Shift in hospital admission policy can have costly implications for patients

By Elliot Raphaelson, Tribune Media Services,

The Savings Game

Posted 05/08/2012 at 7:00 pm EST

If you find yourself in a hospital for more than a few hours, make sure you find out if you have been admitted for inpatient care or if you are merely considered an outpatient under what is called "observation care."

If you haven't been admitted to the hospital, the costs you may have to pay out of pocket for medical services and drugs could be considerable. You could also be denied Medicare coverage for follow-up nursing care.

Patients getting emergency department services, observation services, outpatient surgery, lab tests or X-rays, but for whom the doctor hasn't written an order of admission, are considered outpatients even if they spend the night. Even if you stay in the hospital for a few days, don't assume you have been admitted. Ask about your status!

Why are hospitals doing this? In November 2010, the American Hospital Association warned that changes in policy by the federal Centers for Medicare and Medicaid Services "are causing hospitals to place patients in observation status for more than 48 hours instead of admitting them." As a result, observation claims have increased by more than 46 percent since 2006. According to Kaiser Health News, observation stays longer than 24 hours increased more than 300 percent from 2006 to 2010.

The National Senior Citizens Law Center and the Center for Medicare Advocacy filed a class-action lawsuit last November on behalf of seven individual patients, seeking to end the practice of putting Medicare patients in a hospital without formal admission. The plaintiffs claim this practice "interferes with their benefits because, as non-admittees, they can't satisfy their Medicare three-day inpatient hospital stay requirement."

When a patient is not formally admitted, Medicare will not pay for drugs prescribed for chronic conditions such as diabetes. If Medicare won't pay, neither will a patient's supplementary insurance. Moreover, Medicare has no control over the amount that a hospital can charge for drugs. Hospitals are not required to tell a patient that he has not been formally admitted, or that he will be responsible for paying any non-covered Medicare expenses. Medicare recommends that patients should remain under observation for no more than 24 to 48 hours, after which they should be admitted. However, this is a recommendation, not a requirement.

The most unpleasant surprise for non-admitted patients is the cost of drugs. Susan Jaffe of Kaiser Health News recently documented examples of patients charged much more for common drugs than they would have paid at a local pharmacy. A patient in Boca Raton, Fla., for instance, was charged $71 for a blood pressure pill for which her neighborhood pharmacy charges 16 cents.

Patients who have Medicare Part D will find that the drugs prescribed in the hospital will not necessarily be covered under their policy. Patients may bring their own medications, but the hospital is under no obligation to allow their use.

A patient can contact his insurance company to ask for help in appealing a hospital bill. Jaffe reported that a Medicare Advantage patient appealed the hospital's decision to disallow insurance from covering her hospital drugs. Her insurer requires its hospitals "to notify a member before delivering a non-covered service." Since the hospital did not obtain the patient's written consent, the hospital couldn't bill the patient.

Naturally, an emergency patient isn't thinking about hospital status. However, being an inpatient can mean significant savings to you. So you should ask your doctor to see that you are admitted. In addition, do not hesitate to ask your insurer for assistance in appeals if you believe that the bill you received is incorrect.

It is best to be prepared before a medical situation arises. I urge you to consult Medicare's pamphlet on observation care, which can be found online at http://www.medicare.gov/publications/pubs/pdf/11435.pdf. For further information, you may call Medicare at 1-800-MEDICARE (800-633-4227) or e-mail extendedobservation@cms.hhs.gov.