Fighting ‘Observation’ Status
By SUSAN JAFFE
Every year, thousands of Medicare patients who spend time in the hospital for observation but are not officially admitted find they are not eligible for nursing home coverage after discharge.
A Medicare beneficiary must spend three consecutive midnights in the hospital — not counting the day of discharge — as an admitted patient in order to qualify for subsequent nursing-home coverage. If a patient is under observation but not admitted, she will also lose coverage for any medications the hospital provides for pre-existing health problems. Medicare drug plans are not required to reimburse patients for these drug costs.
The over-classification of observation status is an increasingly pervasive problem: the number of seniors entering the hospital for observationincreased 69 percent over five years, to 1.6 million in 2011.
The chance of being admitted varies widely depending on the hospital, the inspector general of the Department of Health and Human Services has found. Admitted and observation patients often have similar symptoms and receive similar care. Six of the top 10 reasons for observation — chest pain, digestive disorders, fainting, nutritional disorders, irregular heartbeat and circulatory problems — are also among the 10 most frequent reasons for a short hospital admission.
Medicare officials have urged hospital patients to find out if they’ve been officially admitted. But suppose the answer is no. Then what do you do?
Medicare doesn’t require hospitals to tell patients if they are merely being observed, which is supposed to last no more than 48 hours to help the doctor decide if someone is sick enough to be admitted. (Starting on Jan. 19, however, New York State will require hospitals to provide oral and written notification to patients within 24 hours of putting them on observation status. Penalties range as much as $5,000 per violation. )
To increase the likelihood of being formally admitted, “get yourself in the door before midnight,” advised Dr. Ann Sheehy, division head of hospital medicine at the University of Wisconsin Hospital in Madison, Wisc. A new Medicare regulation — the so-called “pumpkin rule” — requires doctors to admit people they anticipate staying for longer than two midnights, but to list those expected to stay for less time as observation patients.
Although the rule applies now, Medicare officials won’t enforce it until April 1, having already pushed the deadline back. The American Medical Association and the American Hospital Association have called the pumpkin rule “impossible” to comply with and have urged that enforcement be delayed again until October.
“It doesn’t make any sense,” said Dr. Sheehy, who studied how the rule would have affected admissions at her hospital over an 18-month period and published the results in JAMA Internal Medicine. “Some patients will be admitted because they came in at the right time of day, not because they have more complicated medical problems.”
The two-midnight rule doesn’t change Medicare’s three-midnight rule, the one limiting post-hospital nursing home coverage. Officials at the federal Centers for Medicare and Medicaid Services declined comment for this story because of pending litigation seeking to eliminate observation status.
If you or a family member land in the hospital as an observation patient and think you should be admitted, it’s better to act sooner than later.
“I would talk to anyone who would listen to me,” said Terry Berthelot, a senior attorney at the Center for Medicare Advocacy, which offers a free self-help packet for observation patients. “Make as much noise as you can, because it’s much easier to change your status while you’re still in the hospital than to go through Medicare’s appeals process later.”
Ms. Berthelot suggests asking your regular physician to speak with the doctor treating you in the hospital about why you need to be admitted, based on your medical condition and risk factors.
“It’s got to be a medical argument,” said Ms. Berthelot. “You can’t say, ‘Mom will need rehab after this,’ or ‘We can’t take her home because no one can stay with her.’”
If that doesn’t work, sometimes a strongly worded letter or call from a lawyer describing the patient’s medical needs can be effective.
In some cases, help from a professional can make a difference. Shari Polur, an elder-law attorney in Louisville, Ky., recently hired a geriatric care manager to persuade a local hospital to admit her client. Since admission status can change from one day to the next, the manager, who is also a registered nurse, called the hospital every morning to make sure the patient was still officially admitted until she could be transferred to a nursing home.
If the situation isn’t resolved while you’re in the hospital and you require follow-up care at a nursing home, you’ll have to pay the bill of often thousands of dollars up front. At that point, Ms. Berthelot suggests, you should file what amounts to a special doubled-barreled appeal with Medicare.
It’s not for the faint of heart: the process is long and arduous, and it requires beneficiaries to first receive and pay for the care — often an expensive proposition — before seeking reimbursement.
And the legal arguments can be tangled. The Medicare appeals processtypically addresses disputes over whether certain treatments or services rendered should have been covered. Observation patients have actually received hospital coverage and services a doctor says is medically necessary — so they don’t really have anything to appeal, said Marc Hartstein, director of Medicare’s hospital and ambulatory policy group, at a recent briefing in Washington.
“My limited understanding of this is that the patient cannot appeal a decision not to order or not to do something,” he said.
But observation patients may claim that they received treatment usually provided to admitted patients only in a hospital. Therefore, the hospital incorrectly billed Medicare for an outpatient service instead of for inpatient services. The patient should have been admitted and therefore qualifies for nursing home coverage.
“It’s absolutely confusing as heck,” said Michael Sgobbo, an elder law attorney in Charleston, S.C., who recently won an appeal on behalf of a 98-year-old woman who will be reclassified as an admitted patient. That means Medicare will pay her nursing home bill of nearly $10,000.
Lawyers at the Center for Medicare Advocacy recommend fighting observation care on two fronts.
First, follow the appeal instructions in the Medicare summary notice, a quarterly statement of services. Circle the charges on the statement from the hospital and explain that these items were inappropriately billed under Medicare’s Part B as outpatient services. They should have been billed under Medicare’s Part A for hospital services, because the patient received treatment that could only have been provided in a hospital. Mail the statement within 120 days (from the date on the statement) to the address provided for appeals.
Second, after challenging the hospital’s observation designation, file a separate appeal to seek reimbursement for the nursing home charges, said Ms. Berthelot. To begin, ask the nursing home to bill Medicare. You should receive a Medicare summary notice indicating that it did not pay the nursing home charges because the patient didn’t have the required three-day hospital stay. Circle those charges, and explain that the beneficiary was hospitalized for three days and received an inpatient level of care. Then send it within 120 days to the address provided for appeals.
Be prepared to dig in. If either appeal is denied, you must appeal again to the next level, following the instructions in the denial letters.
“Both appeals can take at least a year and are fraught with difficulty,” said Ms. Berthelot. “The reality is that most people can’t get through and those who do, get lucky.”
Some observation patients appeal and never get decisions, warned Diane Paulson, senior attorney at Greater Boston Legal Services. Some of her clients’ cases were dismissed because they were not admitted to the hospital — the very point they were challenging.
“You can’t appeal if you don’t have a denial,” she said. When that happens, the case falls into “a black hole.”
But the chances of winning improve as you continue to appeal, as Nancy and George Renshaw, of Bozrah, Conn., discovered. After spending nearly four years going through the process, a Medicare judge decided last February that Mr. Renshaw’s father should have been admitted to the hospital instead of classified as an observation patient. Medicare finally paid his nursing home bill, and in November the Renshaws received a refund of $4,410.
“I was shocked,” said Ms. Renshaw. “I never expected to see a penny of it.”
