Senior citizens and their families should be aware of a little-known policy and practice by hospitals, which is called “observation status.” Failure to understand this issue can result in very expensive medical bills not covered by insurance.
After a hospital stay, many patients require therapy or “rehabilitation” in a skilled nursing facility. Medicare (or the senior’s insurance) will pay up to 100 days for this rehabilitation and therapy (days 21 to 100 with a co-pay), but only if the patient stayed a minimum of three days in the hospital first. If insurance does not pay, then skilled nursing can be between $5,000 to $30,000 per month.
However, many hospitals, including our local hospitals, are engaging in a practice called “observation status.” This means that the patient believes they are a patient of the hospital… they wear a hospital gown, are in a hospital room, and may even stay in the hospital for several weeks. However, they are not considered an admitted “patient” by the hospital, but rather, on “observation status” only. Many times the individual has no idea that they are not actually classified as a patient.
This is a big problem. People are discharged to skilled nursing facilities after a hospital stay, incur thousands of dollars of care and therapy, and later find out their insurance will not pay the bill. Why? Because the person must have been a patient in the hospital for three days minimum, and “observation status” does not count toward these required three days.
Unfortunately, we see this “observation status” classification becoming more commonplace. Based on our experience, it appears that hospitals are not giving individuals notice of non-coverage, or notice of the “observation status.” A current lawsuit, Bagnall v. Sebelius, was filed on November 3, 2011 which claims that people are being harmed by the fast-growing “observation status” policy and practice. This lawsuit alleges that the use of observation status violates the law. However, it may take years for this case to resolve. In the meantime, “observation status” continues to be a problem in our community, as well as communities across the nation. Be aware of the problem – ask questions, get answers in writing, and be proactive!
For more information, please call the Law Office of Jane M. McNamara at 661-287-3260. Our websites are www.janemcnamara.com and www.VAbenefits4seniors.com.