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CMS proposes new rules addressing observation status

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Say you fall down at home and break some bones.  Don’t do it but just say that you do.  Naturally, you go to the hospital, right?  And after a four day stint at the hospital, because no one at home can care for you and your broken pelvis and broken elbow, you head off to the nursing home for a nearly three month stint to recover.  You’d think that Medicare would cover your little excursion but when you get home you find a bill for $19,000 from the nursing home.  This is a real life example that you can read about here.  What’s going on you might ask. 

What’s going on is that the hospital called the first two days observation status and so under Medicare guidelines you’re on the hook for the bill.  We talk about this often on this site so why dredge it up again?  The Centers for Medicare and Medicaid Services (CMS) are proposing new rules to address observation status.  (Caution:  Don’t print.  The document is 339 pages long.)  The proposed changes would have an assumption that any time a physician documents that a patient must spend more than two midnights in the hospital the patient would be automatically considered a hospital inpatient (and therefore covered by Medicare).  This is especially important if between the time you go to the hospital and the time you go home you spend a little vacation at the local nursing home.  By contrast, the new rules would consider anyone who spends less than two midnights in the hospital to be under observation unless the services provided by the hospital matched an item on Medicare’s inpatient-only list or in “exceptional cases such as beneficiary death or transfer.”

According to the Center for Medicare Advocacy, the changes significantly change the current practice but “might, in fact, make matters worse.”  Between 2006 and 2011, patients in observation status for more than 48 hours nearly tripled but the total number of observation stays of any duration increased by nearly 50 percent during the same time frame and like this article mentions, statutes are supposedly already in place.  Many advocates are arguing that the three day stay requirement as an inpatient before Medicare kicks in for the nursing home stay is the hang-up.

The other problem is that the appeals process is fraught with issues.  The number one issue appears to be that before anyone can file a lawsuit, they must go through a five step appeals process but many patients who call to complain find they aren’t even told how to go about appealing.  At the moment, a case has gone to court that the government claims shouldn’t even be in court because the five step appeals process hasn’t played out.  It’s a bit like playing a game when only the other side has the rule book.

Here’s my suggestion, for what it’s worth.  The government is a huge ship that takes a very long time to change direction: time that many people simply don’t have.  Financial issues create a tremendous amount of stress and stress hurts people physically and psychologically.  If you enjoy banging your head against a wall, go ahead and take on the hospital system and the government but if you enjoy being a bit more sane, make it a point to call a geriatric manager (you can find one by calling (1-877-76-Aging) the moment you get sent off to the hospital and let that person help guide you through the process.  And, if you do have the unfortunate experience of receiving a bill for tens of thousands of dollars worth of services you thought were covered, pick up the phone and call an elder law attorney.  They are precisely the sort of people who enjoy banging their heads against government walls.

Other articles you may find of interest:

New legislation introduced to count observation stays toward Medicare inpatient requirements

Suit Contests Hospitals’ Practice of Not Admitting Patients Prior to Nursing Home Transfer


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