Medicare patients end up owing huge hospital bills if they enter under "observation" status instead

[pnwmom]

Last edited Sat Dec 21, 2019, 02:44 AM - Edit history (1)

of being classified as "admitted."

Some hospitals even put patients scheduled for elective surgery into the category of observation status in order to avoid accepting Medicare Part A for their care.

ON EDIT: It appears to me that this physicians problem was he had Part A and a supplement Medigap policy, but for some reason didn't opt for Medicare Part B. Part B is what covers outpatient procedures and many other important things. I can't imagine why 2 physicians would make that mistake, but I can see why many other people might.

https://www.latimes.com/opinion/story/2019-12-20/medicare-coverage-hospitalization-patient-costs?fbclid=IwAR22W7myfN7oBcugFIDqeqmX90xlySAxRkQrAhDx1gH7goI_9Uj8gJE7nBU

Medicare Part A was designed to provide that “insured right” to hospital care and is available without cost to every 65-year-old person who qualifies for Social Security. Unfortunately, Medicare Part A has a major gap in its coverage. As a senior citizen with Medicare Part A, I fell through that gap. I was diagnosed with prostate cancer, entered the hospital for a radical prostatectomy and spent the following two nights on a general surgical ward. Several weeks later, I was blindsided with a $25,334 bill for my hospitalization. The surgeon’s bill was an additional $4,695 that was not covered by Part A.

Certain the bill was a mistake, I contacted the hospital billing department to remind them that I had Medicare Part A, and that Medicare Part A pays the cost of hospitalization. “That is correct,” the hospital representative replied. But I hadn’t been “admitted,” I was told; I had been hospitalized as an “outpatient” under “observation status.”

Since I hadn’t been formally admitted, those expenses weren’t covered by Medicare Part A, which doesn’t cover observation status. I was stunned and incredulous. General anesthesia, major surgery, two nights on a surgical ward and not admitted? My wife and I are both physicians, but neither of us had any clue that this could be the case.

[dalton99a]

1. Kick

For many elderly patients, observation status carries an even greater financial hazard. Consider the patient who breaks a hip and needs a week of post-hospital care. Medicare Part A will pay for 20 days in a rehabilitation facility, but only if the patient has been admitted for three days. If the patient is admitted for fewer than three days or hospitalized under observation status, the patient, not Medicare, pays the cost of the rehabilitation facility.

Medicare Part A is often supplemented with Medicare Part B or other insurance to help cover outpatient services, doctor’s fees and drug costs. Under Medicare Part B, the patient is typically responsible for 20% of the Medicare approved amount for each service. For a hospitalization, that can be a very significant out-of-pocket cost. (I wasn’t enrolled in Part B, but did have Blue Cross/Blue Shield supplemental insurance, which required me to pay 20% of the allowable hospital and surgical charges.)

In recent years, an increasing percentage of patients are being placed in observations status. Indeed, some hospitals place up to 70% of their patients in this category.

Why would a hospital categorize a patient under observation status? There are two advantages. First, observation status allows the hospital to avoid accusations of improper hospital admissions or billing by Medicare. Second, a hospital can charge a patient who has only Part A coverage and is on observation status more than Medicare will allow if the patient is admitted.

[Karadeniz]

2. Whoa! Thanks, mom, for alerting us to this!

[LonePirate]

3. And people, even some on DU, think we do not need a single payer system.

[Hortensis]

33. Fortunately, "some people" are not our Democratic Party.

[forthemiddle]

36. These are Medicare rules!

So if the single payer option is Medicare For All, these will probably still be the rules!
Hospitals must follow Medicare guidelines, and it’s those guidelines that define what inpatient status is, and what observation means.
It’s Medicare that doesn’t want to pay the inpatient rates, and not the hospitals. Believe me, the hospitals would love the increased revenue that comes with more inpatient admissions.

[LonePirate]

39. I don't think you understand the concept of "single payer"

[forthemiddle]

52. I do understand

I’m just saying that if Medicare For All is a concept built upon Medicare, there will be rules.
We won be able to just get whatever care we want for free.
Right now the Government makes the rules for Medicare, so why do you think those rules would change so drastically? So instead of the patient directly paying the bill, the hospital or the taxpayers would be responsible? I just don’t see it working out so well.
We will just agree to disagree.

