A recent piece by Amanda Gengler in Money Magazine, which was picked up at the CNNMoney website, illustrates the importance of knowing your status as "inpatient" or "under observation" when you are admitted to a hospital. It is critical to know your status before you are released because it can make a big difference in how your Medicaid benefits work.
The Money Magazine article chronicles how Laraine Sickels, a retired teacher from Whidbey Island, Washington, who broke her pelvis in three places, and then hospitalized, after she fell at outside friend's home. She spent four days and five nights in the hospital, where she was classified as "under observation." She was then released to a nursing home for 10 days of rehabilitation. Laraine's bill for the rehab was $7,027, none of which was picked up by Medicare.
Had Laraine been classified as "inpatient" while she was in the hospital, Medicare would have paid for up to 20 days in a skilled nursing facility. However, because of Laraine's "under observation" status, Medicaid paid $0. The reason Medicare would prefer to see you as under "under observation"
is two-fold: the reimbursements to the hospital are lower than for
"inpatients," and Medicare is off the hook for any post-hospital nursing
home stays. How can you avoid Laraine's fate?
Be sure to confirm your status while you are still in the hospital. If you believe you should be considered "inpatient" rather than "under observation," appeal to the hospital's review board to see about changing your status. This will impact the cost of both post-hospital care and the portion of your hospital stay covered by Medicare. If you are considered "under observation" while you are in the hospital, Medicare treats your stay similarly to how it treats a doctor's office visit. In other words, you will have a 20% co-pay (after a $140 deductible). This can put a nice dent in your wallet if you cannot be reclassified and if you do not have co-insurance.
Medicare coverage presents a growing minefield of problems for seniors, and it pays to know your rights. For more information, check here.