The jargon used in the senior living and healthcare industry can be confusing; there are a lot of terms that sound similar but have very different meanings. One phrase that can sometimes befuddle people is “Medicare-certified” as it relates to senior care providers. So, let’s break down exactly what this term means.
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What is a senior care center?
The term “senior care center” is fairly broad, encompassing assisted living facilities (for those who need some help with activities of daily living like dressing, meal prep and eating, toileting), memory care centers (for people with memory-related care needs), and skilled nursing facilities (SNFs, also called “nursing homes”; for those who have care needs that require assistance from a healthcare professional).
Senior care centers may be stand-alone facilities or operate as part of a bigger retirement community, such as a continuing care retirement community (CCRC, or life plan community). A CCRC offers services spanning the entire continuum of care, ranging from independent living to assisted living, memory care, and/or skilled nursing care.
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What does Medicare-certified mean?
Senior care centers are either “Medicare-certified” or “private-pay” facilities. In short, a Medicare-certified senior care center has met Medicare’s minimum requirements for patient care and management, including administration, clinical services, standards of excellence, and more. As a result, they can accept Medicare as a payor for some or all expenses incurred by the patient.
But, there is an important caveat: Medicare certification only applies to skilled nursing facilities (a.k.a., nursing homes) that are licensed in their respective state to offer 24-hour medical care provided by a registered nurse or rehabilitative staff, including procedures such as IV and drug administration, wound care, lab tests, physical therapy, and more.
Because of this, CCRCs that describe themselves as “Medicare-certified” are referring only to the skilled nursing or healthcare facility within the CCRC. Medicare certification, or lack thereof, has no bearing on independent living residences or assisted living facilities since they do not provide any skilled medical services. The exception could could be if a person hires in-home nursing care to be provided in their independent living residence. In this case, it is possible that the nursing care agency providing the care is Medicare-certified.
Private pay versus Medicare-certified
Some nursing homes are “private pay” — meaning the facility does not accept Medicare and therefore the cost of services is paid out-of-pocket by the care recipient or their family. This might lead a person to think the cost of care would be significantly more than the cost of care in a Medicare-certified facility. It also may seem like choosing a Medicare-certified senior care center should be of the utmost importance in your senior living and healthcare search.
However, you may be surprised to find that, depending on the circumstances, the financial impact of choosing a private pay facility versus Medicare-certified facility is not as great as some may think.
To better understand the real-world financial impact of receiving care in a private pay senior care facility compared to a Medicare-certified facility, we must first understand what expenses are actually covered by Medicare.
Contrary to what many assume, Medicare does not cover custodial care — that is to say, assisted living or help with personal care — if that is the only type of care needed. However, Medicare (Part A) will cover some or all of the cost of skilled nursing care in a semi-private room on a limited basis if the following criteria are met:
- Care must be provided in a Medicare-certified facility. (Medically necessary services provided at home by a Medicare-certified home healthcare agency may also qualify for Medicare coverage.)
- The recipient of care must have first had an “admitted” hospital stay of at least three days or longer. Most commonly, Medicare-covered skilled nursing care follows a serious medical occurrence like a stroke, heart attack, fall, or major surgery.
- Admittance into the skilled nursing facility must take place within 30 days of the hospital stay.
- A physician must decide that daily medical nursing care or rehab is necessary.
If these requirements are met, the full cost of care may be covered by Medicare only for the first 20 days. Days 21 through 100 may be covered at a portion of the cost (Medicare will cover $185.50 per day in 2021) with the balance being at the resident’s expense. After day 100, all nursing home expenses are out-of-pocket for the resident or their family. For more details on Medicare coverage for skilled nursing care, visit to Medicare.gov website.
Which type of facility is the best choice?
Using the national average daily cost of a semi-private room in a skilled nursing facility from the 2019 Genworth Cost of Care Survey, we can calculate your maximum cost exposure in a private-pay facility compared to a Medicare-certified facility.
|Medicare-Certified Facility Cost Per Day||Avg. Cost of Semi-Private Room||Daily Difference||Total Days||Total Cost Difference Between Medicare-Certified and Private Pay|
|Days 1-20||$0||$247||$247||20 days||$4,940|
|Days 21-100||$185.50||$247||$61.50||80 days||$4,920|
It is possible that the cost difference could be more than shown on this chart if you enter the skilled nursing facility more than once. Also, the average cost is based on a semi-private room. In a post Covid-19 world, it is likely that more people will desire a private room, which averages $280 per day compared to $247. Finally, some people will never need the full 100 days of care, particularly if it is a rehab situation, and therefore the total cost difference would be lower than shown above.
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But perhaps the most important takeaway to consider: After 100 days, Medicare ceases to provide any coverage for care services, except in the case of a re-admittance after a certain period of time has passed. Therefore, after 100 days, a resident of a skilled nursing facility would pay for 100 percent of their care out-of-pocket, regardless of whether they are receiving services in a Medicare-certified facility or a private-pay facility.
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