You’re in the hospital for a couple of days. You’re wearing a gown. You’re eating hospital food. You even have a wristband. So your health plan will cover all of your hospital care plus rehabilitative care, right?
Hold on a minute.
For most people, it would be reasonable to assume this is correct. However, it’s not so cut and dried, according to Kaiser Health News. When it comes to billing, there’s a big difference between being admitted to a hospital and being held for observation—especially for folks on Medicare.
Generally speaking, observation care is for patients who are not well enough to go home but not sick enough to be admitted to the hospital. When your doctor wants to keep you for observation, you’re allowed to stay at the hospital as an outpatient. Patients under observation are generally kept 24 hours or less, but the stay can be longer—sometimes several days.
As an outpatient, you’re usually billed for each medical service individually. Your copays, deductibles, and any additional costs are likely to be based on the outpatient terms of your health plan. The costs can add up in a hurry.
Also, there are limits on how long your insurance will pay for observation services. Medicare and Medicaid allow up to 48 hours, but a private insurer may only allow 23 hours.
When you are admitted to the hospital, you are an inpatient. As an inpatient, you’re usually billed once for all services, so you pay your copay and leave the rest to your insurer.
For those on Medicare, this is where being admitted can save you some serious money. Sometimes you need nursing home care after you get out of the hospital for rehabilitation, which can cost thousands of dollars. To be eligible for skilled nursing facility coverage, people on Medicare must have first spent at least three consecutive days (or through three midnights) as an admitted patient, not counting the day of discharge.
Here are some tips from AARP for people on Medicare. However, the first three apply to anyone who is concerned about their hospital admission status.
Here’s what you can do to help avoid big bills if you or someone you’re looking out for is placed under observation in the hospital:
- Ask about your status each day you are in the hospital, as it can be changed (from inpatient to observation, or vice versa) at any time.
- Ask the hospital doctor to reconsider your case or refer it to the hospital committee that decides status.
- Ask your own doctor whether observation status is justified. If not, ask him or her to call the hospital to explain the medical reasons why you should be admitted as an inpatient.
- If, after discharge, you need rehab or other kinds of continuing care but learn that Medicare won’t cover your stay in a skilled nursing facility, ask your doctor whether you qualify for similar care at home through Medicare’s home health care benefit, or for Medicare-covered care in a rehabilitation hospital.
- If you go to a skilled nursing facility and have to pay for it yourself, you can try formally appealing Medicare’s decision. When you receive your quarterly Medicare Summary Notice, make a copy and highlight the facility’s charge. Send this to the address provided on the notice with a letter saying you want to appeal Medicare’s decision of noncoverage on the basis that you should have been classified as an inpatient during your hospital stay and not placed under observation. If this is denied, you can go to a higher level of appeal, following instructions on the denial letter.
What can you do?
There has been litigation regarding this issue, but no ruling to help clear up the confusion of observation vs. admission. So for now, the only thing patients can do is ask questions about their admission status and contest decisions that seem inappropriate. Being aware of your admission status can help you understand what it means to your budget and prevent unpleasant billing surprises.