AARP backs proposal to ensure 'observation
status' hospital stays don’t lead to higher costs
by Dena Bunis, AARP, March 15, 2019
Federal lawmakers
introduced bills this week that would close a Medicare loophole by helping to
protect seniors against high out-of-pocket costs for care after being in the
hospital. AARP said it strongly supports the bipartisan measures.
Under current Medicare
policy, if a beneficiary who has been in the hospital needs to go to a skilled
nursing facility for more care, Medicare will pay for that care only if the
patient has spent at least three days in the hospital. But many Medicare
patients who go to the hospital are classified under what Medicare calls
observation status, meaning that they are considered outpatients, not
inpatients in the hospital, even if they remain in the hospital for days.
Because they are
considered outpatients, they don’t qualify for Medicare to pay for their care
in a skilled nursing facility and they have to pay out of pocket. In addition,
these patients are subject to Medicare Part B rules for outpatients and so are
responsible for 20 percent of the bills for their hospital care. That 20
percent can be more than they would pay if they were admitted as a regular
patient and classified under Medicare Part A, which covers inpatient hospital
services.
The bills introduced
in the U.S. House of Representatives and Senate would allow the time patients
spend in the hospital under observation status to be counted toward the
three-day hospital stay Medicare requires before it will pay for care in a
skilled nursing facility.
“Unfortunately, the
financial impact for Medicare beneficiaries who spend time in observation can
be burdensome and significant,” David Certner, AARP’s legislative counsel and
legislative policy director, said in letters of support to the authors of the
measures. Sens. Sherrod Brown (D-Ohio), Susan Collins (R-Maine), Sheldon
Whitehouse (D-R.I.) and Shelly Moore Capito (R-W.Va.) and Reps. Joe Courtney
(D-Conn.) and Glenn Thompson (R-Pa.) introduced the measures.
“These beneficiaries
may be faced with paying thousands of dollars in surprise medical bills for the
full cost of their skilled nursing facility care,” Certner said, and in some
cases, they may forgo getting the follow-up care they need because of the cost.
Federal Medicare officials have said that the number of people being treated
under observation status and the length of observation stays have been
increasing.
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