Defining Age as Sickness

Medicare Observation Status

You've read the stories for years. An elder is hospitalized for a few days – it could be for anything from a broken bone to chest pain, fainting, irregular heartbeat or dozens of other conditions – a common occurrence at hospitals throughout the U.S. every day.

As if an illness needing hospitalization isn't enough trouble, in thousands of cases (an estimated 2 million in 2013) when the patient is released to a nursing home for rehabilitation to build up strength, they find that Medicare does not cover the tens of thousands of dollars of that necessary treatment because they were never “admitted” to the hospital.

Instead, their stay was classified as “observation status” or outpatient and the way the rules read, no admission, no coverage for rehab.

Several readers have emailed me about the January 2014 report about this issue on NBC Nightly News. The correspondent, Kate Snow, does a good job of clearly explaining the issue. Take a look:

To ensure you or a loved one is “admitted” to the hospital is probably not at the top of anyone's agenda during an emergency. And you can be forgiven, I think, for believing you've been “admitted” if you are lying in a hospital room for two or three or more days while doctors and nurses do what they do best.

Challenging an observation classification, as reporter Snow suggests, is arduous and expensive. It requires that the patient have already paid the nursing home bill and the process is as labyrinthine as you would expect it to be.

The New York Times has a good explanation of how to proceed in this story about fighting observation status. It's not for the faint of heart.

A variety of lawsuits – individual and class action – have been slowly working their way through the legal process for several years without result but recently, thanks to such reports as the NBC video above and others, this reprehensible and cruel situation is gaining some traction.

Last Friday, Democratic Senator Sherrod Brown of Ohio introduced a bill, S.569 titled, Improving Access to Medicare Coverage Act of 2013. The text of the bill is here and the introduction reads:

”To amend title XVIII of the Social Security Act to count a period of receipt of outpatient observation services in a hospital toward satisfying the 3-day inpatient hospital requirement for coverage of skilled nursing facility services under Medicare.”

According to Senator Brown's website, the bill would also

”Establish a 90-day appeal period following passage for those that have a qualifying hospital stay and have been denied skilled nursing care after January 1, 2013.”

The bill has 25 co-sponsors – all, as you would imagine, Democrats except for Republican Susan Collins of Maine and the two Independents, Bernie Sanders of Vermont and Angus King of Maine.

Govtrack lists the remaining co-sponsors and has more information including their prognosis that the bill has “0% chance of being enacted.”

Perhaps their pessimism is related to the fact that last March an identical bill, H.R.1179, was introduced in the House by Representative Joe Courtney, Democrat of Connecticut. It was referred to a subcommittee on health and went nowhere.

Among the dozen or so organizations that support this bill is the Center for Medicare Advocacy (CMA) which has created a page to make it easy for us to contact our Congressional representatives and urge them to end the overuse of observational status by supporting this bill.

The CMA page gives you two choices – a basic script to adapt for a personal telephone call to your representatives or submit your Zip Code and they'll supply the letter which, of course, you can edit and send along to your representatives with one click.

If you have any experience with observation status – personal or friend or family – be sure to include that in your phone call or letter.

Maybe Govtrack is right and this bill will die in committee. You can be certain that will happen if none of us speaks up to Congress.

At The Elder Storytelling Place today, Mary Hertslet: My Five Sense on Steroids


Thanks Ronnie. I had in fact NOT "heard these stories for years". Thank you for the link for taking action. My church congregation is heavy on seniors, and some of us are constantly in and out of hospital. I have sent your post to as many as have email. and we'll bring hard copy materials for the rest to the next service, in addition to information for the younger members.

I'd vote for Sherrod Brown for just about anything (including President).

And what you say here is one very good reason.

Medicare observation status---sigh

I just wonder who came up with this clever idea?

This is under the radar trickery ---

Stepping into a hospital is like stepping into a mine field.

Hadn't heard of this before. You've done another good service bringing it to our attention so we can take some positive actions.

Thanks Ronni. This was a very informative post for me.

hmmmmm...just like that co-pay for clinic visits to a hospital connected clinic...makes one paranoid. I think they get a bigger reimbursement for classifying an admission as an observational admission..anyone know the answer to that? Oh yes, and when you are admitted as an inpatient, make sure that you have a 3 day stay - and that is midnight to midnight...that way if you need rehab in a care center it will be covered by medicare..and make sure that you get evaluated the minute you hit that care center...if it goes a few days you will lose your reimbursement..
We should all be attorneys!!

Ugh! Passing this along to my friends and my relatives who are responsible for us on Medicare. Thanks Ronni.

I've heard about this on rare occasion. Certainly not enough that I'm likely to remember it or the details if I ever end up in the hospital. It's frightening to contemplate. Do you have any figures on what percentage of elders run into this every year? It would help me know where to rank it on my mental list of things to worry about.

Please read the story or watch the video for number of incidences per year.

I'd heard of this before and was careful to be sure I was 'admitted' last year. I believed it was hospital policy at work, but now it looks like Medicare is the culprit. Hmmm. I wonder what the full story is.

We had what was probably a near-miss with this while taking care of my mother-in-law who had extreme dementia during the last two years of her life. Only one day during her last months did we need to visit the ER. She had taken a fall and though she initially seemed fine, within a a day or so she was in obvious pain and had blood in her urine. So around mid-morning I took her to the ER for what would turn out to be one of the worst days during that period. Not only were we in an exam room for almost the entire day, with no offer of food or drink, no relief from her anxiety and agitation until I requested some water for her around noon. No one seemed to be concerned about this. Except for a couple of very brief periods when she fell asleep, it took constant physical comforting and reassurance from me to keep her getting off the bed and walking out of the room, or climbing the walls. She was taken for tests around mid-afternoon, and a couple of hours later someone came to take her upstairs. I had not been told about test outcomes, but I assumed that something serious had been found, and followed along. When we got upstairs, she was even more agitated than she had been in the ER. I asked the nurse what she was being admitted for and was told that nothing had been found. I then pointed out that she had been without food and medication all day and could use some antianxiety medication and something to eat very soon. I also suggested that she would probably need to have a sitter with her, to which I was asked if I could stay. By that time, I had already had a sleepless might the night before, and been with her for more than 8 horrible hours in the ER. I had also had to follow her out of the room and redirect her several times and help her to use the toilet. She was leaning when she walked, at about a 45 degree angle and I was afraid she was going to fall any moment. I ended up telling the nurse that no one would be staying, that if nothing had been found, I would take her back home and follow up with her doctor in the morning. I did not know about this Medicare rule at the time, but it seems to me that not only would things probably have gone very badly for her that night, but that she would have ended up with a large bill to add insult to injury. I learned several things that day, not the least of which is what a bad combination dementia and the ER can be.

Thanks Ronnie, for bringing this very important issue to our attention. Going to pass it along to others

I knew only vaguely about this but incorrectly thought that being in for observation was an "admission." Thank you for this.

A couple more issues:

Discharge planners will just send you to the nearest rehab/care facility, often those run by or affiliated with the hospital. Families dealing with an emergency don't have time to research nursing-home ratings (all states have them online), and there are horror stories galore.

If you are taking care of a loved one, don't wait for an emergency to check out the ratings. Have a plan ready for which one you prefer; if you can, visit them. You don't have to accept the discharge planner's choice.

ERs also have changed. Many of them, particularly in for-profit hospitals, basically rent space to doctors who run an independent business. Many patients are indigent, so the ERs will go out of business if they don't run up insured patients' bills. Any time you have to sign a release holding the hospital harmless for ER care, you are in one of those independent outfits trying to make money with as few staffers as possible.

Caveat emptor and all that.

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