Late last year Susan Jaffe of the Kaiser Health News wrote an excellent article in The Washington Post (September 7, 2010) concerning a significant increase in the use of “observation services” by hospitals for Medicare beneficiaries. Of course, many patients who show up or who are brought to hospitals are treated and then held for observation, not only because the hospital physicians and staff need to be sure their diagnoses are correct and that the treatments are working, but also because they often know absolutely nothing about the patient when they arrive in the emergency room or at an outpatient clinic. So their being cautious is quite understandable. But, as Ms. Jaffe so clearly points out, this appears to have gotten out of hand; indeed, she cites the case of an 85-year old beneficiary who broke a number of ribs and was held in observation for six days! This was in spite of the fact that Medicare says observations stays should be limited to 24 hours, and, with rare exceptions, to 48 hours. And, as her article further points out, beneficiaries who are put in this limbo often do not understand that they have not been admitted as an inpatient, as they are assigned a bed and get one of those plastic bracelets and are fed their meals and seem to be regarded as any other inmate.
But from the beneficiary point-of-view, there are two big downsides to this whole trend. One of them is not what you will directly owe the hospital for your observation care. This is because although you are responsible for a Part B co-payment for your observation care, this is limited to the amount of the Part A inpatient deductible, that is, what you would have owed the hospital for your inpatient care if you had been admitted. So you are protected on your hospital bill whether or not you are admitted as an inpatient. [Well, mostly protected; see the note at the end of this posting.*]
But you will be liable for two other expenses, which can be huge. In Medicare, recall that your Skilled Nursing Facility (SNF) care is covered only if you were admitted to a hospital as an inpatient for at least three days. So if you get put in “observation care,” no matter how long you are there, you will NOT qualify for Medicare to cover your Skilled Nursing Facility care if you go to one of these facilities after your hospital treatment. (While some of your care there may be covered, that is, your Part B will have to pay for “ancillary services” such as physical or occupational therapy, your basic room and board charges, which are the big part of the bill, will not be covered at all.) In Ms. Jaffe’s article, she points out that the beneficiary ended up owing well over $10,000 out-of-pocket to a Skilled Nursing Facility.
The Centers for Medicare & Medicaid Services has begun to realize that this is quite a problem, and is working on it. Perhaps they will issue a requirement that hospitals give beneficiaries in observation status an “Advanced Beneficiary Notice” clearly telling them that their care is covered under Part B and not Part A and what the implications of this are. But unless there is a way to instantly appeal this, I’m not sure where it leaves the beneficiary. Probably still in limbo.
My only suggestion at this point is that if your are put into a protracted observation status at a hospital, and you think you should be admitted, immediately call, or have a family member or caregiver call, your Quality Improvement Organization (QIO) and formally complain to them about the quality of care you are receiving. Perhaps they can intervene. These outfits are discussed on page 215 of Managing Your Medicare; you can get your organization’s number by calling the 1-800-MEDICARE number or by going on www.medicare.gov.
And while this will not help you while you are in the hospital, you can always appeal your Medicare Summary Notice about the hospital observation services, and insist that you should have been admitted as an inpatient. If you are successful, you can demand that any subsequent Skilled Nursing Facility also be covered by Medicare. The Center for Medicare Advocacy, a strong proponent of beneficiary rights, has excellent suggestions on its website www.medicareadvocacy.org on how to do this. It advises that you may need help from an organziation such as itself or from your State Health Insurance Counseling Program (SHIP).
The other liability arises when, while you are in observation status, you have to take prescription drugs you take everyday, and which may have nothing to do with your being at the hospital. You may have neglected to take your drugs with you, or perhaps the hospital wouldn’t let you take what you did bring. Or perhaps you have to take a prescription that you have but which you don’t usually take everyday. In cases where the hospital gives you these drugs, you will be in a bind as generally Part B will not pay for self-administered drugs in a hospital outpatient setting unless they are part of the hospital’s therapy. And so the hospital will bill you, and not Medicare, for these drugs.
If you have Part D, your drug plan MAY pay for what the hospital billed you. Particularly because most hospital pharmacies do NOT participate in Part D, the hospital will likely bill you for these drugs, you will have to pay them, and you should submit the bills to your Part D plan. You can call them to find out how to do this. Your plan may inquire about the reasons for your hospital visit, or if you could have gotten the medicine in another way, or from an in-network pharmacy. If your drug plan does reimburse you, it will probably be only at the level that it would have paid if you got the medicine at a network pharmacy, taking Part D deductibles, coinsurance and co-payments into account. The amount it establishes will count toward your Part D true out-of-pocket costs (TrOOP).
This issue has become such a problem that the Centers for Medicare & Medicaid Services had a “tip sheet” about it. You can download it, “How Medicare Covers Self-Administered Drugs Given in Hospital Outpatient Settings,” CMS Product No. 11333 (January. 2010), from their website, www.medicare.gov.
Perhaps the “moral of this story” is that you should always try to have a small supply of your prescription drugs with you, and your schedule for taking them, with you. And while this perhaps this can’t be done in all emergencies, it is just a good habit. For example, recently I was unexpectedly stranded overnight in an airport due to a flight cancellation; I was not happy that I did not have my meds with me.
I would be interested in any experiences you may have had with this issue. Please email me at managingyourmedicare@gmail.com.
[*Well, you are mostly protected. But you should also be aware that if you are not admitted, your Part A “benefit period” or “spell of illness” will not begin. Recall that once that happens, that is, you are admitted as an inpatient, you are liable for the Part A deductible of $1,132 (in 2011). And that’s all you pay for your first 60 days of hospital inpatient care. So, for example, if you are admitted as an inpatient, and then discharged, let’s say five days later, and you are readmitted four weeks later, your benefit period (spell of illness) is still in effect and you do NOT have to pay the inpatient deductible again. (Your benefit period or spell generally does not expire until you have been out of a hospital or a Skilled Nursing Facility for 60 days.) But, if you were held in observation status for four days and then released, and then readmitted four weeks later, but now as an inpatient, you would be liable not only for the Part B copayment for the observation stay, but also for the Part A deductible for the new, inpatient stay.]
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