Am I in or am I out? Many patients are finding after spending days in a hospital that they were never really there. It can be a costly discovery, particularly if they’re covered by Medicare.
Although they’re “in” the hospital, often in a room that looks exactly the same as one down the hall, being monitored and treated by doctors and nurses, millions have discovered they’re ghost patients. They’re inside the walls of the hospital for observation. But they’re not really admitted.
Lots of patients are kept “for observation” at hospitals when it’s not immediately clear what’s wrong with them — a stomach ache, chest pains or fainting can be symptoms of a lot of different problems, some urgent, some routine. But most health insurers, including Medicare, typically suggest time spent in hospital limbo last no more than a day or two.
The difficulty is that payment for services differs depending on whether you’re admitted to a hospital, depending on insurance coverage. This is particularly true under coverage provided by Medicare for hospital care versus outpatient care.
People under observation are considered outpatients, and must pay a bigger share of costs for tests, drugs and other items than if they’d been admitted. Perhaps most important, Medicare will only pay for nursing home care after a patient spends at least three consecutive inpatient days admitted to a hospital.
Medicare officials recently tried to reduce confusion about the practice with a rule that’s come to be known as the “two midnight rule.” It works like this: if a physician certifies that a patient is expected to stay for a period lasting “two midnights” or longer to identify and treat their medical problem, they’re an inpatient; less than that, they’re an outpatient.
Medicare, hospital and patient advocacy groups gathered at a recent Capitol Hill forum on the observation trend earlier this month. Their comments indicate the rules change isn’t making anyone very happy. Enforcement has been delayed until next year as hospitals try to set up new procedures.
Even Medicare is confused. A report from the inspector general with the Department of Health and Human Services released last summer said in 2012 Medicare paid $255 million for nursing home care for patients that should not have been covered due to the three-day stay rule. Another $12 million in claims were denied.
An AARP study of Medicare observation stays released in October noted that the number of patients in this category doubled to more than1.5 million a year between 2001 and 2009, with only about a quarter of them ultimately admitted to the hospital. More than 12 percent were in observation status for 48 hours or longer before being sent home or to another facility.
“The magnitude of these changes raises concern that observation is becoming a substitute for inpatient admission,” the AARP report said, adding that the trend may be affecting the quality of care.
Most experts say there’s health benefit from putting a patient in observation status. More patients are put in observation mostly for financial and administrative reasons, most observers say.
Doctors and hospitals are being cautious due to fear of audits and financial penalties if patients are needlessly admitted; the practice helps keep space open in emergency rooms and more beds occupied “upstairs.” About a third of all hospitals have wards or floors dedicated to observation. And the practice helps institutions avoid new Medicare penalties for patients who are re-admitted to a hospital for the same problem within a month.
With the two-midnight rule on hold until at least March and lawsuits filed on the issue by both the American Hospital Association and a host of Medicare patient advocates, the confusion is unlikely to ease soon.
One possible solution might be for Congress to change the rules so that anyone who’s hospitalized at least three days – whether inpatient or out – can get nursing home care covered. There’s at least one bill with about 130 backers in the House and Senate that would do this, but the outlook is uncertain.
Even that change “continues to leave Medicare patients and families exposed to high and unexpected costs associated with what seems like an ordinary hospital stay,” said Carol Levine, an advocate with the United Hospital Fund in New York City, adding that a bigger overhaul of Medicare hospital coverage is needed.
— Contact Scripps health and science correspondent Lee Bowman at BowmanL@shns.com