In-Patient vs. Observation – Does Medicare Pay?

One of my recent pet peeves, has been the relatively new process by which hospitals (seemingly) indiscriminately decide which admissions should be placed on in-patient services and which are listed as ‘observation only’.

The difference between these two designations, is one of serious financial import and consequences for the patient.

Medicare doesn’t pay for expensive follow-up nursing home care for observation patients or the routine maintenance drugs the hospital provides patients with chronic conditions, such as diabetes or high blood pressure. As a result, they can end up with thousands of dollars of medical bills that Medicare would cover if they had been admitted. Others who can’t afford the care doctors ordered may go without it, prolonging their recovery.

Furthermore, individual patients who are discharged from a Hospital to a nursing facility for in-patient rehab, can only tap into their Medicare entitlements, if they achieved an in-patient stay at the hospital for 3 consecutive nights.

Observation patients used to be relegated to the Emergency department and typically for no more than 24 hours. Nowadays, however, I’m seeing more and more instances of hospital patients who are admitted for several days in a regular room on the unit, but classified as ‘observation’ instead of in-patient.

In fact, CMS does not require hospitals to tell patients they are receiving observation services, which the IG’s analysis said can include some of the same procedures provided to admitted patients.

So what’s the deal?

The answer is that it is ALL about dollars and cents and NOT about dollars and sense.

It turns out, my concerns are well founded! In this just released investigative report conducted by the Department of Health and Human Services Inspector General, it cites (amongst many other concerns) that a Medicare patients’ chances of being admitted to the hospital for in-patient services vs. observation only can depend on what hospital they go to – even when their symptoms are the same!

So where is this all going?

Lawyers at the Center for Medicare Advocacy filed a lawsuit on behalf of 14 Medicare observation patients and argued in federal court in May that observation status was created by Medicare officials and are asking a judge to order them to eliminate it.

Government lawyers want the case dismissed.

We will keep you posted!

The Regency Alliance on Senior Care is at the forefront of all of these developing stories in the world of Senior Healthcare.

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About Judah Gutwein, L.N.H.A.

As a Licensed Nursing Home Administrator, with additional years of experience as an Admissions and Marketing Director, I am intimately familiar with the challenges of building and maintaining a vibrant census in nursing and rehab facilities. Regency Nursing Centers has a well deserved reputation for excellence in healthcare and I'm extremely proud of our achievements! Thanks for reading our Regency Blog!
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