“Observation” vs. Hospital Admission For Medicare Patients – Not Knowing the Difference Can Be Dangerous to Your Health and Pocketbook

Although you may be spending multiple nights in a hospital bed receiving medical treatment, that doesn’t mean you’ve been admitted to the hospital. You may be characterized as being on “observation” status – and the distinction can have a significant impact on your Medicare coverage and your ongoing care.

Patients can be hospitalized under “observation status” or “observation care” when doctors are not sure if they are sick enough to need formal admission or well enough to be safely sent home. This type of hospitalization is considered an outpatient service, despite the fact that patients can remain in the hospital for several days and can undergo testing and receive treatment. An observation stay is supposed to last only 24-48 hours, during which time doctors can decide whether to admit the patient or allow the patient to go home. Unfortunately, hospitals are keeping patients for much longer than that and using observation status for their own financial benefit and to the detriment of their patient’s physical and financial well being.

In most cases, observation status guarantees that the hospital will be paid under Medicare Part B and avoid the scrutiny of Medicare Part A admissions, but it also shifts a potential financial burden to the patient. For example, if a doctor determines that an observation patient requires follow-up care in skilled nursing facilities, Medicare will not cover the expense. Generally, patients are only eligible for nursing home coverage if they have spent at least three consecutive days (or through three consecutive midnights) as an admitted patient, so they face the Hobson’s choice of going to an extended care facility that might bankrupt them or going home and not receiving needed treatment.

Also, because observation is an outpatient service, patients are responsible for co-payments of doctors’ fees during that time, and must also pay hospital charges for medications and maintenance drugs that they would otherwise take at home.

The real danger comes when hospitals place their desire to be paid without Medicare scrutiny over the patient’s health. Placing a patient on observation status (and insuring the hospital’s reimbursement) may later cause a patient to incur catastrophic debt for necessary treatment at an extended care facility. At the same time, when a patient opts to forego proper medical care because Medicare doesn’t cover the treatment and the patient cannot afford it, the consequences can be serious. These could be grounds for a hospital malpractice lawsuit.

The determination of observation or admission can vary widely depending upon the individual hospital. In an article explaining the problem, The New York Times reported, “Admitted and observation patients often have similar symptoms and receive similar care. Six of the top 10 reasons for observation — chest pain, digestive disorders, fainting, nutritional disorders, irregular heartbeat and circulatory problems — are also among the 10 most frequent reasons for a short hospital admission.”

Over-classification of observation care is rampant. According to statistics from the Medicare Payment Advisory Commission published by Kaiser Health News, the number of observation patients increased nearly 90% through 2012, surpassing 1.8 million patients nationally, while hospital admissions under Medicare remained virtually unchanged.

So what are patients and their families to do? Experts quoted in the New Times and Kaiser Health News articles suggest the following:

• Speak up – Health care advocates warn that it’s much easier to change your status while you’re still in the hospital than to go through a Medicare appeal process later.
• Move fast – Get into the hospital before midnight to start the clock running.
• Enlist the help of your regular doctor – Ask your personal physician to talk to the treating doctor about the necessity of a hospital admission relative to your medical condition and risk factors.
• Get a lawyer – Engage an attorney to fight on your behalf to ensure you get proper medical treatment

Over-classification of observation status is a very real concern to seniors and other patients that rely on Medicare coverage. If you believe Medicare rules have put you or a loved one at risk, please contact the attorneys in Sommers Schwartz’ Medical Malpractice Litigation Group today!