Friday, January 31, 2014

The Two Words Every Medicare Patient Should Know

By Hailey Chung

It can be difficult to make sense of Medicare, but a new warning will now force patients to be especially vigiliant particularly when it comes to hospital forms. A segment on NBC Nightly News highlights the importance of hospital classification for Medicare patients.

When a patient enters the hospital and is labeled "under observation," this technically classifies the person as an "outpatient." While Medicare does pay for up to 20 days of rehabilitation at a nursing facility following discharge, there are a number of qualifying conditions required including a 3-day in-patient hospital stay. As a result, an "under observation" classification directly impacts the patient's ability to qualify for nursing facility reimbursement. Consequently, Medicare will not pay for rehabilitation services if the person was labeled "under observation" during their hospital stay. For example, Mary Jane Bricu, aged 79, suffered a broken leg last September and spent three days in a hospital before she was discharged to a nursing facility for rehabilitation. She received the same care and services as an in-patient, but simply was not labeled as one and instead was classified as "under observation." She now owes over $25,000 for rehabilitation services and recently moved in with her son in order to save money.

Rich Umbdenstock, the President of the American Hospital Association, admits that the hospitals are partly to blame, but he also notes that the stringent regulations of Medicare forces hopsitals to be particuarly careful when labeling patients so as not to be penalized in the future by Medicare audits. Unfortunately, this means that the patients are caught in the middle between Medicare and the hospitals and many are unknowingly exposed to hefty bills later.

Unfortunately, examples like Mary Jane are becoming far too common. It is a growing concern, particuarly because the number of patients "under observation" has dramatically increased since 2006. Litigiation on this issue is currently pending, but in the meantime, Medicare patients should pay close attention to their hospital forms and make sure they are classified as in-patients rather than "under observation," so as to avoid the costly consequences later.

Watch the video here

Snow, K. (Reporter), & Williams, B. (Anchor). (2014, January 9). "Under Observation:" The Two Words that Cost Medicare Patients Thousands. [Television series episode]. NBC Nightly News. Retrieved from

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