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By law, hospitals must now tell Medicare patients when care is ‘observation’ only
Under a new federal law, hospitals across the country must now alert Medicare patients when they are getting observation care and why they were not admitted—even if they stay in the hospital a few nights. For years, seniors often found out only when they got surprise bills for the services Medicare doesn’t cover for observation patients, including some drugs and expensive nursing home care.
The notice may cushion the shock but probably not settle the issue.
When patients are too sick to go home but not sick enough to be admitted, observation care gives doctors time to figure out what’s wrong. It is considered an outpatient service, like a doctor’s visit. Unless their care falls under a new Medicare bundled-payment category, observation patients pay a share of the cost of each test, treatment or other services.
And if they need nursing home care to recover their strength, Medicare won’t pay for it because that coverage requires a prior hospital admission of at least three consecutive days. Observation time doesn’t count.
“Letting you know would help, that’s for sure,” said Suzanne Mitchell of Walnut Creek, California. When her 94-year-old husband fell and was taken to a hospital last September, she was told he would be admitted. It was only after seven days of hospitalization that she learned he had been an observation patient. He was due to leave the next day and enter a nursing home, which Medicare would not cover. She still doesn’t know why.
“If I had known [he was in observation care], I would have been on it like a tiger because I knew the consequences by then, and I would have done everything I could to insist that they change that outpatient/inpatient,” said Mitchell, a retired respiratory therapist. “I have never, to this day, been able to have anybody give me the written policy the hospital goes by to decide.” Her husband was hospitalized two more times and died in December. His nursing home sent a bill for nearly $7,000 that she has not yet paid.
The notice is—as of last Wednesday—one of the conditions hospitals must meet in order to get paid for treating Medicare beneficiaries, who typically account for about 42% of hospital patients. But the most controversial aspect of observation care hasn’t changed.
“The observation care notice is a step in the right direction, but it doesn’t fix the conundrum some people find themselves in when they need nursing home care following an observation stay,” said Stacy Sanders, federal policy director at the Medicare Rights Center, a consumer advocacy group.
Medicare officials have wrestled for years with complaints about observation care from patients, members of Congress, doctors and hospitals. In 2013, officials issued the “two-midnight” rule. With some exceptions, when doctors expect patients to stay in the hospital for more than two midnights, they should be admitted, although doctors can still opt for observation.
But the rule has not reduced observation visits, the Health and Human Services inspector general reported in December. “An increased number of beneficiaries in outpatient stays pay more and have limited access to [nursing home] services than they would as inpatients,” the IG found.
The new notice drafted by Medicare officials must be provided after the patient has received observation care for 24 hours and no later than 36 hours. Although there’s a space for patients or their representatives to sign it “to show you received and understand this notice,” the instructions for providers say signing is optional.
Some hospitals already notify observation patients, either voluntarily or in more than half a dozen states that require it, including California and New York.
California Governor Signs Flurry Of Health Laws
AB 72: “Surprise medical bill” legislation by Assemblyman Rob Bonta (D-Oakland) was among the most-talked-about measures of the year in Sacramento. It promises to better protect consumers against unexpected medical bills.
SB 482: Amid a national opioid epidemic, Brown approved legislation that requires doctors to check a patient’s prescription history in a state database before prescribing any potentially addictive drugs.
SB 586: The legislation, a compromise between the Department of Health Care Services and children’s advocates, aims to slow down and improve plans to overhaul the way the state’s most medically fragile children receive care.
SB 908: This bill will allow consumers to learn when their health insurance premium rates have been considered “unreasonable” by state officials. Current law requires that unreasonable rate hikes be posted online by one of the two state agencies that regulate insurers — the Department of Managed Health Care or the California Department of Insurance. But consumers don’t check online, the bill’s supporters argued.
SB 1076: This law, sponsored by the California Nurses Association, was designed to protect hospital patients in “observation” care. It requires that observation units meet the same staffing standards — nurse-to-patient ratios — as those in the emergency room.
Micro-hospitals could prove financial boon and salvation to healthcare systems
So-called “micro-hospitals”–acute care facilities with six to 10 beds–could actually prove to be big moneymakers for healthcare systems.
The Indianapolis Business Journal has reported that such hospitals can allow healthcare systems to bypass site neutrality rules that prohibit billing at inpatient rates if a facility is located more than 250 feet from an acute care facilty. Moreover, their construction costs, at between $7 million and $30 million, are a fraction of what it costs to build a full-size hospital.
Most micro-hospitals are open around the clock like a typical acute care facility, but they tend to offer limited services, such as observation care and short stay inpatient admissions.
Hospital Observation Care Can Be Costly For Medicare Patients
http://khn.org/news/observation-care-faq/
http://khn.org/news/hospital-surprise-medicares-observation-care/
Some seniors think Medicare made a mistake. Others are stunned when they find out that being in a hospital even for a couple of days doesn’t always mean they were actually admitted.
Instead, they received observation care, considered by Medicare to be an outpatient service. The observation designation means they can have higher out-of-pocket expenses and fewer Medicare benefits. Yet, a government investigation found that observation patients often have the same health problems as those who are admitted.
Medicare officials are working to finalize a notice that will inform patients that they are receiving observation care. That is required under a federal law that went into effect in August, and hospitals will likely begin using the notices in January. Some states already require that patients be told about their status.
More Medicare beneficiaries are entering hospitals as observation patients every year. The number doubled since 2006 to nearly 1.9 million in 2014, according to figures from the Centers for Medicare & Medicaid Services. At the same time, enrollment in traditional Medicare grew by 5 percent.
Here are some common questions and answers about observation care and the coverage gap that can result. (Seniors enrolled in Medicare Advantage should ask their plans about their observation care rules since they can vary.)
HENRY KOTULA 