Hospital ‘observation’ care bad,
costly decision for many seniors on Medicare
Considered by Medicare an outpatient
service which means seniors can face higher out-of-pocket expenses and
fewer Medicare benefits.
By Susan Jaffe, Kaiser Health
4, 2013 - Some seniors think Medicare made a mistake. Others are just
stunned when they find out that being in a hospital for days doesn't
always mean they were actually admitted.
Instead, they received observation
care, considered by Medicare to be an outpatient service. Yet, a recent
found that observation patients often have the same health
problems as those who are admitted. But the observation designation
means they can have higher out-of-pocket expenses and fewer Medicare
More Medicare beneficiaries are
entering hospitals as observation patients every year. The number
rose 69 percent in five years, to 1.6 million nationally in
2011, according to the most recent federal statistics. At the same
time, Medicare hospital admissions have declined slightly.
Here are some common questions and
answers about observation care and the coverage gap that can result.
(Seniors enrolled in Medicare Advantage should ask their plans about
their observation care rules since they can vary.)
Seniors kept for observation varies by hospital;
Medicare doesn't pay for expensive follow-up nursing home care for
By Susan Jaffe, KHN
Aug. 1, 2013 - Medicare patients' chances of being
admitted to the hospital or kept for observation depend on what hospital
they go to - even when their symptoms are the same, notes a federal
watchdog agency in a report released Tuesday, which also urges Medicare
officials to count those observation visits toward the
three-inpatient-day minimum required for nursing home coverage.
A. Hospitals provide observation
care for patients who are not well enough to go home but not sick enough
to be admitted. This care requires a doctor's order and is considered
an outpatient service, even though patients may stay as long as several
days. The hospitalization can include short-term treatment and tests to
help doctors decide whether the patient should be admitted. Medicare
guidance recommends that this decision should be made within 24 to 48
hours, but observation visits exceeding 24 hours nearly doubled to
744,748 between 2006 and 2011, federal records show.
Q. What effect does observation
status have on patients' care and expenses?
A. Because observation care is
provided on an outpatient basis, patients usually also have co-payments
for doctors' fees and each hospital service, and they have to pay
whatever the hospital charges for any routine drugs the hospital
provides that they take at home for chronic conditions such as diabetes
or high cholesterol.
Q: Why are more Medicare
patients receiving observation care instead of being admitted?
A. Medicare has strict criteria for
hospital admissions and usually won't pay anything for admitted patients
who should have been observation patients. In response to these rules,
hospitals in recent years have increased their share of observation
recently revised Medicare rules,
hospitals that were denied reimbursement because a patient should not
have been admitted can now can resubmit a bill within one year to
Medicare for a payment based on observation status. The American
Hospital Association has said that is not enough time and is suing
Medicare to end the policy.
Hospitals have another incentive
for keeping patients in observation status: If patients return within
30 days, they don't count as readmissions since they were not admitted
in the first place. Medicare withholds a percentage of payment from
hospitals with high readmission rates.
Will the cost of my maintenance drugs be covered when I am in the
If you have a separate Medicare
drug plan, the coverage decision will be up to the insurer. If the plan
covers your maintenance drugs at home and agrees to cover them in the
hospital, it will only pay prices negotiated by the plan with drug
companies and in-network pharmacies. Most hospital pharmacies are
out-of-network. So even if your drug plan covers these drugs, you may be
left paying most of the bill.
Sept. 4, 2013 - In fact, Medicare recommends that
observation status should be used ... three days, but
still couldn't qualify for coverage of nursing home care.
Q: How do I know if I'm an
observation patient and can I change my status?
A. The only way to know for sure is
to ask. Medicare does not require hospitals to tell patients that they
are in observation status and that they will be responsible for paying
any non-covered Medicare services. "Unless people are in an observation
unit, the difference between observation and inpatient care is basically
indistinguishable," said Toby Edelman, a senior attorney at the Center
for Medicare Advocacy.
Medicare does require hospitals to
tell patients they have been downgraded from inpatient to observation.
If you believe you should be
admitted, ask your doctor to change your status to inpatient. However,
even if the doctor agrees, the hospital may be able to overrule that
decision or Medicare can change it later when reviewing the claim.
Q. What can I do if I'm about to
be discharged or am already in a nursing home and I find out Medicare
won’t cover my nursing home care?
A. If you can't persuade the
hospital to change your status, Edelman advises patients to file
two kinds of appeals.
When you receive your Medicare Summary Notice, follow the
instructions to challenge the charges from the hospital listed under
Part B of the notice if you believe those services should have been
billed as inpatient services. Also challenge any charges from the
nursing home for outpatient services such as physical therapy.
If you do enter the nursing home,
you may be billed for the care. Ask the nursing home to submit a
"demand bill" to Medicare. When it is rejected, you can appeal. The
Center for Medicare Advocacy's online "self-help
packet" offers more details about to how to challenge
Q. What is being done to fix the
A.Medicare's recent revisions in
payment rules, are intended to ease the financial pressure on hospitals
to put patients in observation care.
So far, Medicare has not made
changes that would directly affect patients, for example, dropping the
three inpatient day criteria for nursing home coverage, forcing
hospitals to tell patients when they getting observation care or
requiring hospitals to allow patients to bring drugs from home.
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