[Recursion]

40. Umm.... this is Medicare? (nt)

[ProfessorGAC]

42. Reread The Title Please (nt)

[AJT]

4. When my mom was in the hospital the doctor fought hard to keep my mom

off of observation status until the social worker could get insurance approval for skilled nursing rehab, and discharged us to the rehab facility before the hospital could change her status to observation. I am grateful to good doctors and social workers who work hard within the system to help patients.

[DURHAM D]

5. Why would two doctors enroll in a Medicare Advantage plan

instead of regular Medicare with a supplemental? Pretty sure they could afford better coverage.

As for the observation status issue - I thought everyone had become aware of that issue years ago. Surprised again that two physicians were not aware of that problem. Guess it is good that they are talking about it so more will be aware of hospital tricks.

[PoindexterOglethorpe]

19. Many Advantage plans are every bit as good

as one of the other supplementals.

It's what I have, and so far (6 years now on Medicare) I'm very happy with it.

It looks as if the people in the article had never gotten any supplemental or Advantage plan at all, which is the problem. Unfortunately, like almost all of the health care coverage in this country, these things are complicated and difficult to figure out.

[tblue37]

43. When I retired in May, I had so much trouble figuring out the benefits plans I had to choose

from that I had to get a lawyer friend to help me decipher the impenetrable prose. Also, so many initialisms (i.e., abbreviations consisting of the first letters of a phrase) were used that I couldn't figure out what many of them referred to.

Now, I have 3 degrees and certain resources (like that lawyer friend), so I was probably in a better position to figure stuff out than many, perhaps most, who need to sign up for insurance plans, but I still was terribly confused and not at all sure that what I finally chose was the best plan for me--or that it would cover everything I thought (hoped) it would cover.

[llmart]

61. I disagree with you.

I've had both and depending upon which supplemental plan you choose, if you choose the G plan it is almost always better than an Advantage plan.

[GReedDiamond]

6. I am literally in the process of signing up for Medicare...

...I'm going for the Part B, plus then going to my current health insurer to look into supplemental plans, if I can afford em.

BTW, the current Part B monthly premium is $144.60.

Thanks for posting this, pnwmom.

Edited to change "Madicare" (!) to Medicare.

[Liberal In Texas]

14. Get your Medicare A and B.

The Advantage Plans look good and are all glowing with extras like vision and dental, gym memberships.

Just remember they're private insurance and if you get really ill and need really expensive coverage they might drop you like a hot rock.

I have supplemental through my former employer. Because you need that. The repubs decided a long time ago we had to pay 20%. So you need a supplemental for the rest.

But really. Stay away from the advantage plans. I love my "pure" medicare.

[GReedDiamond]

17. I'm doing the A&B thing, for sure...

"I have supplemental through my former employer. Because you need that."

My former/current employer is me.

Any supplemental will have to also have to be paid by me, if I can afford it, but also if I think I MAY need "it," whatever "it" is.

Probably dental & vision, I suppose.

[JustABozoOnThisBus]

35. Don't forget part D

If you don't think you need it, get the cheapest available. If you put it off, it will cost more when you eventually sign up. And the monthly penalty for delay is permanent.

My "maintenance" drugs are pretty cheap, so I get the lowest-price part D.

I priced out separate dental and vision, but they don't seem to be worth the cost. Glasses are fairly reasonable at Costco, and dental, well that's a bite out of the budget.

[GReedDiamond]

64. OK, thanks...nt

[democrattotheend]

18. Are Medicare Advantage plans allowed to drop sick patients?

I thought the rules prohibited that for such plans, even before Obamacare?

[MineralMan]

46. No. They aren't

There is a lot of misinformation out there. I would try to correct all of it, but I just don't have time to do so. Some people also confuse Medicare with Medicaid, and that complicates the spread of misinformation.

[dalton99a]

47. No

Generally, if you’re eligible for Original Medicare (Part A and Part B), you can’t be denied enrollment into a Medicare Advantage plan. An exception would be if you have end-stage renal disease (ESRD), which is kidney failure requiring dialysis or a kidney transplant. If you have ESRD, you might not be eligible for Medicare Advantage plans except for certain Special Needs Plans.

If a Medicare Advantage plan gave you prior approval for a medical service, it can’t deny you coverage later due to lack of medical necessity.

