More and more Medicare beneficiaries are unknowingly entering hospitals as observation patients, which is considered outpatient service by Medicare. This service can be costly for patients. It’s important to know whether you’ve been admitted as an inpatient or put on observation status – all of which will determine how much money you pay out-of-pocket.
Changing Hospital Policies
Many older adults have been surprised by the recent change in hospital policies regarding admission vs. observation status. Before the Affordable Care Act (Obamacare) was implemented, hospitals were not fined for the number of readmissions that occurred within a 30 day period of time so no one paid attention to the admissions process. Since the ACA emphasizes “performance”, hospitals are now judged by the effectiveness of their treatments and readmissions are considered to be a failure.
Therefore, hospitals are now more careful about admitting people who might be “frequent flyers” and might hold them for observation rather than admitting them. In an effort to solve these issues, there are new 2015 regulations that require a hospital to admit someone if the doctor anticipates they will need to stay at least “two midnights”. However, when there is a need for a hospital stay after a visit to the emergency room, you may be informed that you are being kept for observation.
Unfortunately, many people (and their families) don’t know what “observation” means or the difference it can make financially. In addition, they may have been surprised that after staying three or four days, they were still considered “on observation” and were never admitted to the hospital.
How Medicare & Observation Affect Rehabilitation Fees
Admission vs. observation can have a huge impact on how much money you will pay out-of-pocket. Your Medicare plan will also determine the amount of fees that are covered.
Medicare + Medicare Supplement
If you have original Medicare and a Medicare supplement, there is usually no additional cost for the hospital stay. However, if you are not admitted for at least three days (measured by counting three midnights) and need rehabilitation services afterwards, Medicare will not pay for rehab. Many families find out the hard way that they are responsible for 100% of the cost for rehab and that sometimes can be as much as $500/day or more.
Medicare Advantage Program
If you are enrolled in a Medicare Advantage program, the good news is that the plan will cover the cost of rehab whether you were admitted to the hospital or were only there on observation (copays will apply). However, there is a catch: The category “observation” falls under Part B.
If you are only being observed in the hospital, you will potentially be responsible for 20% of the costs. Each plan has a maximum limit as to how much money you will need to spend out-of-pocket for the calendar year. Nevertheless, not knowing the rules can be potentially stressful if you are not prepared for the costs required.
Choosing Your Health Care Plan
There is no right or wrong answer – many people prefer to pay a little along the way with a Medigap policy or a Medicare Advantage Plan because of the potential for huge savings. Others prefer to pay an insurance company the premium so they can be 100% taken care of. Regardless, asking the question, “Am I being admitted to the hospital or will I be kept for observation?” will help you know what to expect.
Do You Have Questions Regarding Medicare or Observation Status?
Call Althea West For More Information at (636) 926-8407
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