Every year, thousands of Medicare patients who spend time in the hospital for observation but are not officially admitted find out they are not eligible for rehab in a nursing home after they are discharged.
Medicare rules state that you must spend 3 consecutive nights (midnights) in the hospital (not counting the day of discharge) as an “admitted” patient in order to qualify for nursing-home coverage. If you are under observation but not admitted, you will also lose coverage for any medications the hospital provides for pre-existing health problems. (Medicare drug plans are not required to reimburse patients for these drug costs.)
Some background on “observation” status.
Medicare beneficiaries who are under observation (which is considered outpatient care) often face higher out-of-pocket costs, including higher co-payments and charges for drugs that are not covered for outpatient stays.
The rule says that to be eligible for Medicare’s nursing home coverage, you must spend three consecutive midnights “admitted” in a hospital. This means that days spent under “observation” do not count towards meeting this requirement.
Since an observation stay is an outpatient hospital stay is it covered under Medicare Part B (the medical insurance part of Medicare). If you have Original Medicare, Part B covers outpatient services you receive and you typically pay 20 percent coinsurance for each medical service you receive in the hospital after you have met your yearly Part B deductible.
If you get your Medicare benefits through a Medicare Advantage plan, different costs and rules may apply. Each plan is different. You will need to contact your plan directly to learn more about your plan’s coverage of hospital care. It is important to know whether you are considered to be a hospital inpatient or an outpatient since your Medicare costs and coverage may be different depending on your status because your costs may be higher if you are a hospital outpatient.
If you are in the hospital, you or your family member should ask hospital staff whether you are an inpatient or an outpatient each day during your hospital stay, since this affects what you pay for hospital services. Keep in mind that whether you are an inpatient or outpatient can also affect whether you will qualify for Medicare coverage of skilled nursing facility care.
However things are about to change – but only slightly!
Last week President Obama signed a new law passed by Congress called the “NOTICE Act”. This new law will require hospitals to tell you of your outpatient status within 36 hours, or, if sooner, upon discharge.
Hospitals will have until next year (August 2016) to comply with the new law. So you still need to be aware of your status when you or a loved on is in the hospital. Nothing is changing today and once this law is implemented hospitals still have 36 hours to notify you so I would continue asking about your status daily so you are aware.
“The new law will not cure [some] problems, but will at least give patients a warning before they spend thousands of dollars on care that will not be covered by Medicare,” Jeff Marshall, an elder law attorney in Pennsylvania, said. “Some beneficiaries will likely decide to receive a different set of medical services after being notified of their observation status.”
If you would like to know how your plan pays for inpatient vs. outpatient care you can contact your plan by calling the phone number on the back of your insurance card or by calling 1-800-Medicare. You may also contact us for a plan review to find out if you are getting the coverage you need at costs that are affordable to you. Remember, Medicare Advantage plans and Medicare Prescription Drug plans change every year so it is always a good idea to review these changes and to look at what other plans offer to make sure you’re taking advantage of all your options.
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