ones; related conditions are covered under the hospice benefit; unrelated conditions continue under Parts A and B
  • § 418.26 — Discharge: a hospice may discharge a patient who revokes election, who moves out of the service area, who no longer meets eligibility criteria, or whose condition improves beyond the terminal illness standard (improvement does not automatically trigger disenrollment — the patient may remain enrolled as long as they remain eligible under their primary terminal diagnosis or develop a new terminal prognosis)
  • § 418.28 — Revocation: a beneficiary may revoke the election of hospice at any time; revocation ends the election period; unused days in the period are forfeited; the patient may re-elect hospice in a subsequent benefit period without waiting

  Conditions of Participation (Subpart C — §§ 418.100–418.116):

  • § 418.100 — Organization and administration: the hospice must maintain interdisciplinary group (IDG) care planning; IDG must include at minimum a physician, registered nurse, social worker, and pastoral/counseling representative
  • § 418.102 — Medical director: a designated physician oversees the clinical aspects of the hospice's patient care program; the medical director certifies terminal illness and participates in IDG case review
  • § 418.106 — Drugs and supplies: the hospice is responsible for providing all drugs, biologicals, and medical supplies related to the palliative treatment of the terminal illness — including all pain medications; unlike traditional Medicare, there is no separate drug cost-sharing under the hospice benefit for covered medications
  • § 418.108 — Short-term inpatient care: inpatient care for acute pain control, symptom management, or respite must be available; inpatient respite care is limited to 5 consecutive days per period

  Coverage requirements (Subpart D — §§ 418.200–418.205):

  • § 418.202 — Covered services: hospice covers nursing services, physician services, medical social services, aide services, counseling, short-term inpatient care, medical supplies, and home health aide services — all delivered within the hospice plan of care; the covered services cluster is broader than traditional Medicare home health but narrower than hospital inpatient
  • § 418.204 — Periods of crisis: continuous home nursing (24 hours/day) is covered during a period of medical crisis — acute deterioration with pain, respiratory distress, or severe symptoms requiring continuous nursing oversight; crisis-level care is paid at the highest (continuous care) daily rate
  • § 418.205 — Pre-election counseling: Medicare covers a pre-election evaluation and counseling session by a hospice physician or nurse practitioner to help a terminally ill patient and family understand hospice services — a benefit specifically designed to reduce underutilization of hospice by ensuring patients and families have accurate information about what the benefit covers

• 42 CFR Part 482 — Conditions of Participation for Hospitals: the foundational Medicare participation standards every acute care hospital must meet to receive Medicare and Medicaid payment. Part 482 defines what a compliant hospital must have in place across governance, clinical services, quality, patient rights, and physical infrastructure:

  • § 482.12 — Governing body: every hospital must have an effective governing body (or individual) with legal responsibility for the conduct of the hospital; governing body is responsible for the quality of care, the appointment of medical staff, and the CEO selection; no hospital may participate in Medicare without a functioning governing body accountable for institutional performance
  • § 482.13 — Patient rights: a hospital must protect and promote each patient's rights, including the right to participate in care decisions, the right to a personal representative, the right to receive notice of rights in advance of care, the right to privacy, the right to be free from restraint or seclusion except in emergencies, and the right to receive care in a safe setting free from abuse; § 482.13 is the most-cited CoP condition in CMS enforcement actions against hospitals
  • § 482.21 — Quality assessment and performance improvement (QAPI): every hospital must have an ongoing, data-driven QAPI program that identifies and corrects quality deficiencies; the QAPI program must include tracking of adverse events, analysis of clinical outcomes, and performance improvement projects; hospital boards are responsible for overseeing QAPI; inadequate QAPI has been cited in virtually every high-profile hospital enforcement action
  • § 482.22 — Medical staff: a hospital must have an organized medical staff operating under bylaws approved by the governing body; only members of the medical staff may be granted clinical privileges; the medical staff is responsible for quality of medical care and recommends practitioners for privileges
  • § 482.23 — Nursing services: a hospital must have adequate nursing staffing — sufficient registered nurses (RNs) to assess patient needs, develop nursing plans, and supervise LPNs and aides; § 482.23 is intentionally non-prescriptive on staff ratios (unlike some state laws), relying instead on patient acuity assessment; CMS surveys assess whether actual staffing was adequate in practice
  • § 482.25 — Pharmaceutical services: hospitals must maintain a pharmacy or drug storage area under competent supervision; medication orders must be reviewed by pharmacist or practitioner before dispensing; medication error tracking required; formulary management and controlled substance procedures required
  • § 482.42 — Infection prevention and control, antibiotic stewardship: hospitals must maintain an infection prevention and control program and an antibiotic stewardship program; the antibiotic stewardship CoP (added in 2019 final rule) requires a systematic program to promote appropriate antibiotic prescribing and reduce resistance — a direct response to CDC data showing 30% of hospital antibiotic use is unnecessary

  CMS surveys hospitals through State Survey Agencies under contract. Hospitals receive unannounced surveys (inspections) typically every 3 years for full Medicare certification; CMS may conduct complaint investigations at any time. When surveyors find a deficiency constituting Immediate Jeopardy (serious risk to patient health or safety), the hospital must correct it within typically 23 days or face termination of its Medicare/Medicaid provider agreement — effectively shutting down revenue and referring patients elsewhere. Non-immediate-jeopardy deficiencies have longer correction timelines (Plans of Correction) and may result in civil money penalties rather than termination.

