The Average Cost of Chronic Conditions With Medicare

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Contributor, Benzinga
August 11, 2022

According to data from AARP, over two-thirds of Medicare beneficiaries have cancer, diabetes, heart disease, renal disease, lung illness or some other chronic condition. Medical care costs for these chronic conditions continue to increase. Keep reading for a more in-depth look at the cost of these chronic conditions and how they are covered by Medicare.

The Cost of Chronic Conditions With Medicare

According to the World Health Organization (WHO), a chronic disease is a long-term condition that is non-communicable and progresses slowly. The Centers for Medicare & Medicaid Services (CMS) defines these 15 chronic conditions generally covered by Medicare/Medicaid or Special Needs Plans.

  • Diabetes
  • Heart failure and cardiovascular disorders
  • Dementia
  • Stroke
  • Cancer
  • Arthritis and other autoimmune disorders
  • Asthma and other chronic lung disorders
  • Mental illnesses like major depression
  • Neurological disorders such as epilepsy or multiple sclerosis
  • End-stage liver disease
  • End-stage renal disease
  • Hemophilia and other hematologic disorders
  • Chronic alcohol and drug dependence
  • HIV/AIDS

Research from the Milken Institute estimates the total cost for health care related to chronic diseases in the U.S. reaches $3.7 trillion each year. You likely know someone with a chronic condition, or you may be living with one or more chronic medical conditions. 

Conditions such as high blood pressure, osteoarthritis, diabetes and dyslipidemia (high "bad" LDL cholesterol and/or low "good" HDL cholesterol) are quite prevalent. Diabetes, Alzheimer's disease and osteoarthritis are the three most expensive diseases. The good news is that Medicare pays for comprehensive care for Medicare recipients enrolled in Medicare Part B with two or more chronic conditions. 

You may wonder how Medicare covers chronic diseases like diabetes or arthritis. Medicare Part A covers hospitalization and skilled nursing facility care while Medicare Part B provides outpatient care such as doctor visits, lab tests, screenings and wheelchairs.

Here is a breakdown of what is covered by Medicare Part A and Part B.

Medicare Part A

Homecare

  • Free home health care
  • 20% of Medicare-approved DME (DME)
  • Hospice

Hospice

  • You may be eligible for free hospice services.
  • For pain treatment and symptom control at home, you may pay a $5 copayment per prescription medicine. If your prescription isn't covered by hospice, your hospice provider should check Medicare Drug Coverage (Part D)
  • Inpatient respite care may cost 5% of Medicare's allowed amount.
  • Medicare doesn't fund hospice treatment in your home or another institution (like a nursing home).

Hospitalization

Each benefit period costs:

  • $1,556 deductible
  • 1 to 60 days: no coinsurance
  • 61 to 90 days: $389/day coinsurance
  • After day 90, coinsurance is $778 per "lifetime reserve day" (up to a maximum of 60 reserve days over your lifetime).
  • After the reserve days: Everything.

Medicare excludes:

  • Private nursing care
  • In-room TV or phone
  • Unless necessary, a private room

Psychiatric hospitalization

  • $1,556 annual deductible.
  • Days 1–60 have no coinsurance.
  • Days 61–90: $389 daily coinsurance.
  • After day 90, coinsurance is $778 per "lifetime reserve day" (up to 60 days over your lifetime).
  • Beyond reserve days it includes everything.
  • 20% of the Medicare-approved amount for mental health services while hospitalized.
  • Mental health in a general hospital has no benefit limit. Psychiatric hospital patients can have many benefit periods. There's a 190-day limit.

Hospitalization

  • 1–20 days: No coinsurance.
  • Days 21–100: $194.50/day coinsurance.
  • All expenditures for Days 101+.

Medicare Part B

The 2022 Part B deductible is $233. After your deductible, you pay 20% of the Medicare-approved amount for:

  • Most doctor services (including inpatient care).
  • Outpatient treatment DME Clinical lab services.
  • Free Medicare services.

Homecare

  • Free home health care.
  • 20% of Medicare-approved DME amount.
  • Most doctor services, outpatient therapy, and durable medical equipment (Dme) cost 20% of the Medicare-approved rate.