Your Medicare Advantage plan isn’t allowed to make statements such as “It is our policy to deny coverage for this service” without providing justification.

If you require care that’s considered medically necessary, and your Medicare Advantage plan doesn’t have providers in its network that provide that care, the plan can’t deny you coverage. The plan has to arrange your care from a qualified out-of-network provider.

[PoindexterOglethorpe]

20. I'm on an Advantage Plan and I just love it.

I don't pay anything extra and it covers everything I've needed so far.

Which admittedly isn't much, but still.

[Captain Zero]

25. I know someone with an Advantage plan recent hospitalization $80k

They owed $30.00 and some change at the end. Some Advantage plans are good. There are some independent brokers who can review how you use healthcare and weigh in your risk of hospitalization and help you pick the right Advantage plan. They get paid by the plan somehow or another.

[llmart]

63. "so far."

That's a big risk you take. When you're older, anything can happen and you don't want to be caught off guard when it does. You may want to take that risk and that's your choice, but I didn't want to take that risk the closer I got to 70. I am an extremely healthy person and have led a very healthy lifestyle my entire adult life. I've told this story on here before but for those who haven't heard it...

I was diagnosed with wet macular degeneration last year. I had a year of injections that cost $2400 per injection which does not include the doctor's costs. If I wouldn't have had the supplemental Plan G, which I had signed up for only a year earlier, I would have been S.O.L. Up until then I had an Advantage plan because I had the same attitude that you do - that I had nothing wrong with me and was 69 years old.

I am so glad I decided to pay the extra for the supplemental premiums because.

[yellowdogintexas]

21. pure "original" Medicare also has no networks

so you don't have to deal with out of network issues if you become ill when traveling.

It is not designed to be a profit maker for the insurance companies either.

[Recursion]

41. Sure it does. Not all doctors take Medicare

That's exactly like a network for a private insurer

[democrattotheend]

66. But if they don't, can't you submit the bill to Medicare and get reimbursed?

I thought if a doctor doesn't take Medicare you can still get reimbursed for at least part of it, unlike a private plan that only covers in-network care. Am I wrong about that?

[Recursion]

67. I mean, private insurers do that, too

The problem is getting whatever the doctor did to line up with whatever treatment schedule the insurer, private or Medicare, has. The default answer is going to be to deny the reimbursement unless you have several months to fight the bureaucracy.

[ooky]

7. I'm copying this in my Medicare folder.

More from the article.

What can be done? If you are scheduled to be hospitalized for elective surgery, get a written statement from your surgeon and from the hospital that you will be admitted and not placed under observation status. If you are already hospitalized, and receive notice of observation status, pressure your surgeon to change your status to admitted, although the hospital is not required to agree to it. These strategies might help vigilant patients, but not countless others who will still be left with unaffordable bills.

[RockRaven]

8. I had previously thought observation status was limited to 24 hours...

and if the patient was there longer it was then deemed in-patient by rule. But my knowledge of that is limited. And clearly not congruent with your experience.

[Volaris]

24. I think its 72 hours. If they cant diagnose and discharge you in 3 days,

They will admit you.
I had a friend that had a bad uti n kidney infection.
They moved her from the er to a room, kept her 2 nights to get her stable, GAVE her the antibiotic script she needed, and sent her home before the admit deadline.

[Yonnie3]

9. I was placed in observation at a high cost to me.

This is not a problem unique to Medicare.

I had insurance (not Medicare) from my employer. My surgeon wanted me admitted before the surgery, but the insurance said no, this is an outpatient only procedure. I was placed on observation status for over 48 hours. My co-pay and rates were much higher for observation.

The insurance said in writing it was my doctor's fault for not having me admitted. He told me that he was told by the insurance, no admission, observation only. Because I could prove they lied (recording), I ended up getting 100% paid. I was lucky.

[Deb]

10. Our experience with a total knee replacement

87 year old pt sent home to suffer alone -24 hrs after an uncomplicated "elective" knee replacement "short stay". Wtf?

Angry nurses explained how the new rules are sending shocked and unprepared patients away from necessary care.

My advice is to learn home health care, patient advocacy and DO NOT sign your loved one out until they can be assured a safe place to recuperate.

Medicare as it stands can be horribly cruel.

