Overview
Medicare Part A is the Hospital Insurance component of Original Medicare, the federal health insurance program for Americans 65 and older and certain younger individuals with disabilities or end-stage renal disease. Part A primarily covers inpatient hospital stays, stays in skilled nursing facilities (after qualifying hospital admission of at least 3 days), home health care, and hospice care. Medicare Part B covers outpatient and physician services separately.
Most beneficiaries receive Part A premium-free based on payroll tax (FICA) contributions during their working years — 40 quarters (10 years) of Medicare-eligible work history earns free Part A. Beneficiaries without sufficient work history can buy into Part A by paying a monthly premium ($505/month for 2025 if less than 30 quarters; reduced $278 for 30–39 quarters). Most US seniors qualify for premium-free Part A.
Part A cost-sharing is structured around benefit periods. A benefit period begins the day of hospital admission and ends after 60 consecutive days without inpatient care. For each benefit period: $1,676 deductible (2025) for the first 60 days; $419/day coinsurance for days 61–90; $838/day for days 91–150 (using lifetime reserve days, a beneficiary has 60 such days total over their lifetime); all costs after lifetime reserve exhaustion. For SNF: days 1–20 covered in full; days 21–100 coinsurance of $209.50/day (2025); all costs after day 100.
For hospital RCM, Part A is reimbursed through the Inpatient Prospective Payment System (IPPS) for acute-care hospitals, through separate PPS programs for long-term care hospitals, inpatient rehabilitation facilities, and inpatient psychiatric facilities, and through SNF PPS for skilled nursing. Each PPS has its own payment methodology, rules, and operational implications. Billing occurs on the UB-04 / 837I form with bill-type codes identifying the specific setting and frequency.
Part A interacts with other programs in specific ways. Medicare Advantage Part C replaces both Part A and Part B for enrolled members — the MA plan receives capitated payment from CMS and manages inpatient and outpatient care in one package. Medigap supplements Part A cost-sharing for Original Medicare enrollees. Dual-eligible beneficiaries (Medicare + Medicaid) have Medicaid cover some Part A cost-sharing. Part A and Medicaid coordination is complex in states with managed Medicaid dual-eligible programs.
For revenue cycle operations, Part A billing discipline depends on correct determination of inpatient vs. observation status (the "two-midnight rule"), precise MS-DRG coding of principal diagnosis and MCC/CC secondary diagnoses, accurate ICD-10-PCS procedure coding, correct POA indicators, and compliance with admission notification and discharge planning requirements. Audit programs — RAC, MAC, SMRC, TPE — focus heavily on Part A billing patterns identified through PEPPER reports.
Industry benchmark
CMS Medicare Benefit Policy Manual Chapter 3 (Duration of Covered Inpatient Services). Annual Part A deductible and coinsurance updated via CMS MLN publications. Industry reference: Medicare Part A enrollment approximately 66 million beneficiaries (2024).
Worked example
A 74-year-old is admitted to an acute-care hospital for CABG surgery. Principal dx I25.10 coronary atherosclerosis; secondary dx with MCC; MS-DRG 236 (CABG with cardiac catheterization, with MCC). Hospital stay 6 days. IPPS payment: MS-DRG relative weight × standardized amount × wage index × policy adjustments = approximately $48,000 base payment. Beneficiary pays $1,676 Part A deductible. If Medigap Plan G, Medigap covers the $1,676. Post-discharge SNF for 18 days: covered in full (days 1–20). Hospital receives Part A + copay; SNF receives SNF PPS payment.
Frequently asked questions — Medicare Part A
Is Medicare Part A free?
Most beneficiaries receive Part A premium-free based on 40 quarters (10 years) of Medicare-eligible work history. Those without sufficient history can buy Part A by paying a monthly premium. Premium-free Part A does not mean no cost-sharing — deductibles, coinsurance, and eventually uncovered costs apply.
What does Medicare Part A cover?
Inpatient hospital stays, skilled nursing facility stays following qualifying hospital admission, home health care, and hospice. Part A does not cover physician services during inpatient stays (that is Part B), custodial care, or routine outpatient services.
How is Medicare Part A paid to providers?
Through prospective payment systems specific to each setting: IPPS for acute-care hospitals (MS-DRG-based), LTCH PPS for long-term care hospitals, IRF PPS for inpatient rehab, IPF PPS for inpatient psychiatric, SNF PPS for skilled nursing. Each has its own payment methodology and operational rules.
What's a benefit period in Part A?
A benefit period starts the day of inpatient admission and ends after 60 consecutive days without inpatient care. Each benefit period has its own deductible and coinsurance schedule. A beneficiary with multiple benefit periods per year (e.g., readmitted after 60+ days) faces multiple deductibles.
Disclaimer
This glossary entry is operational reference for revenue-cycle and medical-billing professionals. It is not legal, clinical, or contractual advice. Industry benchmarks cite named public sources where available; always verify against the current guidance from the authority body before relying on a number in a contract, policy, or compliance filing.