Tuck away the many horror stories of the wrong limbs being amputated, things
being left in surgery patients, terrible infections picked up in hospitals and
totally wrong diagnoses. More relevant is a bureaucratic hospitalization horror
that far too few Americans covered by Medicare are aware of.
Odds are that you do not know a key question to ask if you ever find
yourself in a hospital for an overnight stay that could last from one to two
days, or perhaps much more. What you and anyone accompanying you want to know
is whether you are being classified as "under observation." This
means that legally you are not an inpatient. If the former, then you are likely
to find yourself owing the hospital a large amount of money, because your
Medicare or other health insurance will not provide the benefits associated
with inpatient status. Many, many Americans nationwide that were classified as
under observation have faced unexpected bills of many tens of thousands of
dollars.
So pay very close attention to what you are about to read.
If you in a hospital, possibly in an emergency room, then you or family or
friends should ask some tough questions of hospital staff if you are kept in
the hospital after being handled in the emergency room. Ask if you will be kept
in as an inpatient. If told that you will be in the observation category, then
you might seriously consider whether you should stay in that hospital, or
perhaps seek another one if you are not in immediate need of medical attention
beyond what was received in the emergency department.
Indeed, ordinary Americans should recognize what Medicare does, namely that
the decision made by the hospital to classify a patient as under observation
for billing purposes is a "complex medical judgment." What that means
is that different interpretations and decisions can be made, either by someone
else in the hospital or professionals in a different hospital. The critical
decision to use the observation classification, with so much potential negative
impact for patients, is "open to widely variable interpretation" as
physician Steven J. Myerson has
noted.
Because you may be in a very stressful state resulting from facing some
medical condition, it is imperative that family and friends also need to become
educated. Realistically, you may not be in a clear enough mental state when you
enter a hospital to ask questions and demand good answers about how the
hospital is classifying your stay.
Understand this: Nothing is crazier than entering a hospital for one or more
nights and being designated as under observation, which amounts to being an
outpatient, rather than an inpatient. Despite coverage by Medicare, you will
not have expected benefits.
Beyond hours in the emergency department, you can spend days in a hospital
bed, receive regular nursing care, be given drugs and all kinds of tests. You
might even spend time in a critical care or intensive care unit. But you can
still be officially designated an outpatient in observation status. Even though
you might stay in the hospital for more than just one or two nights, unless
officially designated an inpatient, you face major financial liability.
Under Medicare this means you are not covered by Part A which provides the
best hospital coverage, but rather covered under Part B with far inferior
coverage. This practice is as bad as anything you have ever heard about awful
health insurance coverage. Furthermore, Medicare does not cover post-discharge
care for Part B observation stays. For example, a patient in observation status
for a broken bone will have to pay the full cost of rehabilitation or a nursing
home. But for an inpatient Medicare pays for skilled nursing care following at
least three consecutive inpatient days. Also, observation patients pay
out-of-pocket for the medication they receive in the hospital and Subtitle D
drug coverage may not cover these costs.
Hard to believe but your personal physician may not know that their patient
has been classified by the hospital as outpatient or under observation. Though
it would be very smart for you to raise this issue and make it clear that you
do not want to stay in a hospital unless you are being admitted as an
inpatient. But starting in an emergency room makes it difficult to push this
issue, but not impossible.
Even the key
public document
from Medicare makes clear that "You're an outpatient if you're getting
emergency department services, observation services, outpatient surgery, lab
tests, or X-rays, and the doctor hasn't written an order to admit you to the
hospital as an inpatient." Regardless of what a doctor has said, however,
hospitals have the power to classify you as under observation. The government
advises "If you're in the hospital more than a few hours, always ask your
doctor or the hospital staff if you're an inpatient or an outpatient."
Note the word "always." That is terrific, critically important
advice.
You or your accompanying relative or friend must be prepared to challenge a
decision of observation status and even raise the possibility of immediately
leaving the hospital. Remember, this is after any actions given in an emergency
department. Being prepared to challenge an observation status decision requires
that you fully understand the considerable downside of this hospital
classification.
Actually, Medicare maintains a one way communication street. Medicare
doesn't require hospitals to tell patients they are "under
observation," though many will do so. It only requires hospitals to tell
patients they have been downgraded from inpatient to observation.
To be clear, if you are not classified as an inpatient, then you officially
have not been admitted to the hospital though you have entered it. Toby Edelman
of the Center for Medicare Advocacy
has
noted that "People have no way of knowing they have not been admitted
to the hospital. They go upstairs to a bed, they get a band on their wrist,
nurses and doctors come to see them, they get treatment and tests, they fill
out a meal chart - and they assume that they have been admitted to the
hospital."
How much of a problem is observation status? In recent years, hospitals have
increasingly classified Medicare beneficiaries as observation patients instead
of admitting them, according to a Brown
University
nationwide
analysis of Medicare claims. From 2007 through 2009, the ratio of Medicare
observation patients to those admitted as inpatients rose by 34 percent. Worse,
more than 10 percent of patients in observation were kept there for more than
48 hours, and more than 44,800 were kept in observation for 72 hours or longer
in 2009 - an increase of 88 percent since 2007.
A recent New York Times
article
noted that under Medicare: "the number of seniors entering the hospital
for observation increased 69 percent over five years, to 1.6 million in
2011." And from 2004 to 2011, the number of observation services
administered per Medicare beneficiary rose by almost 34 percent,
according
to the Medicare Payment Advisory Commission, while admissions per
beneficiary declined 7.8 percent. In other words, this observation issue is not
a trivial or minor issue affecting just a few people.
