Here is the scenario: You have Medicare insurance; you go to the hospital; you are evaluated in the Emergency Unit; and then you are sent to a room in one of the hospital’s nursing units. Have you been admitted to the hospital, or not?
The answer is “maybe yes” and “maybe no.” The reason for this ambiguity is something called “Observation Status.” The purpose of “Observation” is to allow physicians to gather the necessary information from tests and procedures to determine if you need to be admitted to the hospital. However, while you are on “Observation,” you will be treated just as if you had been admitted to the hospital. If you guessed that money is behind these semantics, you are correct. If a hospital allows a physician to admit a patient to the hospital and Medicare later determines that the patient did not meet Medicare’s hospital admission criteria, the hospital is financially penalized. (Medicare has a Recovery Audit Contractor program to check for what it feels are inappropriate hospital admissions.) Consequently, hospitals have become very careful about admissions.
So how does this affect you? First of all, “Observation Status” is treated by Medicare as outpatient services. This means that you may be billed for some services that normally would have been covered if you had been admitted to the hospital. Secondly, a hospital admission of at least three days is required before Medicare will pay for subsequent skilled nursing care or skilled rehabilitation in a nursing home. If you are in the hospital for three days before going to a nursing home, but one of the days was on Observation, Medicare will not cover any of the nursing home expense. (Some Medicare Advantage Plans cover nursing home stays without a three day hospitalization requirement, so if you have a Medicare Advantage Policy, it is important to understand your policy’s coverage.) What is most unfortunate in all this is that some hospitals do not make it clear to their Medicare patients if they are admitted or if they are on Observation. This means it is up to you as a consumer to ask. Click here to find more information to help you understand how the difference between “Admission” and “Observation” affects you.
John Reese
Elder Care Coordinator