When a Hospital Stay is NOT a Hospital Stay.

There has been an increasing trend nation wide for hospitals to keep a patient for observation.  Often times the patient may not even be aware, but every time it can result in significant costs.  Observation, or outpatient observation services is loosely defined by Medicare and CMS.  The regulations do, however, state that observation should be for 24 hours, or 48 hours.  Recent cases have shown observation periods as long as 14 days!  Unless you are told there is no way to tell the difference: Same hospital bed; same IV; same medications; same doctors and nurses.  So why is it important?  There are a few reasons it is important for you to know the status of your stay.  Observation is classified as an outpatient service, therefor it is covered as an outpatient service.  All of your co-pays apply and you will likely get a bill for hospital services and medications.  It is even more important if you will require services in a Skilled Nursing Facility (SNF) upon discharge from the hospital.  In order for Medicare to cover the costs there must be a three day (three mid nights) inpatient hospital stay.  With out the 3 day stay, Medicare will not cover the costs of skilled nursing care. (Contracted Medicare Plans often do not have this requirement.  I'll cover that in a different post.) Lets assume you went to the hospital through the emergency room and you were "admitted".  During the stay it is recommended you go to a SNF for rehabilitation or nursing services.  During the conversation you are told you were never admitted but were there for observation.  You are financially responsible for the services the hospital provided that are not covered, including medications, and you will also be responsible for the cost of the SNF.  Even if your physician orders admission, the utilization review board has the power to change your status to observation.  Even worse, your status can be changed from inpatient to outpatient during you stay, retroactive to your "admission" date.  Though Medicare and CMS allow this change the language clearly states that this should be the rare exception, not common practice.  My experience shows it happens more than rarely.

So how do you know if you in the hospital under observation or if your status is changed to observation?  Hospitals are required to inform you if services are not medically necessary.  If treatment is not medically necessary Medicare will not pay for inpatient services but they will cover outpatient services: Observation.  This notice must be given to you in writing and it must include information for you to appeal.  Medicare and CMS assume you are not aware and the provider must be able to produce evidence you were notified.  If you were not notified in writing and there is no reasonable expectation that you would know about the observation status, you may not be legally required to pay for the services.

If you are given notice that your stay is, was, or will be for observation, appeal immediately.  Appeal information should be on the written notice and should include the name and telephone number to contact.  Ask that the case be reviewed to determine if qualifications for admission have been met.  If you were not notified in writing immediately file a request with the Medicare Administrative Contractor (MAC) and ask for a review to determine if the stay qualifies for inpatient status.  To determine which MAC covers your state click http://www.entnet.org/Practice/MAC-websites.cfm.  In Pennsylvania our MAC is https://www.novitas-solutions.com/transition/j12/lcd.html.  You may also be able to get information at 1-800-Medicare or www.mymedicare.gov.

If you have already found yourself in this situation it is still wise to contact the MAC in your area.  For medications, follow the instructions in you Part D coverage for payment to out of network providers.  Remember, this applies only to Medicare and not to other Medicare products, so if your Medicare coverage is through a commercial insurance company this information does not apply to you.