Today, NBC reported on a story about hospitalized seniors pushed into nursing home care who are never “admitted” and rack up thousand of dollars in fees that Medicare won’t cover. Unbeknownst to patients and their families, hospital officials place patients in an observation status instead of admitting them as an in-patient. As a result, the time spent in the hospital is not counted towards the nursing home care, leaving the patient on the hook for tens of thousands of dollars out-of-pocket expenses after leaving the hospital.
Some Medicare critics are calling it a coverage gap, but in reality its a game being played by the hospitals to reduce the risk of a federal auditor finding them out of compliance. Hospitals are at risk of losing full Medicare reimbursement if an auditor determines an inpatient stay should have been classified as an observation stay. As a result, hospitals are more likely to use the observation stay status. Patients classified as under observation status receive the same care, however, Medicare covers fewer costs.
The result of a one week stay in the hospital under observation can be completely devastating to a senior and their family. Under pressure by the Obama Administration to cut costs where ever and however possible, Medicare is finding new ways to push the cost of medical care back to the beneficiary without the benefit of advanced notification.
The Center for Medicare Advocacy has filed suit in federal court. It wants observation status to count towards Medicare coverage of skilled nursing care. Meanwhile, Congress is considering new legislation to close the so-called coverage gap.