Notes, News & Musings on Elder Care


Imagine this scenario.  Your father falls in the bath and is raced to the hospital.  The ER doctor says that a bone is broken and he will be moved upstairs for a few days.  Three days later, you meet with the discharge planner and ask about skilled rehabilitative care.  The discharge planner surprises you by saying that your father is not eligible for Medicare payment of skilled care because he was never admitted to the hospital.  “There must be some mistake.  He has been on this hospital floor for three days.” She responds, “He was on the floor for observation.  It is different from being admitted, and therefore Medicare won’t pay for treatment at a skilled nursing facility.”

This scenario has become more common in recent years as Medicare has become more stringent with hospitals over admission criteria, especially for shorter lengths of stay.  The American College of Emergency Physicians explains:

With short inpatient hospital stays (less than the average LOS) Medicare is concerned about overpayment and appropriateness of the admission. As a result, Medicare and a state’s Quality Improvement Organization (QIO) monitor hospital discharge data and specifically target short hospital stays.

If a hospital is found to have a high frequency of short inpatient hospital stays Medicare will investigate and if inappropriate admissions are found the sanctions can be severe. As a result, hospital health information management (HIM) and utilization management (UM) staff closely monitor the medical necessity of inpatient hospital admissions and short inpatient hospital stays. Their efforts can put pressure on emergency department physicians to make sure that each inpatient admission from the [emergency department is] medically necessary and will pass fiscal intermediary or Medicare Area Contractor (MAC) scrutiny.

In some cases the use of observation status might be an alternative to an immediate inpatient admission.

Why does this matter?

Medicare will only pay for skilled nursing care after a person has been admitted to the hospital for three midnights.  If faced with a decision to pay out of pocket for skilled care (to the tune of thousands of dollars) or to forego treatment, many choose the latter option placing them at a higher risk for re-hospitalization.  They are still eligible for home health, but home health care does not provide the intensity and frequency of therapy seen in skilled nursing facilities.

Skilled care is offered on a separate hospital floor or inside a nursing home, which has the added benefit of providing day-to-day care while undergoing therapy.  If not receiving skilled care, extra help may be needed for your loved one either through informal assistance from family members and friends or through paid services such as sitters, assisted living care, or long term care at a nursing home.

Cost of hospitalization is another important issue.  While observational care may look and feel like a hospital admission, it is billed differently and that difference can mean a hefty bill at the end of treatment.  The Centers for Medicare and Medicaid Services explain:

  • Medicare Part A (Hospital Insurance) covers inpatient hospital services.  Generally, this means you pay a one-time deductible for all of your hospital services for the first 60 days you’re in the hospital.
  • Medicare Part B (Medical Insurance) covers most of your doctor services when you’re an inpatient. You pay 20% of the Medicare-approved amount for doctor services after paying the Part B deductible.

The Center for Medicare Advocacy, Inc. also warns that the level of care can change without notice or can be retroactively reversed :

As a consequence of the classification of a hospital stay as outpatient observation (or of the reclassification of a hospital stay from inpatient care, covered by Medicare Part A, to outpatient care, covered by Medicare Part B), beneficiaries are charged for various services they received in the acute care hospital, including their prescription medications.  They are also charged for their entire subsequent [skilled nursing facility] stay, having never satisfied the statutory three-day hospital stay requirement.

So what can you do?

  1. Familiarize yourself with the differences in admission and observation status.  For a helpful pamphlet from Medicare detailing the differences, go here.
  2. When you or a loved one visit the ER make sure to give the doctor the full clinical picture.  It may help to have the primary care physician consult with the ER doctor and/or fax recent records.  If you are unable to be with your loved one, phone the ER department and request to give information to the doctor or nurse.
  3. If treatment goes beyond the ER, ask what level of care determination has been made.  Ask this question daily to make sure the status has not changed.  If you do not agree with the level of care, try to have it changed by speaking with the doctor, utilization review nurse, and case manager.  Ask your primary care doctor to consult with the hospital doctor.
  4. Begin working with the discharge planner as early as possible.  Many discharge planners do not work weekends, but you can still ask to leave a voicemail for him/ her to phone you as soon as he/she returns to the hospital.  If ineligible for Medicare payment of skilled nursing care, make sure that an order for home health is written and the referral process is begun.  Remember, you do not have to do this alone!  Your elder care coordinators want to help and can make recommendations for other services such as personal care attendants, respite care in an assisted living, and medical equipment companies for adaptive equipment that may be needed.
  5. For more information on appeals you can read the Center for Medicare Advocacy, Inc’s helpful Self Help Packet for Medicare “Observational Status”.
  6. Share your knowledge with others.  Help those in your life with Medicare by sharing this information and the information from the websites we have linked in this article.  Talk with your congressional representatives about the need for Medicare reform on this issue.  Share with them the AMA’s most recent letter to the Centers for Medicare and Medicaid Services in hopes that they will support the proposed changes.


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