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Medicare Blog | Medicare News | Medicare Information

Hospitalized under observation status, a costly secret

Posted by Guadalupe Cantu on Fri, Jan 31, 2014 @ 01:03 PM

Medicare Supplements More and more seniors are finding out that Medicare will not cover their stay at the hospital because they were not officially admitted. Instead, they received ‘observation’ care, which is an outpatient service not covered under Medicare.

Medicare covers the first 100 days of care for skilled nursing, only for patients who were formally admitted into a hospital for three consecutive days.

This is a growing trend that is very costly for senior Medicare recipients. Recent federal data shows a sharp jump in patients receiving ‘observation’ care. In 2011, 1.4 million patients were being labeled under ‘observation,’ compared to the 920,000 in 2006. The trend is apparent with patients who have longer hospital stays lasting more than 48 hours. Observation stays rose from 27,600 in 2006 to 112,000 in 2011.

The increased problem appears to be due to a Medicare effort to control costs through a program that audits hospitals for possible overpayments. Once the program identifies improper errors, the hospital must comply with Medicare and must refund all the Medicare payments it received. This has made hospitals more cautious about the admission process and what they think could be challenged; as well, it allows a hospital to receive a lower reimbursement for observation status patients.

Since 2011, a long time legal battle has prompted a class action lawsuit from the non-profit Center for Medicare Advocacy (Bagnall v. Sebelius), to force the government to change its policy. It has also encouraged other advocacy groups, healthcare providers, and lawmakers the need to change the law.

Momentum to change the law is also (apparent) in Congress, as Senator Sherrod Brown (D-Ohio), is proposing as part of hospital admission process, a legislation that would force Medicare to count all overnight hospital stays; the House of Representatives a similar legislation.

By April Medicare is set to apply a new rule that would require doctors to admit people as patients they expect to stay more than two midnights, and to classify anyone else under observation status. However, there is great resistance to delay the new law from a large coalition of healthcare providers and advocacy groups whom argue that it will be very difficult to comply with the new rule. They argue it would arbitrarily reward patients who happen to arrive at the hospital at certain times of day and that it does not alter the three-day rule.

Traditional Medicare recipients can be affected by the observation status and are the most vulnerable to the rule. Unlike (patients) that uses Medicare Advantage programs, they are subject to their insurance provider’s plans.

Medicare Advantage plans provide comprehensive medical coverage, higher-quality care, better services, and additional benefits, reports The Coalition for Medicare Choices, a national grassroots organization who sole purpose is to protect and improve Medicare Advantage.

Traditional Medicaid program covers 100 percent of the first 20 days of a skilled nursing facility, only when the patient meets Medicare's three-day formal admission hospital rule. Patients are responsible for $152 daily co-pays for the remaining 80 days. Otherwise, patients pay full out-of-pocket cost for the skilled nursing facility if they left the hospital under observation status.

In New York, the daily cost for a skilled private room averaged $230 in 2013, with cost going up to $344 in New York state, according to a survey conducted by Genworth Financial. The survey data illustrates that an observation status patient would pay $34,440 for a 100-day stay in a skilled facility compared to the $12,160 out-of-pocket cost a formally admitted patient; that is $22,280 more.

Hospitals are not required by law to notify patients of their hospital status in many states. The only way seniors may be able to protect themselves from observation status is to constantly ask or have a family member or legal guardian, request to be formally admitted into a hospital.

Medicare Supplements





Please give us your feedback!
Question: Should the government do more to protect seniors by passing a law that makes hospital disclose the patient’s admission status?

Source: Reuters & NBC Nightly News
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Tags: Medicare Advantage, Health Insurance, Medicare, Law, Health Care, Hospital observation status, Observation Status, Officially Admitted

Industry coalition defends Medigap plans

Posted by Guadalupe Cantu on Fri, Nov 01, 2013 @ 02:18 PM

Medicare Supplements The Coalition to Promote Choice for Seniors has asked Republican leaders on the House Ways and Means and the House Energy and Commerce committees to protect the Medicare supplement program.

The coalition which is made up Industry insurers, producers and includes organizations as the National Association of Health Underwriters, the National Association of Insurance and Financial Advisors, America's Health Insurance Plans and the Blue Cross and Blue Shield Association groups.

Moreover, the CPCS has defended the Medigap program and has written to Republican leaders in response to allegations that some Medigap plans drive up Medicare program costs.

The Medicare Supplement program helps pay the out-of-pocket expenses not covered by traditional Medicare Part A and Part B, like medical care, co-payment, coinsurance and deductible requirements.

Medicare Supplement insurers are required to offer standardized packages of benefits by law. Supporters for the program say that seniors who purchase the higher quality plans are the ones that know they are more likely to require the need for more expensive care, minimizing their out-of-pocket costs. Critics argue seniors may be encouraged to get unnecessary care, adding little or no value, due to the ease of access to the richer Medigap products.

In October 21st in a letter to Congress, the coalition cautioned “that higher levels of cost sharing would result in delayed treatments that could increase future Medicare costs and result in adverse health outcomes for vulnerable beneficiaries.” They said that restricting the plan options could lead to millions of beneficiaries, who already spend 15% of their income on health related issues, to financial hardship.

Under the existing federal and state law, Medigap contracts are “guaranteed renewable.” Any changes to the law “could result in significant complaints and litigation by changing existing insurance contracts”.

Debates over restricting access to richer Medigap products and imposing surtax on some or all its policyholders are fiercely debated by leaders of the House.


Please give us your feedback!
Question: Will altering the Medigap plan hurt financially vulnerable seniors who are already beneficiaries, or will it discourage seniors from seeking unnecessary care and help the plan save money on the long run?

 

Source: LifeHealthPro

Additional Updates:
    • 2014 Medicare Advantage and Part D Certifications are now available! Learn More

Tags: Beneficiaries, Medicare, Law, Medicare Supplement, Medigap, med supp

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