Mental Health Outpatient

  • If your doctor accepts assignments, yearly depression screenings are free.
  • 20% of Medicare-approved amounts for doctor visits to diagnose or treat your disease. Part B deductible.
  • If you seek hospital outpatient care, you may have to pay a copayment or coinsurance.

Mental Health Partial Hospitalization

  • If a doctor or mental health practitioner accepts assignments, you pay a percentage of the Medicare-approved amount for each service.
  • After meeting the Part B deductible, you pay coinsurance for each day of outpatient partial hospitalization.

Outpatient Care

  • You pay 20% of the Medicare-approved cost for a doctor's services. Outpatient hospital services that can be delivered in a doctor's office may cost more. Outpatient copayments are capped at the inpatient deductible.
  • In addition to the doctor's fee, you'll normally pay the hospital a copayment for each outpatient service, save for certain preventive procedures. The copayment can't exceed the Part A hospital stay deductible for most services.
  • Except for preventative care, the Part B deductible applies. Critical access hospital outpatient copayments may surpass the Part A hospital stay deductible.

What is Chronic Care Management?

Medicare covers chronic care management for persons with two or more chronic conditions expected to last a year. A health care provider will help you reach your health objectives if you're eligible. Medicare offers these chronic care management services:

  • Provider coordination (such as doctors, pharmacies, and hospitals)
  • Inter-appointment calls to help manage chronic conditions
  • 24/7 medical emergency access
  • 20 minutes of chronic disease management every month
  • Medicare supports other chronic disease management services, including:
  • Diabetes or kidney disease nutritional therapy
  • Diabetes eye tests to check for diabetic retinopathy (regular eye exams aren't included).
  • Cardiac rehab for qualified patients
  • Obesity testing, therapy
  • Therapy and mental health care

Coinsurance is required for chronic care management. Medicare Part B covers 80% of Medicare-approved costs for most items and services after you meet your $233 deductible in 2022.

How Often Do Chronic Conditions Occur?

Chronic diseases in the United States have a startling impact on a variety of fronts, including the number of people they affect, the number of deaths they cause and the amount of money they cost. The Centers for Disease Control and Prevention (CDC) reports that:

  • Chronic diseases are responsible for seven out of every ten deaths that occur each year.
  • Treating persons who have chronic conditions accounts for 86 percent of the total cost of health care in the United States.
  • At least one chronic illness affects fifty percent of all individuals in the United States.
  • Two or more chronic diseases are present in one adult in every four people.

The Centers for Disease Control and Prevention (CDC) reports that many chronic diseases share similar risk factors, such as smoking, being overweight and having high blood pressure. By making adjustments to the following aspects of your lifestyle, you may be able to reduce the likelihood of developing a chronic illness:

  • Cutting back on the amount of alcohol you drink
  • Consuming a diet that is abundant in fresh fruit and vegetables
  • Maintaining a busy lifestyle physically
  • Not smoking
  • Keeping a healthy weight on a consistent basis

Chronic Conditions Americans Should be Wary of

As a general rule, a chronic disease is one that lasts for a year or more, has no known cure and significantly impairs one's ability to work or participate in other normal activities of life. Heart disease, cancer and diabetes are the top chronic conditions that cause death and disability in the United States. They also play a major role in the nation's annual health care costs of $4.1 trillion.

Several simple risk factors account for the occurrence of many chronic diseases:

  • Cigarette smoking and secondhand smoke exposure
  • Lack of fresh produce, together with a diet rich in salt and saturated fats
  • Relatively little physical activity
  • Use of alcohol in excess

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Frequently Asked Questions

Q

What does Medicare consider a chronic condition?

A

Medicare considers 15 conditions to be chronic conditions. These include diabetes, heart failure and cardiovascular disorders, dementia, stroke, cancer, arthritis and other autoimmune disorders, asthma and other chronic lung disorders, mental illnesses like major depression, neurological disorders such as epilepsy or multiple sclerosis, end-stage liver disease, end-stage renal disease, hemophilia and other hematologic disorders, chronic alcohol and drug dependence and HIV/AIDS.

Q

What impact do chronic conditions have on healthcare costs?

A

Each year, the overall cost of medical treatment in the United States that is attributable to chronic diseases surpasses $3.7 trillion.