Pay Attention, Granny: Two Words Could Cost You Big Bucks If You Are a Medicare Patient

Two words: Observation Status. From The Wall Street Journal:

When in the hospital, more Medicare recipients are being held for observation rather than being formally admitted, a status that can leave them with big bills for items including rehabilitation services.

While the federal agency that runs Medicare expects new rules to reduce the number of lengthy observation stays, consumer advocates say Medicare recipients remain at risk for surprise bills and should take steps to protect themselves.

Hospitals and doctors place patients on observation care to give doctors time to evaluate whether they require an inpatient stay. But in recent years, the use of observation care has grown as regulators penalize hospitals for admitting patients that auditors say should receive outpatient care.

From 2004 to 2011, the number of observation services administered per Medicare beneficiary rose by almost 34%, according to the Medicare Payment Advisory Commission, while admissions per beneficiary declined 7.8%. (That’s an imperfect comparison, but it’s the way the Department of Health and Human Services’ Office of Inspector General reports the numbers.) The number of Medicare beneficiaries grew 13% in the period, according to the nonprofit Henry J. Kaiser Family Foundation.

Observation status can expose Medicare patients to unexpected expenses. As outpatients, their visits aren’t covered under Medicare Part A, which pays for hospital charges above a $1,184 deductible. Instead, outpatient services are billed under Medicare Part B, which requires patients to pay 20% of the cost and imposes no cap on their total expenditures.

Observation patients also pay out-of-pocket for the medication they receive in the hospital. While those with Medicare Part D prescription-drug plans can file claims for reimbursement, they stand to receive little or no refund if their Part D plan doesn’t cover the medications they took or include the hospital in its network, says Joe Baker, president of the nonprofit Medicare Rights Center.

According to a report the OIG released in July, for 6% of observation stays in 2012, patients paid more than the $1,184 Part A deductible.

Moreover, upon discharge, observation patients can get hit with big bills for rehabilitation care. While Medicare pays for up to 20 days of rehabilitation at a skilled-nursing facility, a patient must spend three consecutive nights in the hospital as an inpatient to qualify. In 2012, 617,702 hospital stays of three or more nights failed to qualify because some or all of that time was on observation status. (Rules for Medicare Advantage vary by plan.)

Get ready to cough up, Granny.

Seniors who voted for this jackass? Is this what you voted for?


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