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Patient beware! Inpatient or observation status. The difference could cost you!

May 12, 2017

I discovered something today that appalled me. It's about "observation status," otherwise known as "observation care." Have you heard of it? It's something hospitals are doing in place of admitting patients as "inpatients." The thing is, as a patient (or family member of a patient), you often aren't aware of the difference. 

 

Patients with observation status still don those lovely bluish-colored hospital gowns full of openings. They still receive their own nifty little plastic bracelets indicating their names and allergies. Some even get neon "Fall Risk" bracelets. They're put in a room (usually with a roommate), awakened multiple times each night to be poked and prodded, and are fed three pretty bland meals per day. 

 

 

Sounds like an inpatient, doesn't it? You would think. That's where it gets tricky. You see, Medicare will only pay for skilled care in a nursing facility (up to 100 days) if the patient has spent at least 3 consecutive days in the hospital (excluding day of discharge) as an inpatient. However, if the patient was on observation status or observation care, then Medicare won't pay a single dime to the nursing home. Not a dime. 

 

If the patient or the patient's family is unaware of this, it could end up costing them thousands upon thousands of dollars!

 

I don't know about you, but this outrages me! Hospital workers often do not inform patients that they are under observation status. A patient will think they're being admitted (it seems that way, right?), but they're actually considered an outpatient, therefore outside of the guidelines Medicare has for paying for rehabilitation or skilled nursing.

 

Patient beware! Always, always ASK what the patient's status is. If you're told they're on "observation status" or "observation care," demand to know why. Contact their doctor and see what they can do for you. Of course, their PCP cannot dictate what the hospital does, but they can advocate for the patient. Ask for an Advance Beneficiary Notice explaining the level of care and the reasons for it. 

 

If the patient is sent to a nursing home, request that the home bills Medicare. If Medicare denies the claim due to the "observation status," file an appeal. 

 

In the case where the nursing home refuses to bill Medicare, complete a Notice of Exclusions from Medicare Benefits: Skilled Nursing Facility form (found here), and send it to Medicare. Again, if they turn down the claim, appeal it.

 

Medicare has a brochure addressing the issue of inpatient vs. observation care. You can download it here.

 

If you want to delve deeper into this subject, you can call 800.677.1116 and ask for the State Health Insurance Assistance Program (SHIP) in your area.

 

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