7.1 Medicare Parts A, B, C, and D

Hospital case managers live inside Medicare every shift. Blueprint domain 2D expects you to recognize what each Medicare Part covers, how Original Medicare differs from Medicare Advantage, and how those differences change discharge planning, utilization review, and patient education. Wrong assumptions about Parts create avoidable denials, unpaid SNF days, and pharmacy delays at the bedside.

Quick Answer: Part A = hospital insurance (inpatient, SNF when qualified, hospice, some home health). Part B = medical insurance (outpatient, physician, DME, many preventive services). Part C = Medicare Advantage private plans covering A+B (often with D). Part D = outpatient drugs via PDP or MA-PD. Always confirm the patient's active enrollment before promising coverage.

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Part A — Hospital Insurance

Medicare Part A helps pay for:

• Inpatient hospital care
• Skilled nursing facility (SNF) care when qualifying rules are met
• Hospice care
• Some home health care

Most people do not pay a Part A premium if they or a spouse paid Medicare taxes long enough. Cost-sharing still applies. Per CMS's 2026 Parts A & B premiums and deductibles announcement:

Case management implications — Part A

• Status matters. Part A inpatient payment follows inpatient admission rules (including the Two-Midnight framework discussed elsewhere). Observation is generally outpatient and billed under Part B.
• Benefit periods, not calendar years, drive Part A hospital/SNF day counts. A benefit period starts with inpatient hospital or SNF care and ends after 60 consecutive days without inpatient hospital or SNF care.
• SNF coverage is conditional. Part A can cover SNF only when the 3-day qualifying inpatient stay and other skilled-need rules are met (see Section 7.4). Do not tell families "Medicare always pays for rehab after the hospital."
• Hospice is a Part A benefit with its own election rules; clarify goals of care before assuming acute-care pathways continue.

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Part B — Medical (Outpatient) Insurance

Medicare Part B helps cover:

• Physician and other practitioner services
• Outpatient hospital care
• Durable medical equipment (DME)
• Many preventive services (screenings, vaccines, Annual Wellness Visit)
• Limited outpatient drugs (for example, many infused/injectable drugs given by a provider, certain oral cancer/anti-nausea drugs, drugs used with qualifying DME such as nebulizers)
• Some home health services

For 2026, CMS set the standard Part B monthly premium at $202.90 and the annual Part B deductible at $283. After the deductible, beneficiaries commonly pay 20% coinsurance for many Part B services (Medigap or other secondary coverage may reduce that exposure).

Case management implications — Part B

• Observation, ED care, and many outpatient procedures typically fall under Part B, not Part A.
• DME at discharge (walker, oxygen, hospital bed) is usually a Part B pathway with supplier enrollment, medical necessity documentation, and sometimes prior authorization depending on the item and payer pathway.
• Part B drugs ≠ Part D drugs. Infused chemotherapy in an outpatient infusion center may be Part B; the patient's daily oral diabetes medication is usually Part D. Mixing these up causes pharmacy and prior-auth failures.
• Preventive services can be teaching opportunities during hospitalization ("Your Annual Wellness Visit is a Part B benefit—ask your PCP after discharge"), but they rarely solve an acute placement barrier.

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Part C — Medicare Advantage (MA)

Medicare Advantage (Part C) plans are offered by private insurers approved by Medicare. Enrollees still have Medicare, but they receive Part A and Part B benefits through the plan. Most individual MA enrollees are in plans that also offer Part D (MA-PD).

Typical MA operational features case managers encounter:

• Networks — in-network hospitals, SNFs, HHAs, and specialists matter
• Prior authorization — post-acute placements, DME, elective procedures, and some imaging often need plan approval
• Different cost-sharing — copays/coinsurance replace classic Original Medicare structures; MA plans must have an out-of-pocket maximum for Part A/B services (exact limits vary by plan/year)
• Possible waivers of the SNF 3-day rule — many MA plans waive the 3-day inpatient qualifying stay; verify with the plan, do not assume Original Medicare rules apply

KFF reporting on 2026 MA markets notes that a large share of individual MA-PD enrollees pay no supplemental premium beyond the Part B premium, which is a patient-facing talking point—but premium status does not remove authorization requirements.

Case management implications — Part C

1. Identify the exact plan (HMO, PPO, SNP, employer group MA).
2. Call or portal-check authorization requirements before promising a named SNF or home health agency.
3. Document the reference/authorization number and any peer-to-peer deadlines.
4. Educate patients that "I have Medicare" is incomplete; Advantage members follow plan rules.

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Part D — Prescription Drug Coverage

Part D covers outpatient prescription drugs through:

• Stand-alone Prescription Drug Plans (PDPs) paired with Original Medicare, or
• MA-PDs that bundle medical and drug coverage

Original Medicare (A + B alone) does not cover most self-administered retail prescriptions. Part D plans use formularies and tiers; utilization tools (prior auth, step therapy, quantity limits) are common.

IRA-era reforms created a meaningful Part D out-of-pocket cap (CMS/plan materials for 2026 describe a $2,100 annual OOP threshold for covered Part D drugs, up from $2,000 in 2025). Exact premium and deductible amounts still vary by plan; CMS has published that the Part D deductible may be no more than $615 in 2026 for standard designs. If a specific plan's premium is unpublished in your materials, say so and look it up in real time.

Case management implications — Part D

• Start discharge medication reconciliation early for high-cost or specialty drugs.
• Confirm formulary status before writing "continue home meds."
• Coordinate with pharmacy, social work, and manufacturer/patient-assistance programs when coverage gaps appear.
• Dual-eligible patients may have Low-Income Subsidy (Extra Help) that changes copays—flag this in handoffs.

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Original Medicare vs Advantage — Side-by-Side for CM

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Practical Workflow on the Unit

1. Verify payers in ADT/registration and with the patient (Medicare number, Advantage plan ID, Part D PDP card).
2. Classify the episode — inpatient Part A vs observation Part B changes SNF eligibility and patient liability messaging.
3. Map the discharge need to the correct Part — SNF/hospice → Part A pathway; DME/outpatient therapy → Part B or plan medical benefit; retail meds → Part D/MA-PD.
4. Escalate coverage uncertainty to UR, financial counseling, or the plan as early as day 1–2 of the stay, not the afternoon of discharge.

Exam Tip: ACM items often test whether you know observation days do not create Part A SNF eligibility under Original Medicare, and whether Advantage prior authorization is required even when the clinical need is clear.