Are You Being Admitted Or Observed?

Frequently, in recent years, people have come home after a hospital stay, expecting Medicare to pay for that stay, only to find that their stay is not Medicare covered and they owe the hospital a big bill. Here’s why and what to do.

Medicare distinguishes between two types of hospital stays: “admitted” and “under observation”. The rates Medicare pays is different for these, with “admitted” receiving the higher payment. In the past, Medicare believed that many patients were “admitted” when they should have been “under observation” thus costing Medicare more than it wanted to pay. To fight this trend Medicare created stringent rules about who should be “admitted” and who should be “observed”.

The patient (and family) cannot easily determine the state without explicitly asking and getting an explicit yes or no answer. The patient can be in a hospital bed on a hospital floor and not be “admitted.” Don’t assume. You have to ask!  

Further, the hospitals are incentivized to “observe” because if an “admitted” patient returns within 30 days after being discharged, Medicare will not pay for the second stay.

Finally, if the doctor prescribes a nursing home as a follow-up to the hospital stay, Medicare will not pay unless the patient has been in the hospital for three in-patient nights – observed patients don’t meet this criteria.  

In addition, “observed” patients may not have their medications covered either.

Some supplemental insurance policies do cover “observation” stays; some don’t. Check with your insurance company to determine coverage.

What can one do if a patient is “under observation” and you think the patient should be “admitted”? Speak with the doctor first. The doctor’s opinion weighs heavily.

Follow these suggestions from Andrea Callow, an attorney with the Center for Medicare Advocacy:

  • If you are hospitalized, ask about your status. You can’t assume because you’re in a regular hospital room that you’ve been admitted. If you’re on observation, try to get the hospital to change status to in-patient while you’re still there. “Once people are discharged, it is virtually impossible,”
  • If your hospital keeps you on observation but you cannot take care of yourself when you’re discharged, ask if your doctor will order in-home care rather than release you to a nursing home. Medicare should pick up costs for in-home care if you are homebound. In-home care should be set up before you leave the hospital as part of your safe discharge plan.
  • If you were kept on observation but you must go to a nursing home, prepare for a protracted battle to get Medicare to pay the bills for your skilled nursing care. Start by asking the nursing home to submit a “demand bill” to Medicare for your entire stay. Medicare will deny the claim, which will allow you to appeal.
  • Also, you’ll need to appeal the hospital’s bill to Medicare within 120 days after you receive the Medicare Summary Notice showing Medicare was billed for observation stay.

If you would like more information, read more by clicking here.  

Fighting Medicare on this can be a long, tough battle, and success is not guaranteed. But now you’re forewarned and thus forearmed.

-Harold Sasnowitz-

Harold Sasnowitz

Harold Sasnowitz

Harold Sasnowitz CFP®, MBA is a Financial Planner with BCR Wealth Strategies managing the New Jersey office.