What Is Medicare Part A/B/C/D?
Medicare is divided into four parts: Part A covers hospital inpatient, SNF, hospice, and home health; Part B covers physician services and outpatient care; Part C (Medicare Advantage) is private plans replacing A and B; Part D covers prescription drugs.
- Verify Medicare eligibility and plan type at every encounter using the HETS 270/271 transaction or CMS HIPAA Eligibility Transaction System.
- The eligibility response distinguishes Original Medicare from Medicare Advantage and identifies the MA plan name and ID for correct claim routing.
Medicare Part A/B/C/D
Also known as: Medicare Parts; Original Medicare; Medicare Advantage; Medicare Drug Plan
Medicare is divided into four parts: Part A covers hospital inpatient, SNF, hospice, and home health; Part B covers physician services and outpatient care; Part C (Medicare Advantage) is private plans replacing A and B; Part D covers prescription drugs.
Definition
Part A is funded through payroll taxes and pays hospitals under the IPPS using MS-DRGs. Part B is voluntary, funded by premiums and general revenue, and pays physicians under the MPFS using RVU-based RBRVS rates. Part C (Medicare Advantage) is offered by private insurers under contracts with CMS that bundle A and B (and usually D) benefits, often with HMO/PPO networks and prior-authorization requirements. Part D is private prescription drug coverage. Original Medicare claims (Parts A and B) are processed by MACs; Medicare Advantage claims are processed by the MA plan directly.
Example
A 67-year-old patient hospitalized for a CABG: Part A pays the hospital under MS-DRG 235 ($35,000+); Part B pays the surgeon under CPT 33533 (~$1,750 RVU-based); Part D covers the post-discharge antiplatelet medication; if the patient is enrolled in a Medicare Advantage plan instead, the MA plan pays both the hospital and surgeon under its negotiated rates with prior-auth requirements.
Common Misconceptions
Medicare Advantage is not 'supplemental' Medicare — it replaces Original Medicare for those who enroll. Many practices mistakenly bill Original Medicare for MA-enrolled patients, resulting in zero payment and a need to identify the MA plan and rebill.
Practical Application
Verify Medicare eligibility and plan type at every encounter using the HETS 270/271 transaction or CMS HIPAA Eligibility Transaction System. The eligibility response distinguishes Original Medicare from Medicare Advantage and identifies the MA plan name and ID for correct claim routing.
Related Terms
CMS
CMS is the federal agency within the U.S. Department of Health and Human Services that administers Medicare, jointly administers Medicaid and CHIP with the states, and oversees the Health Insurance Marketplaces and HIPAA administrative simplification.
Read definition arrow_forwardMedicare Advantage
Medicare Advantage (Part C) is private health-plan coverage that replaces Original Medicare Parts A and B, offered by insurers under contract with CMS, typically as HMO or PPO products with provider networks, prior-authorization, and capitated risk-adjusted CMS payments.
Read definition arrow_forwardMAC (Medicare Administrative Contractor)
A Medicare Administrative Contractor is a private organization that contracts with CMS to process Medicare Part A and Part B claims (or DME claims) within a defined geographic jurisdiction, applying CMS coverage rules and publishing local coverage determinations.
Read definition arrow_forwardDRG (Diagnosis-Related Group)
A DRG is the inpatient hospital classification system that groups admissions with similar clinical characteristics and resource use into a single payment category; CMS uses MS-DRGs to pay hospitals under the IPPS for Medicare inpatient stays.
Read definition arrow_forwardRVU (Relative Value Unit)
An RVU is a unit of measure in the Medicare Resource-Based Relative Value Scale (RBRVS) representing the relative resources required to perform a CPT/HCPCS service, comprising work, practice expense, and malpractice components.
Read definition arrow_forwardWhere This Applies on MedPrecision
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