New Medicare Rule: Hospital Admission vs. “Observation”

There is a new Medicare rule that is pushing hospitals to relegate patients to “observation” status vs. being fully admitted as an inpatient.

The limit is supposed to be 24-48 hours to make sure people are really sick enough to be there. Except that sometimes patients can be in as long as 5 days on “observation” status.

The big difference is instead of a patient meeting the three day hospitalization rule and then Medicare picking up the bill for the next round of skilled nursing care in a facility — those payments are now disallowed and the patient or their family ends up with the bill.

For more information please read this article entitled: “Hospitals Caught Between a Rock and A Hard Place over Observation”

3 Comments on New Medicare Rule: Hospital Admission vs. “Observation”

  1. This almost happened to my mother – 87 year old who lived alone, fell, fractured her pelvis among other things. Initially “admitted” then changed to “observation” Was any of this discussed with my mother or me, her health care surrogate? No. She could not move her right leg, hold her head up and was in excruciating pain. I work at a SNF and they were ready to accept her for the rehab she needed. ON day #3 I rec’d a call from the case worker at the hospital stating that she was not eligible for a MCR stay at the SNF because of her observation status. I guess they were going to send her to her mobile home the way she was. Needless to say I raised hell! I told them that I would contact an attorney, the local News papers and any TV station who would listen too me and believe me in the state of Fla this is nothing less than elder abuse! My parents worked their whole lives paying into the system. I am 52 and have been earning a paycheck since I was 15, therefore paying into MCR. I am a nurse and I have never heard of such pure and simple CRAP!!!!!! Senior citizens count on their Medicare – not being observed and sent home when they are not even close to being able to care for themselves. Whoever came up with this assinine idea should be put in the exact position my Mom was being pushed into. Oh, after putting up quite a fuss, words such as lawsuit, abuse, etc., my mother miraculously became admitted and is now doing very well with her rehab at our SNF.

  2. Christine Lisi // January 29, 2013 at 1:58 pm //

    I wish I would have raised hell! My mom is the same age and fractured her tibia. She’s struggling at home with my 90 year old dad and 24 hour aides at $2400 per week. I don’t know what to do or where to turn! I called Medicare and they are useless. I am going to call the Doctor’s office today to see what can be done.

  3. C. B. Myers, M.D. // September 8, 2013 at 1:22 pm //

    I refer you to the attached website:

    It well describes the reality of what a doctor and her staff must cope with when determining whether a patient does or does not meet “inpatient criteria”. There are pages and pages of “rules” and “guidelines” doctors and case managers are supposed to follow to determine if a patient meets criteria to become an inpatient. Moreover, the rules are constantly changing, usually to the benefit of the payor, meaning things get stricter and stricter as to what is considered “sick enough” to be “admitted”. While the doctor is the one who says whether the patient does or does not deserve to be an inpatient, at any moment, Medicare or the private insurance company can disagree. Should they do that, there generally is an avenue to appeal. But, the road takes time and is limited. In the end, the insurance company (be it private or Medicare) gets the final say on payment issues, no matter how vociferously and strenuously your doctor presents the situation to them.

    The situation above described by Wanda sounds pretty classic for a case where the doctor said her mother needed to be in the hospital and would not be able to go home, so he admitted her. Often, orthopedics recommends watchful waiting and therapy for pelvic fractures. So, watchful waiting can be done in a patient’s home. Or, at least, that’s how an insurance company looks at things. So, the guidelines stipulate she doesn’t meet “criteria”, and poof, your mother is observation status. As in all of life, there are extenuating circumstances, and Wanda did right to question things.

    But, to put it bluntly, a huge chunk of every doctor’s day is spent talking to case managers and insurance company representatives and EHR, all in an effort to help both the hospital and the patient best afford the care being provided while trying to get the best possible care for the patient. Extensive documentation plays into those communications. And, much of this happens while the patient remains oblivious to it. Yet, if it did not happen, a patient’s hospital care would not be covered, and the patient would be responsible for the cost.

    The OSB vs INPATIENT dilemma is actually not a new one. It has been an ongoing issue since the mid-1990s. But, in some portions of the country, it has only recently been more aggressively enforced by the insurance companies. It has put hospitals in a situation where, in order to avoid myriad insurers just refusing to pay for patients’ hospitalizations at all, they have to be much more precise and discerning when determining which status a patient most accurately meets.

    As a doctor, I can tell you my own opinion is that if I think a patient needs to be in the hospital, I put them there. I would much rather not have to deal with any of the inpatient vs observation nonsense. Having said that, I understand the system is purely aimed at determining whose responsibility it is for paying the bills. Whether you agree with the principle of it or not depends on whether you think your healthcare is a right or whether you think you are responsible for it and just need extra help when the costs are overwhelming. That is the essential crux of the current ACA/Obamacare debate.

    And, I shall leave it at that. 🙂

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