Thanks for posting this link to share

[Dem2theMax]

11. I have known about this for years.

Both of my parents had multiple reasons to visit the hospital, and you better believe I knew every rule going in. They did not have unlimited income, and we had to count every penny. Every time the medicare book showed up at the beginning of the year, I read every word, and compared it to the year before, so I would know what changed.

Never throw away the book from the last year until you have compared it to the new book for the coming year. Always know what changes are coming.

I went over every medication they were on to make sure it was still covered. And I learned the observation versus admitted rule, and I would stand guard until I heard the word 'admitted.' Actually, any time a doctor or nurse got within 10' of me, I was asking, 'have they been admitted yet?'

Whether you are taking care of a loved one or taking care of yourself, you have to become a patient advocate.

A couple of other suggestions while I'm at it.

Always ask your doctor for sample medications. When samples expire, they have to throw them out. My father was on three different inhalers, and he never would have been able to afford them. The staff at his doctor's office kept him supplied by way of sample medications throughout the entire time he needed them. This was over the course of many years.

Those free samples may keep you out of the donut hole. Another thing is that Costco many times has medications that are cheaper out of pocket than what you would pay with your insurance. Always check Costco medication prices. And make sure that IF you find something that is cheaper at Costco, don't let them use your insurance.

I mentioned the words 'patient advocate.' Our local hospital has patient advocates, people who will step forward and work as a go-between if you are having issues with hospital staff.

My father had broken his hip, and the nurse in charge kept refusing to show me his X-ray so that I could understand what exactly had happened. I finally brought up the words patient advocate, and she got really mad, but that X-ray was in front of me within five minutes.

And one thing I have learned in life is if you have to get someone in charge to help, start at the top. Don't work your way up the food chain. Find out the name of the president of the hospital board, and start there.
You would be amazed at how fast things happen when you complain to the boss.

[Lucid Dreamer]

51. Print and Distribute Wothy

D2M, thank you! This is definitely going into my insurance reference notebook.
Insurance is so hard to understand that some info like this is really valuable.
I will share with others.

[Dem2theMax]

58. You are very welcome.

I took care of my parents for seven years, and I learned things I never wanted to know. My brain was so full of medical stuff, I don't know how I got anything else in there!

[SWBTATTReg]

57. Yes, D2M, thanks so much for the tips. Experience in dealing w/ the 'system' goes a long way.

[Dem2theMax]

59. You are so very welcome as well.

One thing that skipped my mind last night, something I did for my parents and now realize I should do for myself, is to take someone with me when I go to my appointments.

My parents were mentally 100% there, but their hearing wasn't the greatest. I went with them to all of their doctors appointments, never realizing that they pretty much weren't paying attention. And then we would get home and they would turn to me and ask, 'what did the doctor say?' Lol?

Take notes, ask questions, follow up with phone calls or emails if you need to. I am a lot younger than my parents were at the end of their lives, and I still find myself forgetting to ask the doctor questions if I don't have them written down. When I have had serious issues, I have always taken a family member with me for support, and as a second set of ears and eyes.
Goes without saying that this also works in the hospital, not just when you are at a doctors appointment.

As one of my cousin says, 'these aren't the golden years, these are the rusty years!'

[SWBTATTReg]

60. Ha heh ha! The rusty years is good, I'll remember this! I like to bring people along too,

for even though I'm in my early 60s, I'm profoundly hard of hearing so I rely on interpreters/friends around me to make sure that I haven't missed anything (which is easy to do sometimes). I even make them (the hospital staff) place a sign on the outside of the door to the hospital room that I'm profoundly hard of hearing, beware!

And I rely on lip reading too, for the majority of my conversations, so when a nurse or someone comes into the room, turn the light on so I can see your lips, otherwise, it's just mumble jumbo.

Take care and again, thanks so much for all of the tips.

[Dem2theMax]

65. You just gave all of us great advice as well!

So thank you too!

[marybourg]

12. My late DH was admitted "for observation"

several times in his last few years. Medicare paid his bills in the ordinary way and we had no surprises.

[pnwmom]

16. You probably had Part B also. The article isn't clear that that was the problem,

but this physician said he didn't have Part B. According to info I've since found, Part B covers outpatient procedures.

