Imagine this: You are a Medicare beneficiary (over 65 years of age or disabled), admitted to a Medicare-participating hospital, and you discover that you were not admitted as an inpatient. You are in the hospital, in an acute care hospital bed, in a room that looks, feels and smells like all the other hospital rooms, cared for by hospital staff, but, in reality you are an outpatient or in “observation” status. This scenario is becoming an increasingly common practice and is significantly affecting the financial and health status of Medicare beneficiaries.

There are several financial and wellness consequences associated with outpatient status versus inpatient for a Medicare beneficiary. Beneficiaries in observation status are covered for some services under Medicare Part B but will be billed for services such as prescription drugs that would usually be covered under Medicare Part A during an inpatient hospital stay. Beneficiaries are denied coverage for a subsequent stay in a skilled nursing facility because they do not meet the requirement of being a hospital inpatient for three or more consecutive days. This may result in a beneficiary going home rather than pay the high cost of skilled nursing home care. The overall effect of placing a Medicare beneficiary in
observation status is to shift significant health care costs that should be covered under Medicare Part A from the Medicare program to Medicare beneficiaries.

Reports from around the country reveal that some Medicare beneficiaries who are in observation status remain in hospital beds for multiple days, or even weeks, receiving physician and nursing services, tests, medications, food, and supplies. Medicare’s manuals suggest that a patient may not remain in observation status for more than 24 or 48 hours. Beneficiaries are often not aware of their hospital status (and often too ill to do much about it). To make matters worse, the Federal guidelines regarding appeals of inpatient or outpatient status are unclear. One CMS (Centers for Medicare & Medicaid Services) brochure issued in early 2010 failed to adequately inform Medicare beneficiaries of their
rights to challenge their placement in observation.

Connecticut Congressman Joe Courtney introduced the Improving Access to Medicare Coverage Act of 2011 (H.R. 1543 and S. 818) in October 2011 to put an end to this practice. In November, 2011, the Center for Medicare Advocacy filed a class-action lawsuit in Federal court seeking to end the use of hospital observation status (Bagnall v. Sebelius). The certification as a class-action lawsuit is still pending.

If you or someone you know is placed in hospital observation, the following steps
should be taken:

1. A hospital patient (or their advocate) should question hospital staff if placement
in observation status exceeds 48 hours.

2. An appeal should be filed for placement in observation status that exceeds 48
hours or if Medicare benefits are denied when the patient is discharged to a
skilled nursing facility (and would have qualified for Medicare benefits if they
were a hospital inpatient for three or more days); or,

3. If the Bagnall case (above) is certified as a class action lawsuit, become a
member of the class.

Barry M. Meyers
Steven D. Avery
Elder Law Offices of Meyers & Avery

DISCLAIMER: The content of this newsletter is: for informational purposes only, subject to change by government agencies, should not be relied upon as current, and does not constitute legal advice. Reading this newsletter does not establish an attorney-client relationship.