Medicare Rules Can Cost Seniors

Montpelier — Hospitals are increasingly placing elderly patients on “observation status,” which means that even if they spend several days in a hospital they’re still considered an outpatient.

Medicare beneficiaries may not know what their patient status is, or what ramifications that status has on the services the program will cover, advocates said.

Medicare rules requiring seniors to receive three days of inpatient treatment prior to paying for follow-up care in a nursing home has left many on the hook for thousands in medical bills. The average cost for a month of skilled nursing care is $8,400 per month, according to the state Economic Services Division.

Seniors may go into a skilled nursing facility for rehabilitation following a hospital visit without realizing that Medicare may not cover those services. Most Medicare beneficiaries have supplemental coverage, either by purchasing more comprehensive Medicare coverage, purchasing wrap coverage through a commercial insurer or because they also qualify for Medicaid. But their supplemental coverage may not cover the rehab services either.

“They’re having to use their savings to pay a hospital bill,” said Jackie Majoros, Vermont’s long-term care ombudsman — a Legal Aid project aimed at protecting people who live in nursing homes, residential care and assisted living facilities .

There were 117,000 Vermonters on Medicare in 2012, and, due to the state’s aging population, that number is growing.

“Because we only hear about problems when people take the proactive step of calling, its hard to tell how often this is happening,” said Rachel Selig who works for Legal Aid on Medicare and Medicaid issues.

Hospitals began placing more Medicare patients in observation status because third-party auditors for the Centers for Medicaid and Medicare Services (CMS) were increasingly scrutinizing short hospitals stays as an area of wasteful spending in the program.

If an inpatient admission is later determined by CMS auditors to not be medically necessary, the hospital can lose its Medicare reimbursement for that stay, whereas services hospitals provide to patients in observation status can yield a partial reimbursement even if the stay is later determined not be medically necessary.Hospital officials in Vermont said they would like to see the policy changed, and said they recognize it can be costly for patients.

“Clinical judgment about patients care comes first with us,” said Mike Noble, a spokesman for Fletcher Allen Health Care. “But we also have to be mindful of these rules and we have to have enough reimbursement to be able to keep serving patients.”

Even if a doctor thought a patient would benefit from skilled nursing care or other rehabilitative services, if they admitted a patient for three days, and CMS auditors later determined that stay wasn’t medically necessary, Medicare wouldn’t cover the rehab, said Cheyenne Holland, CFO for Central Vermont Medical Center.

Last year, CMS issued a new rule meant to give hospitals more guidance around when they should admit a patient or hold them for observation.

The rule directs doctors to admit patients they believe will be in the hospital for two midnights or longer, and those expected to be at the hospital for a shorter stay should be placed in observation status.

In addition, the federal government placed a moratorium on the penalties assessed to hospitals when they classify a patient’s stay improperly.

Congress is also considering legislation that would treat days under observation as inpatient days for purposes of the three-day limit to qualify for skilled nursing or rehab benefits through Medicare.

The legislation is a good step, Selig said, but it does not address the higher out-of-pocket costs Medicare beneficiaries pay when they’re placed on observation status.

Patient status and its implications can be confusing and Majoros said hospitals could be doing more to help Medicare beneficiaries understand their situation.

Hospitals have no legal obligation to tell patients how their hospital stay is being classified, but Noble and Holland said their hospitals try to share that information and its ramifications to the best of their ability.

“We’re working very hard to develop a clear plan to communicate with patients about their status while they’re here,” Noble said, but the CMS rules are in flux and a patient’s situation can be very complex because their status can change throughout a visit.