For those of us lucky enough to have reached the age of 65, we are now entitled to Medicare insurance, a government run health insurance program filled with complicated coverage provisions that can have serious financial implications for individuals covered by Medicare. When you go to a hospital emergency room with a problem, your admission status can dictate whether you will be covered by Medicare or will have to pay the bill yourself. A recent Boston Globe article by Liz Kowalczyk entitled, “The Status of Medicare Patients Can Result in Huge Bills,” underscores the problem. The issue revolves around whether a patient’s stay in a hospital is characterized as “for observation” or “admission”. If a patient is admitted to the hospital and is later required to go to a nursing home or skilled rehabilitation facility, Medicare typically pays most or all of the costs associated with the rehabilitation stay. If the hospital stay is characterized as medical observation, the entire amount of the stay for rehabilitation would have to be paid by the patient. Medicare rules are not clear as to what constitutes admission and what constitutes observation. In fact, hospitals are being challenged by Medicare on whether they have properly characterized patients as in the hospital for “medical observation” or for “actual admittance”. There are severe penalties being imposed on hospitals for improperly classifying patients as admitted when they should be only in the hospital for medical observation. This has resulted in patients being caught in the middle and being subjected to significant personal financial risk.
In the Boston Globe article, there is an example of an elderly patient who spent 10 days in a Boston hospital recovering from urgent hernia surgery. The patient was provided 24 hour treatment and intravenous drugs. After a 10 day stay in the hospital, the patient was sent to a nursing home for rehabilitation. The full $7,500 cost of the nursing home rehabilitation was charged to the patient, not to Medicare, because the hospital had characterized the 10 day stay in the hospital as medical observation. The hospital had decided that the patient was not sick enough to qualify as an official “in patient”. According to the Boston Globe article, “The difference in terminology was not a mere technicality: the observation classification left…the patient with a huge bill.” This is just another example of how the Medicare system’s complex rules can result in financial hardship for Medicare patients.
The Boston Globe article provides another example more disastrous than the first case involving a woman with a broken shoulder who went to the North Shore Medical Center only to have her two doctors’ and a case worker’s decision to admit her overruled by the case worker’s supervisor. This unfortunate patient “had to pay $40,000 for rehabilitation in a nursing home.” How many seniors can afford this type of medical bill without catastrophic financial consequences?
Patients have no control over the decision whether they should be “admitted” or “in for observation only” and are put at serious financial risk by ambiguous Medicare rules and second guessing hospitals trying to avoid draconian fines and penalties concerning patient admissions. Even if the hospital advises a patient that he or she is being admitted, there is a chance the decision will be reversed after the visit.
As the above cases demonstrate, the Medicare rules regarding coverage for hospital patients that are admitted to the hospital versus those patients that are simply under observation, but not admitted to the hospital, are unclear and need to be fixed. The question is will they be fixed and if so, when?