Not knowing your hospital status may cost you thousands of dollars.
Staying overnight in a hospital doesn’t always mean that you have been admitted as an inpatient.
Some seniors think Medicare or the hospital have made a mistake. Many are shocked when they find out that staying overnight in a hospital doesn’t always mean they were actually admitted.
Instead, they received observation care, considered by Medicare to be an outpatient service. The observation designation means they can have higher out-of-pocket expenses and fewer Medicare benefits. It also affects what your Medicare Advantage or Medicare Supplement Plan will pay for.
Health care experts say the situation is far from ideal for both hospitals and patients. Hospitals are feeling increased pressure from Medicare to classify patients the “right way” or risk losing reimbursements. In turn, patients face higher bills for services they receive in the hospital and the possibility of not qualifying for Medicare-covered stays at a skilled nursing facility after their hospital stay.
For Medicare beneficiaries, observation status can result in unexpectedly high out-of-pocket hospital bills, as well as thousands of dollars for care at a skilled nursing facility. Medicare inpatients typically only pay a one-time deductible. Under observation status, however, Medicare beneficiaries pay a deductible plus part of the cost of each individual hospital service provided, with no limit on what they may owe, plus the cost of non-covered drugs.
Medicare will cover 100% of the first 20 days for approved skilled nursing facility care, but only for those with a minimum of three full inpatient days in the hospital. Medicare does not cover follow-up skilled nursing facility care for observation patients because they are considered outpatients, not inpatients.
The only way to know for sure if you are an inpatient or under observation status is to ask. A new federal law now requires hospitals to alert Medicare patients when they are admitted under observation care and why they were not admitted as an inpatient. Medicare beneficiaries in the hospital for more than 24 hours must be informed in writing of their status within 36 hours of when they begin receiving medical services under observation status. (Outpatient)
The patient or their representative must sign the notice to acknowledge their understanding.
Those of us that work in the health care industry or have family that are experiencing or have experienced serious health problems know that the great sage and philosopher Groucho Marx was correct when he observed
“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”
To read the CMS (Centers for Medicare &Medicaid Services) booklet concerning observation status click the link below or copy and paste it into your browser.
On a final note, the financial effect of observation status on a Medicare recipient will vary depending on whether the patient has a Medicare Advantage Plan or a Medicare Supplement.
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Medicare Explained in Plain English