[progree]

26. Here's what the physician said (and it confuses me) ...

(I wasn’t enrolled in Part B, but did have Blue Cross/Blue Shield supplemental insurance, which required me to pay 20% of the allowable hospital and surgical charges.)

So it sounds like his Supplement plan did cover Part B the same as traditional Medicare -- Medicare pays 80% and the patient pays 20%.

Anyway, I was surprised to read this. In Minnesota, one has to enroll in Part A and Part B -- and pay the Part B premiums, in order to buy a Supplement plan. Most types of Supplement plans pay the remaining 20%.

I have a Supplement plan that I pay a monthly premium. In ADDITION, I pay the standard Part B premium via deduction from my Social Security benefits.

Andrew Taylor is a professor of radiology and imaging sciences at Emory University School of Medicine.

Interesting that he's not just a doctor but a professor too. Even odder that he would leave himself open to paying 20% of Part B costs, which for say a $500,000 series of surgeries (not uncommon) would cost him 20% * $500,000 = $100,000. But that he would bother buying a Supplement plan in the first place.

[pnwmom]

27. Supplement plans don't take the place of Part A or Part B.

Supplement plans pick up where Part A (which covers hospital admissions) & B (which covers outpatient care, screenings, and other care) leave off. For example, Supplement plans pay for things like deductibles. But Supplement plans don't pay for the bulk of inpatient or outpatient care.

[progree]

30. That's how I see it too. Certainly the case in Minnesota -- you enroll in A and B, and then go get

a Supplement Plan to cover some/all deductibles and some/all copays. So that's why I say what he says confuses me.

but he did say, "I did have Blue Cross/Blue Shield supplemental insurance, which required me to pay 20% of the allowable hospital and surgical charges."

so I have to assume that whatever the heck he had picked up 80%.

[pnwmom]

32. I think his confusion is what's confusing us. It could be, perhaps, that

his Medigap policy is supposed to pay for all but 20% of the 20% that remains after Part B picks up its 80%.

But if he didn't have Part B, then he's on the hook for the 80%, and his Supplement won't help him with that.

It's amazing that two physicians didn't know to get Part b.

[forthemiddle]

38. If he's still employed he doesn't need to sign up for part B

It’s only after you retire, and no longer covered under your employer plan that you have to start taking Part B.
After you retire you can sign up without penalty.
Medicare Part A has no premium, so you should get that as soon as you’re eligible.

[progree]

48. i thought of that later ... but it sure sounds like he has lousy employer-provided insurance

that leaves him with $30,000 that he has to pay out of pocket.

[marybourg]

49. Yes, he had part B, as well as a Supplement plan that stepped in

when his out of pocket expenses exceeded $2000 for the year, which they did not that year.

[progree]

50. Why do you say he had Part B when he says he didn't, and why $30,000 in bills he has

to pay? That he says he is "stuck with"? Which obviously exceeds $2,000. And not all Supplement plans have a $2000 deductible, mine kicks in on the first dollar.

(I wasn’t enrolled in Part B, but did have Blue Cross/Blue Shield supplemental insurance, which required me to pay 20% of the allowable hospital and surgical charges.)

[marybourg]

54. I was responding to pnwmom#16.

[progree]

55. Sorry, i now see you were talking about your DH, and not the physician in the article.

My bad. I should be more careful.

[marybourg]

56. Easy to get tangled in complex threads. We all do it.

[OhNo-Really]

13. Medicare needs protection. The GOP want all our $$$.

[OhNo-Really]

15. Omg! WTH! Greed needs a spanks!

Medicare for All never excited me. We need health care when we are sick. It’s not rocket science. Don’t tax us and NOT give us basic needs to survive.

[progree]

22. So many people think Medicare is free or free after paying very modest premiums

The observation status racket is one example (of many) of when it is not.

As for the Medicare Advantage (M.A.) plans some people are touting, realize they are privatized Medicare plans that involve networks -- sometimes very narrow networks, that you get shafted if say you have surgery and you were real careful to pick an in-network hospital and physician, but an out of network assistant surgeon steps in to stitch things up, and/or your anesthesiologist and radiologist and the lab are out of network.