• 42 CFR Part 488 — Survey, Certification, and Enforcement Procedures (147 sections across 12 subparts — the operational framework for how CMS and state survey agencies inspect and certify providers, and what happens when they fail to meet requirements):

  • Subpart A (§§ 488.1–488.28) — General Provisions: defines "certification" as a state survey agency determination that a provider meets requirements for Medicare/Medicaid participation; the Secretary must enter into agreements with state survey agencies under § 1864(a) of the Social Security Act for delegated inspection authority (§ 488.10); state plan requirements specify how states must conduct surveys and apply enforcement (§ 488.11)
  • Subpart E (§§ 488.300–488.335) — Survey and Certification of Long-Term Care Facilities: standard surveys of skilled nursing facilities (SNFs) and nursing facilities (NFs) must include a case-mix stratified sample of residents, a survey of quality of care indicators, and an in-depth look at residents identified as at risk (§ 488.305); all standard surveys must be unannounced — the facility may not be told in advance (§ 488.307); each SNF/NF must be surveyed not later than 15 months after the last standard survey, with a statewide average interval of no more than 12 months (§ 488.308); CMS may also conduct extended surveys after a standard survey that finds substandard care
  • Subpart F (§§ 488.400–488.488) — Enforcement of Compliance for Long-Term Care Facilities (32 sections — the largest subpart): when a facility is not in substantial compliance with participation requirements, CMS or the State may impose one or more remedies based on deficiency seriousness (§ 488.402); available remedies (§ 488.406) range from civil money penalties (CMPs — daily rate or per-instance), denial of payment for new admissions, temporary management, directed plan of correction, and state monitoring, to termination of the provider agreement; immediate jeopardy triggers the most severe response — when resident health or safety is at imminent risk, CMS must terminate the provider agreement (or accept a credible allegation of compliance) within 23 calendar days of the survey (§ 488.410); non-immediate-jeopardy deficiencies allow longer correction timelines (§ 488.412); CMP amounts range from a few hundred to several thousand dollars per day; repeat deficiencies within 12 months trigger mandatory denial of payment for new admissions
  • Subparts I, J, M, N — Parallel survey and enforcement frameworks for home health agencies (Subparts I, J), hospice programs (Subparts M, N), and ESRD facilities (Subpart H); the enforcement structure mirrors the nursing home system but with program-specific remedy ranges and correction timelines
  • Subpart L (§§ 488.1000–488.1003) — Home Infusion Therapy Suppliers: accreditation framework for Medicare-certified home infusion therapy suppliers established under the Bipartisan Budget Act of 2018, which created a separate Part B benefit for home infusion

• 42 CFR Part 405 — Federal Health Insurance for the Aged and Disabled (268 sections — the primary Medicare claims determination, appeal, and provider reimbursement adjudication regulation):

  • Subpart I — Determinations, Redeterminations, Reconsiderations, and Appeals (103 sections — the five-level Medicare appeals process): (1) Initial Determination — contractor (MAC) or plan determines coverage/payment; issued within 60 days; must include notice of appeal rights; (2) Redetermination — beneficiary or provider requests MAC reconsider its own decision within 120 days; MAC must decide within 60 days; (3) Reconsideration — if dissatisfied, request reconsideration by a Qualified Independent Contractor (QIC) within 180 days; QIC must decide within 60 days; clinical review; (4) ALJ Hearing — if amount in controversy exceeds $180 (2026 threshold), request hearing before an Office of Medicare Hearings and Appeals (OMHA) ALJ within 60 days of QIC decision; OMHA has had chronic backlogs — hundreds of thousands of cases pending; (5) Medicare Appeals Council — if dissatisfied with ALJ, appeal to DAB's Medicare Appeals Council within 60 days; (6) Federal District Court — if amount in controversy exceeds $1,840 (2026); § 405.1136 governs expedited review for certain post-discharge disputes
  • Subpart R — Provider Reimbursement Determinations and Appeals (51 sections): the separate appeals process for hospital cost reports and provider reimbursements; Provider Reimbursement Review Board (PRRB) hears appeals from contractors' final cost report settlements when the amount in controversy exceeds $10,000 ($50,000 for group appeals); PRRB decisions are subject to Administrator review; federal court jurisdiction follows PRRB exhaustion
  • Subpart X — Rural Health Clinics and FQHCs (34 sections): conditions for coverage; RHCs and FQHCs qualify for cost-based reimbursement (rather than DRG or fee schedule); encounters must be with a qualified mid-level practitioner or physician; basket of services definition; all-inclusive rate (AIR) calculation methodology
  • Subpart C — Suspension of Payment and Overpayment Recovery (22 sections): CMS and MACs may suspend payments when reliable evidence of fraud or overpayments exists; extrapolation of error rates across similar claims (controversial — allows a 100-claim sample to generate millions in overpayment demand); extended repayment schedules for providers unable to repay immediately; interest accrues at Treasury rate on outstanding balances; voluntary self-disclosure through OIG's provider self-disclosure protocol
  • Subpart D — Private Contracts (12 sections): Medicare beneficiaries may enter private contracts with physicians who have opted out of Medicare entirely; opted-out physicians do not bill Medicare; beneficiary pays directly; physician must file an opt-out affidavit and cannot bill Medicare for any service for 2 years from the opt-out date; the private contract must be in writing, signed before services, and state that no Medicare payment will be made