AARP did its
own
study and found that from 2001 to 2009 both the frequency and duration of
observation status increased. Although only about 3.5 percent of Medicare
beneficiaries were in this class in 2009, Medicare claims for observation
patients grew by more than 100 percent, with the greatest increase occurring in
cases not leading to an inpatient admission. The duration of observation visits
also increased dramatically. Observation service visits lasting 48 hours or
longer were the least common, but had the greatest increase, almost 250 percent
for observation only and more than 100 percent for observation with inpatient
admission.
According to a survey by the National Association of Professional Geriatric
Care Managers (NAPGCM) in 2013 more than 80 percent of US geriatric care
managers reported that "inappropriate hospital Observation Status
determinations were a significant problem in their communities and 75 percent
noted that the problem was growing worse.
A University of Wisconsin study found that 10.4 percent of hospitalizations
in 2010 and 2011 were in the observation status category and 16.5 percent of
them exceeded 48 hours and concluded "observation care in clinical
practice is very different than what CMS [the Medicare agency] initially
envisioned and creates insurance loopholes that adversely affect patients,
health care providers, and hospitals." In an Invited Commentary on the
Wisconsin study, physician Robert M. Wachter of the Department of Medicine at
the University of California, San
Francisco, summed up the observation issue as having
"morphed into madness."
Note that
Medicare
guidelines recommend that observation stays be no longer than 24 hours and
only "in rare and exceptional cases" extend past 48 hours. Obviously,
this is nearly meaningless in the real world.
Why are hospitals placing more patients in observation
status? Like so much in American society, the answer is money. Hospitals are at
risk from Medicare audits that declare patients wrongly defined as inpatients.
Payment is then rejected, potentially large amounts of money. The government has
increased audits to such a degree that since 2009 four recovery firms have
reviewed bills from hospitals and physicians nationwide and recuperated $1.9
billion in overpayments. Billion!
Two physicians writing in the prestigious
New
England Journal of Medicine said: "When observation is used as a
billing status in inpatient areas without changes in care delivery, it's
largely a cost-shifting exercise - relieving the hospital of the risk of
adverse action by the RAC [Recovery Audit Contractor] but increasing the
patient's financial burden."
To cut its spending, Medicare has accused hospitals of over-charging by
"admitting" patients instead of putting them on "observation"
status. For example, in July 2013, Beth
Israel New
England Deaconess Hospital in Boston
paid Medicare $5.3 million to settle claims over this issue.
A new wrinkle under Obamacare is that hospitals can be penalized for
readmitting patients in less than 30 days. But observation patients cannot be
counted as readmissions if they happen to return because they were not
officially admitted in the first place. To avoid this risk of financial loss,
more patients can be classified as under observation.
A new Medicare rule taking effect April 1, 2014
requires
doctors to admit people they anticipate staying for longer than two
midnights, but to list those expected to stay for less time as observation
patients. Many medical professionals doubt that this will improve things.
Physician Ann Sheehy of the University of Wisconsin closely examined how this
rule will work and
concluded:
"We found that four of five diagnosis codes were the same across length of
stay, indicating that the cut point is arbitrary and really does not distinguish
different patient groups, even though insurance benefits will be different
based on length of stay." Time, not medical condition or hospital actions,
is being used. She also noted that the government will not count nights spent
at different hospitals, and that 9 percent of their observation were transfers.
Dr. Sheehy made this great point: "Observation is an outpatient
designation, which implies all services delivered could be done in an
outpatient setting. This is totally not the case, which is why observation
status is so frustrating."
Because there is essentially no upside to being put into observation status,
it is critically important for you or your advocate to be very assertive when
entering the hospital. What actions can you take after you are in the hospital
and you are likely in a better mental state to address this problem? Nothing
that is likely to work for you.
The imperative is to check your status each day you are in the hospital and
remember that it can be changed (from inpatient to observation, or vice versa)
at any time by various hospital doctors or officials. Sadly, in many cases a
patient may not be informed that they have been in observation status until the
discharge process. That is why it is very important to ask the hospital, either
through a doctor or nursing staff, what your status is and, if observation, to
formally reconsider your case. Ask if there is a hospital committee that could
review your status. Definitely ask your own doctor whether they are willing to
press your case for inpatient status based on medical factors. In theory, you
could appeal observation status with Medicare after you leave the hospital, but
that is difficult and few have succeeded.
The Center for Medicare Advocacy makes available a
Self
Help Packet for Medicare "Observation Status." This is definitely
worth keeping handy and it would be great if hospitals distributed it. This
group has an active
legal
case challenging the government's policy of allowing hospitalized Medicare
beneficiaries to be placed in "observation status," rather than
formally admitting them, and depriving them of their Part A coverage in
violation of the Medicare statute and other laws. This group makes this
important observation
: "Neither the Medicare statute nor the
Medicare regulations define observation services. The only definition appears
in various CMS manuals."
What is really needed is action by Congress to eliminate observation status
for any overnight stay, but this is unlikely unless many millions of Medicare
beneficiaries demand it. The ugly truth is that this observation status was a
bureaucratic tactic to reduce Medicare spending. It puts hospitals in the
difficult position of putting their patients in a very bad financial situation.
In a real sense hospitals are being blackmailed into serving as agents to
implement this awful observation policy. A vigorous national campaign by AARP
demanding congressional action is needed.
