Have You Really Been Admitted – as an Inpatient – to the Hospital?

You're in a hospital bed, and there you remain overnight – perhaps longer. Whatever adversity you're facing, one thing you may never consider is whether or not you've been admitted to the hospital: that is, specifically, if you're an inpatient.

Under most circumstances, a patient cared for in the hospital is – or quickly becomes – an inpatient. A patient cared for in the community, say at a clinic or doctor's office, would be an outpatient. But there's a murky middle where some Medicare beneficiaries have been surprised to find themselves: under observation – considered outpatients – in the hospital.

"Observation services are hospital outpatient services you get while your doctor decides whether to admit you as an inpatient or discharge you," according to Medicare.gov. "You can get observation services in the emergency department or another area of the hospital." It goes on: "The decision for inpatient hospital admission is a complex medical decision based on your doctor's judgment and your need for medically necessary hospital care."

But clinicians argue they're bound by Medicare policy, and that it's primarily a billing distinction rather than one that neatly reflects the level of care patients need. Criteria are so difficult to interpret and implement that hospitals rely largely on external and in-house reviewers to determine whether a patient's status is observation or inpatient. "Over the last several years it has really morphed into this huge regulatory burden, which is really frustrating for physicians and, just in general, bad for patients," says Dr. Melinda Johnson, hospitalist and clinical professor of internal medicine at the University of Iowa Hospitals & Clinics, who contributed to a 2017 Society of Hospital Medicine white paper that was critical of observation status.

The obscure, confusing status distinction impacts how patients are covered and billed and can lead to significantly higher out-of-pocket costs. In particular, being under observation at the hospital instead of an inpatient can make it difficult – if not impossible – for some patients to be able to afford skilled nursing rehab care that they need after leaving the hospital.

"We really get calls all the time about this – just constantly," says Toby Edelman, senior policy attorney at the nonprofit Center for Medicare Advocacy – regarding challenges patients face after being placed under observation at the hospital. "The biggest issue for most people is if they go to a skilled nursing facility afterwards, Medicare Part A won't cover their stay, because you have to be an inpatient for three consecutive days, not counting the day of discharge."

At the hospital, Medicare covers patients under observation – or outpatients – differently from inpatients. While inpatient hospital stays are covered under Medicare Part A, patients under observation are covered under Medicare Part B – something most, but not all Medicare beneficiaries have. "Instead of paying the inpatient deductible for the hospital, they have to pay copayments under Part B for any services that are provided to them – any test, anything that's done in the hospital," Edelman notes. She says she recently spoke with one woman who didn't have part B coverage who received a bill from the hospital for $23,000. While costs vary greatly, patients can end up spending hundreds or thousands more out-of-pocket in some cases if they're placed under observation for everything from medication to doctors' services to post-discharge skilled nursing care that isn't covered by Medicare.

For those with a Medigap plan, private insurance that supplements Medicare Part A and Part B, that should cover such copayments while patients are in the hospital. But it still won't cover prescription and over-the-counter drugs costs patients who are under observation might encounter during their hospital stay, including so-called self-administered drugs patients would normally take on their own, which aren't covered under Part B either. "They also have to pay for their medications," Edelman says. Patients with a Medicare prescription drug plan, or Part D, would likely need to submit a claim to try to recoup any of that cost, and they may still not get reimbursed. "Even if they have a Part D plan, the hospital pharmacy is unlikely to be part of the network of that Part D plan," Edelman says. Given the high medication costs patients can face under observation, hospitals have the authority to waive these charges, too, she adds. So it's worth asking, though it doesn't mean that will happen.

Informational Source