What is Hospital "Observation" Status and Does it Impact Me?

There is an important provision with Medicare Part A Benefits that is creating unexpected bills for some Medicare Beneficiaries.  Most people understand that Medicare Part A covers Hospital expenses… but Part A also covers Short-Term Skilled Facility Care, up to 100 days (20 days full covered by Part A, Days 21-100 have a copay, which most Medigap Plans pay.)

There is a nuance to qualify for the Short-Term Skilled Facility Care benefit.  In order to qualify for this benefit, you must have been “Admitted” to the hospital for at least 3 days, and enter the Medicare-approved Skilled Nursing Facility within 30 days after leaving the hospital.

For most people that get hospitalized for three days and need Short-Term Skilled Care, this is not a problem since they have been “Admitted” to the hospital.   The people that are impacted are those that were never “Admitted” and kept in an “Observation” status, and then transferred to a Skilled Nursing Facility.  These people are given a notice explaining that they will be responsible for the bills at the Skilled Nursing care, but most people are in too much pain/stress to really understand this information at the time.  These people end up getting bills for thousands and thousands of dollars that are not covered by Medicare (or Medigap).
 
 
Why did CMS Create this Rule?
There is a great article in philly.com this week, which highlighted some key data points and history related to this rule:

“The three-midnight policy was created in 1965 to limit post-hospital care. In 1988, Congress waived the requirement, and Medicare expenditures on skilled nursing home care jumped 243 percent. The requirement was back in place a year later.” 

So it doesn’t sound like the rule will be changing any time soon.

 
What can you do about this?
First, it’s important to at least be aware of this rule.  If you (or a loved one) does get hospitalized and then transferred to Skilled Nursing, you should be aware of whether the patient was “Admitted” with a 3-night stay before the transfer.  If not, the patient will be responsible for all the bills at the Short Term Nursing Facility.

If you want additional coverage for Short-Term Skilled Nursing Care to address these “Observation” situations, give us a call and we can let you know what’s available in your area.