• 42 CFR Part 421 — Medicare Contracting: the regulations governing the administrative contractors who process Medicare claims on CMS's behalf — historically called fiscal intermediaries (for Part A hospital claims) and carriers (for Part B physician claims), consolidated since 2011 into Medicare Administrative Contractors (MACs). Part 421 implements the administrative contractor provisions of the Social Security Act. Key provisions:

  • § 421.100 — Intermediary functions: a Medicare intermediary (legacy contractor) must determine Part A claims, make payments to providers, audit cost reports, conduct utilization review, and educate providers about program requirements; the intermediary acts as CMS's agent and is liable for overpayments it fails to recover
  • § 421.103 — Payment to providers: providers are assigned to a specific intermediary or MAC that processes all their claims; the contractor makes payments from the Medicare Trust Fund, not its own funds; the contractor's payment authority is limited to what CMS regulations and program instructions authorize
  • § 421.200 — Carrier functions: Medicare carriers (legacy Part B contractors) must adjudicate physician and supplier claims, process payments, conduct medical review, handle beneficiary inquiries, and maintain provider enrollment; carriers were the front-line contractors handling the bulk of Medicare Part B volume for decades; the MAC consolidation replaced separate intermediary and carrier contracts with unified contractors handling both Part A and Part B claims for a geographic jurisdiction
  • § 421.120 — Performance criteria: CMS evaluates contractors against financial management, claims processing accuracy, timeliness, customer service, and program integrity metrics; contractors failing performance criteria receive corrective action plans; persistent failure can result in termination of the contract; the MAC system was designed to enable CMS to consolidate contractors from ~50 to ~12 geographic MACs, introducing competitive procurement and performance accountability that the legacy intermediary system lacked
  • § 421.126 — Termination of agreements: CMS may terminate a Medicare contractor agreement for failure to comply with program requirements, failure to meet performance standards, or national security grounds; the contractor may terminate by giving sufficient advance notice; CMS must ensure continuity of claims processing during transitions — a logistical challenge because each MAC processes hundreds of millions of claims annually and holds years of provider enrollment data

  The transition from legacy intermediaries and carriers to the current MAC system — authorized by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) — was one of the largest Medicare administrative restructurings since the program's 1965 launch. The 12 MAC jurisdictions replaced approximately 50 separate contractor relationships, enabling CMS to impose standardized systems and competitive bidding. MACs are required to operate shared systems (FISS for Part A, MCS for Part B) rather than proprietary systems, enabling national consistency in claims adjudication. The MAC system also consolidated provider enrollment, eliminating the prior situation where a hospital in a state bordering two intermediary jurisdictions had to maintain separate enrollment with each contractor. Part 421 is the legal framework; the actual MAC contracts are not public, but they incorporate CMS program manuals, transmittals, and instructions that effectively govern all day-to-day Medicare claims operations.

Pending Legislation (119th Congress)

As of April 8, 2026, no enacted federal law has changed the core 2026 Part A benefit design described above. Congress continues to debate broader Medicare financing and post-acute-care rules, but the main current-law issues for this page are still the annual CMS cost-sharing update, observation-status/SNF access, and the Hospital Insurance Trust Fund outlook.

Recent Developments

• Nov. 14, 2025: CMS released the official 2026 Part A premium, deductible, and coinsurance amounts. The inpatient deductible rose to $1,736, hospital coinsurance rose to $434 and $868, and SNF coinsurance rose to $217 per day for days 21-100.
• Jan. 1, 2025 / Feb. 14, 2025: Medicare implemented new appeal pathways for certain patients whose hospital status is changed from inpatient to outpatient observation, a significant development because that status change can affect Part A billing and downstream SNF coverage.
• June 18, 2025: The Medicare Trustees issued their most recent report and projected that the Hospital Insurance Trust Fund would be depleted in 2033 under current law, making trust-fund financing an ongoing policy issue even though Part A benefits continue to be paid normally today.
• Feb. 26, 2026: CMS announced an updated Medicare Outpatient Observation Notice (MOON), with providers required to use the updated notice beginning April 21, 2026.