Medicare sticks patients under observation with bills
What is a senior like Grandpa expected to do about medical insurance coverage in a hospital, when he’s facing a barrage of medical questions and likely feeling pretty bad?
Well, if Grandpa wants to make sure Medicare pays most of the costs, he or someone who cares had better do some clear thinking. Grandpa’s hospital status — whether he is an inpatient or an outpatient — affects how much he will pay for hospital services like X-rays, drugs and lab tests.
That status also affects whether Medicare will cover care he gets later in a skilled nursing facility. The Medicare.gov website advises seniors, who may not look this up before going to the hospital, to “find out if you’re an inpatient or an outpatient.”
At Frederick Memorial Hospital, patients get a letter explaining the designation, said Heather Kirby, case manager. Patients do not select their designation; the hospital does.
A doctor may order observation services to help decide whether a patient needs to be admitted as an inpatient or can be discharged, Medicare explains.
While the patient is getting those services, “you’re considered an outpatient — you can’t count this time towards the three-day inpatient hospital stay needed for Medicare to cover your (skilled nursing facility) stay.”
In recent years, some people have spent as many as five days “under observation” in a hospital before coming to Homewood at Crumland Farms for skilled nursing care, said Eric Nichols, executive director.
A patient may then be surprised to learn that the hospital stay did not meet the three-day inpatient threshold that prompts Medicare skilled nursing home coverage to kick in, he said.
That sort of surprise has had the Internet buzzing with emails among seniors who find it outrageous that they could be hit with the high cost of the hospitalization and rehab after.
“Pay attention to this if you or an older relative or friend should have to be hospitalized,” John Ashbury, of Frederick, wrote in an email.
“The elderly — of which I am a member — is under attack from Washington,” Ashbury wrote. “The battle is engaged, and we must fight this intrusion into our medical care.”
The three-day threshold has long been the standard, Nichols said, but in the past couple of years, the distinction between inpatient and “under observation” has been made more frequently. Nichols said most of Homewood’s patients have been able to pay their bill privately or through supplemental insurance when Medicare did not cover the costs.
Hospitals began to feel more pressure from Medicare starting in about 2010 to use the observation status more than admitting as inpatients, Kirby said. Medicare conducted a study in 2006 that led to stricter enforcement of observation status nationwide about three years ago, she said.
All hospitals are dealing with the stricter enforcement, and FMH hired a medical director who oversees compliance and advocates for patients, Kirby said.
“We really have done a lot of work to try to get it right,” Kirby said. “It’s still not perfect.”
“We’re kind of stuck” between providing all the services doctors may recommend and having those services qualify for Medicare coverage, Kirby said.
“I realize the downstream effect,” she said. “It’s definitely a pinch.”
For example, a senior with a pelvic fracture does not typically qualify for inpatient admission, but such a fragile patient is difficult for many families to manage at home, which is where Medicare usually advises the patient to recover.
In such cases, the hospital might keep patients for observation while the next stage of recovery is planned. That time in observation will not qualify for Medicare coverage and will not qualify them for skilled nursing care coverage later.
“It certainly impacts their ability to go for skilled care,” Kirby said. “I think that’s where we really get squeezed.”
Follow Patti S. Borda on Twitter: @FNP_Patti.
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