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 or 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.
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