With Medicare looking to control costs, a controversial billing practice is on the rise. Seniors who spend days at a hospital without actually being admitted can be left with thousands of bills to pay, which are not covered by insurance.
In more and more instances, a person enters a hospital under “observation,” rather than being admitted. This is true even when a person stays multiple nights in a hospital bed, receiving similar care to their neighbors, and for conditions such as a broken pelvis or chest pains. Because this person is under observation, rather than being admitted, Medicare is able to pay hospitals far less for comparable treatment. The trigger occurs because Medicare pays under Part A for someone admitted and Part B for someone under observation. Part B payments have been substantially reduced in recent years. Compounding this issue, Medicare is using a growing army of auditors who use automated screening systems to second-guess admissions.
Medicare beneficiaries feel this hit in 2 main areas: skilled rehab and prescription drugs. If a person is in a hospital for observation, outpatient drugs (like hypertension, asthma, and other daily maintenance drugs) are NOT covered by Medicare Part B and are often excluded from a person’s Medicare Part D plan. This means that the cost of these drugs falls on the beneficiary to pick up the tab. The price of these drugs given by the hospital is steep, $10 for a single cholesterol pill and up to $30 for a brand name blood pressure pill. I have had 2 clients affected by this practice. In both situations, the clients stayed overnight in the hospital but were never admitted. They were told that they were not allowed to use the prescriptions brought in by their spouses, rather they had to receive the medication from the hospital at a drastically higher cost. The final tab: $600 for the first client and over $1,200 for the second. In these situations, neither Medicare A and B (along with a supplement) or their Part D plan picked up these costs.
The second area seniors feel the hit is if a person is transferred from the hospital “for observation only” to a skilled rehab facility. If this occurs, then Medicare A or B do NOT pay for skilled rehab. Because Medicare does not approve it, your supplemental coverage will not pick up the tab either. In this situation, the facility is able to bill the full room rate. Rates in the St. Louis area hover around $200/day. This can really add up if this would occur.
Fortunately, the vast majority of hospital claims are for admissions. If a person is admitted to the hospital, then almost all the expenses are approved by Medicare. If you have supplemental insurance, then they will pick up the 20%. However, as Medicare continues to create ways to reduce costs, beneficiaries should be aware that they may end up picking up the costs.
The bottom line is you should always ask, however obvious, if you are admitted to the hospital or just there for observation.