78-year old Rita was being treated for cancer when she was taken to the hospital after she fell and broke her pelvis. During her five-day hospital stay, she was evaluated by her cancer doctor, as well as other specialists, to address her many medical problems. A list of Medicare-funded rehabilitation facilities for post-hospitalization care was considered by her family and geriatric care manager. Only after they had chosen a rehab facility, and one day before discharge, was her family told that Rita had never been formally “admitted” to the hospital. Though she was in a hospital bed and being treated on a regular hospital unit, Rita was considered to be in an “observation bed.” As a consequence of not being “admitted”, any nursing home care would have to be paid privately rather than by Medicare.
Traditionally, patients were observed either in an observation unit or in any bed within the hospital for less than 24 hours. That is no longer the case. There are many documented cases of patients staying in a hospital for 3–4 days and then learning that their hospital stay is not covered under Medicare. Over a three-year period from 2006–2009, the percentage of patients not actually admitted to the hospital but staying under “observation” tripled. Typically, patients may be observed for any of these diagnoses:
- Chest Pain
- Congestive Heart Failure
- Syncope (Fainting)
- Abdominal-Gastrointestinal Conditions
- Head Injuries
Whether a person is admitted to the hospital or being treated as an outpatient affects how much will be paid for hospital services such as X-rays, drugs and lab tests. It will also affect whether Medicare will cover the transfer to a skilled nursing facility (SNF) for rehabilitation. The use of observation beds should generally not exceed 24 hours, may sometimes be up to 48 hours, and in “only rare and exceptional cases,” might be more than 48 hours. The ultimate decision is left to the physician.
Families are well advised to inquire about the admission status upon and during the hospitalization. If the individual had a long stay, but was never admitted as an inpatient one can make an appeal to a Medicare designated Quality Improvement Organization (QIO) review the hospital records post discharge. Records can be reviewed to see if the hospital erred and should have permitted admission as an inpatient, rather than using an observation bed. If the individual was required to pay for subsequent SNF cost out-of-pocket because they didn’t have the required three-day inpatient hospital stay, the QIO will review the hospital records to see if the hospital erred. The results of the re-view may qualify the patient as having inpatient status to meet the 3-day qualifying hospital stay.
The only way to protect your loved one is to ask, even on a daily basis. Good communication between family, hospital staff and physician is crucial to keep abreast of any changes in admission status. There is an old axiom that states, “discharge planning begins on admission,” and geriatric care managers are well equipped to assist with this new trend in healthcare.
New Report Details Hospital Use of Observation vs. Short Inpatient Stays
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently released a report describing hospitals’ use of observation stays and short inpatient stays in 2012 and the effects of observation stays on Medicare beneficiaries. OIG found that Medicare beneficiaries had 1.5 million observation stays in 2012 and an additional 1.4 million long outpatient stays, some of which may have also been observation stays. The report also revealed that beneficiaries had 1.1 million short inpatient hospital stays in 2012, and on average, these short inpatient stays cost Medicare and beneficiaries more than observation stays. OIG found that Medicare paid nearly three times more for short inpatient stays than observation stays, and beneficiaries ended up paying al-most two times more.
Observation stays are opportunities for hospital physicians to determine whether or not a beneficiary should be admitted to the hospital as an inpatient. Although policies at the Centers for Medicare and Medicaid Services (CMS) state that observation services are usually needed for 24 hours or less, OIG found that 92 percent of beneficiaries spent one night or more in the hospital under observation. Observation stays are outpatient services covered under Medicare Part B—Medicare usually pays 80 percent of the cost of the claim, and the beneficiary is left to pay the remaining 20 percent, either through a supplemental insurance plan (or Medigap) or by paying out of pocket. As a result, CMS, Members of Congress and advocates have raised concerns that beneficiaries may pay more as outpatients than if they were admitted as inpatients. In addition, beneficiaries who are not admitted as inpatients may not qualify for Medicare-covered skilled nursing facility (SNF) services following discharge from the hospital.
To address these concerns, in April 2013, CMS proposed policy changes that would presume that hospital stays lasting two nights or longer would qualify as inpatient stays, and that stays lasting less than two nights would qualify as outpatient or observation stays. While OIG’s report did not contain any formal recommendations, the agency mentioned in its report that its findings do indicate that CMS may consider policy changes to address the issue of observation and inpatient stays. According to OIG, CMS should consider how to ensure that beneficiaries who need SNF services after a hospital stay are granted sufficient access to that care.
In New York, a bill passed in the State Assembly and Senate that would require hospitals to notify Medicare beneficiaries of their observation status within 24 hours of being treated under observation. It is not clear if and when the bill will be signed by the Governor; however the bill could potentially help beneficiaries access post-hospital care (i.e., SNF care) by giving them notification of the effect observation stays have on their costs and coverage. The notification of observation status is a definite step in the right direction. While it does not guarantee that a beneficiary will fully understand what an observation stay means for their costs and coverage, it provides them with information and resources to gain this understanding.
Updated from an original post in 2013.