The premiums on M.A. plans are mostly quite low and there are usually a lot of extra benefits, the reason being is that they are heavily subsidized, especially by Republican administrations / Congresses, who want to push everyone into privatized Medicare with its network restrictions. When M.A. reaches a critical mass, goodbye traditional Medicare and Medicare Supplement. Also, the Medicare website and emails steer people to choosing M.A. plans. One has to know about, and hunt down Medicare Supplement plans.

I went the Medicare Supplement (Medigap) route so that I don't have to worry about networks. But all Supplement plans are provided by private health insurance companies, so they are not "pure Medicare" unless one believes UnitedHealth, Aetna, etc. etc. are "pure Medicare" (spoiler alert: they are not).

No matter what, if the provider does not accept Medicare assignment, and not all do, then you are responsible for the bill. That's true of traditional Medicare, Medicare Supplement plans, and Medicare Advantage.

Oh, another thing I saw that just isn't true: Part A is not "free". Yes, there is no premium for those who have worked 40 quarters (10 years). But the Part A deductible is $1364 in 2019. And per benefit period, days 61-90 in a hospital costs $341 per day, and days 91-150 you pay $682 per lifetime reserve day.

Fidelity estimates that a 65 year old couple on Medicare will have to pay an average of $250,000 over their lifetimes in medical costs not covered by Medicare.

[Stonepounder]

23. From the FWIW Dept.

My wife and I are both on Medicare Advantage programs. I have been hospitalized 3 times since I turned 65 and my wife twice. I am also on an 'orphan drug' that retails for $95,000/yr. My plan pays about 1/2 of that (and a foundation pays the other half, so my share is $0.00). I have never been billed more than the standard amount quoted in the plan info.

We pay $5.00 for a visit to our Primary Care doctor and $40.00/visit to a specialist. Mist of my other meds are $0.00 and my wife's are $2.50.

I have no complaints.

[pnwmom]

28. Your Medicare Advantage still would have left you in the lurch, if you didn't have

the foundation to pay half your drug cost.

[Stonepounder]

29. Probably. But straight Medicare would have also.

And, I have to admit, I have a great doctor who got the meds approved through my Medicare Advantage and the foundation before he even prescribed them for me. He called me to tell me about the drug and how much it cost, then told me the cost to me was $0.00.

[progree]

31. Actually straight Medicare doesn't cover drug costs except those administered while in the hospital

or doctor's office, neither do any Medicare Supplement plans. People covered in traditional Medicare or Medicare Supplement have to get a Part D drug plan if they want drug coverage (would be wildly foolish not to). Most but not all M.A. plans provide drug coverage, from what I read. Anyway, you did very well .

[YOHABLO]

34. So legislation needs to be passed to correct these greedy bastards. Yeah, good luck with that.

I appreciate the heads up, but bottom line is: stay healthy.

[PuraVidaDreamin]

37. ALWAYS ASK how they plan to admit you and then REFUSE, but stay put!

We entered the system during flu season and a huge bed availability crunch. They were going to admit under 23 hr observation status and because I am a nurse and know this game I told them under no circumstance will we approve being admitted under this category just to wait for a neurology consult due to a new lesion seen on brain scan and maybe some slight new word recall issues found as per strongly recommended by his onc. We will just stay in your ER until the neurologist visits. Wow did the neuro md show up quickly after that.

[KentuckyWoman]

45. THIS - THIS - THIS - THIS - THIS

Yours is about the most important post in this thread.

Thank you

[KentuckyWoman]

44. This happens on regular insurance too. - Always Ask.

I know someone who had a heart attack, ended up in bypass, out in 4 days. Was never ADMITTED. Only observation. When he got the $300 co-pay EOB from Humana he called the insurance company... no... I was admitted. Nope, observation - you owe.

It was a small amount considering the the cost of heart bypass and a value of life. He was in recovery with no energy to haggle. He just paid it and moved on.

A year later his wife had bronchitis from hell and ended up in the ER - really serious trouble breathing. They said they were "just waiting for a room upstairs". Sure enough, they planned to hold her for observation. He said if they could not admit her then we need to find a hospital that will and have her transported. He was told Humana had stipulated the terms of her staying so he called Humana. It took few hours of stress that didn't need to be an a call to Humana from the Pulmonology department, but they got it done.

[dalton99a]

53. +1.

[Demovictory9]

62. omg.. they'll do anything to create a stupid madeup gigantic bill