“Under Observation”…Two Words Costing Medicare Patients Thousands

**Reader Alert:  This week, I have received several emails about an email blast on the NBC Nightly News report called “Two words costing Medicare patients thousands”.  This news story is about how your hospital bill is being coded and what you should know to protect yourself against having to pay financially more when you or a loved one leaves the hospital. This is a real situation and not a bogus email.  When you or a loved one are in the hospital are you “under observation” or “inpatient” status which is important to know.   Let me explain the difference to keep my readers from having to pay more when you or a loved one have a hospital stay.


What is “Under Observation” status?

              You are put in the hospital (with Original Medicare); you are assigned either “inpatient” status or “under observation” status.  “You’re assigned inpatient status if you have severe problems that require highly technical skilled care.  You’re assigned “under observation status if you’re not sick enough to require inpatient admission, but are too sick to get your care at your doctor’s office”, says Elizabeth Davis from about.com-health insurance April 20, 2013 online article.  “Your doctor or doctors can observe you in the hospital and make you an inpatient if you become sicker, or let you go home if you get better”, said Ms. Davis in the article.

Medicare has a giant book of criteria that must be met for you to qualify for “inpatient” status.  Staying in the hospital overnight does not always mean you are an “inpatient”.  You may be classified as “under observation” or outpatient status which falls under Medicare Part B.  Most of the outpatient and doctor services under Medicare Part B are 20% of the Medicare-approved amount for outpatient and doctor services after paying the Part B deductible.

How do you know that you have been assigned “Under Observation” or “Inpatient” status?

The only way to know if you are “under observation: or “inpatient” status is to ask your doctor or hospital case manager.  There are certain guidelines to determine what status you or your loved one qualifies.

Observation patients are classified as outpatient that falls under Medicare Part B and not Medicare Part A, which is Hospital or Inpatient hospital stay.  With Medicare Part A, the deductible is a set amount and Medicare Part B costs more because it is a straight 20% of the Medicare approved amount.

Why should I be concerned if I am “Under Observation” or “Inpatient” status?

            If you or your loved one has “Under Observation” status and have not reached their 3 days in the hospital as “inpatient” or formally admitted with a doctor’s order as written on page 33 of the 2014 Medicare & You handbook with the 4th day discharged, then you will pay 100% of the skilled nursing or rehab bill, if, you are in need of that care..

How can I appeal for “Inpatient” status or should I settle for “Under Observation”?

Ask what specific guidelines were used to decide that you or a family member should be in “Under Observation” status rather than “Inpatient” status.  Ask what treatments, test results, or symptoms would have qualified you for “Inpatient” status. Ask to speak to someone who can estimate what your out of pocket costs would be.

The Medicare patient that NBC Nightly News was reporting about owed over $28,000 to a rehab facility because she was classified as “Under Observation” when she was moved to a rehab facility after falling and breaking her leg.  This is a real situation that has affected over 600,000 nationwide; those were not eligible for a rehab facility and had to pay 100% out of pocket.

Next week, I will continue about “under observation” and how it affects Part D prescriptions.

Confused about Medicare” Workshops for 2014 are starting.  Contact Toni if you would like a workshop for your church, organization or a company lunch and learn.

Toni King, author of the new Medicare Survival Guide®, which is a simple guide that puts Medicare in “people” terms, is on sale at www.tonisays.com  Email questions or to schedule a “Confused about Medicare Workshop” to www.tonisays.com/ask-toni or call 832/519-TONI (8664).

About the Author

Toni KingToni King is a recognized subject matter expert and a passionate advocate for those who are overwhelmed by Medicare rules and requirements. She is a published author (The Medicare Survival Guide), a workshop presenter (Confused About Medicare Workshops) and writes weekly articles for 14 area newspapers. Toni also offers one-on-one consulting services for those who need help sorting through the confusion of the enrollment process and choosing benefits.View all posts by Toni King →

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