What You Need to Know About “Outpatient” Observation Status

December 20, 2016
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Picture this: You have fallen ill and are put into a hospital room, where you receive services and medicine ordered by doctors and hospital staff members. You have Medicare, so you are under the assumption that you will not be facing an expensive bill for your hospital care. However, you have not been admitted to the hospital and are receiving observation care instead. Medicare classifies observation care as an outpatient service, even if the patient stays overnight, so it is more likely that you will have higher costs for hospital care than if you had been admitted.


According to the Center for Medicare Advocacy (CMA), costs like the coinsurance Medicare charges for outpatient services (usually 20 percent) that may include, but are not limited to, emergency services, observation services, outpatient surgery, lab tests, and X-rays, preventative and screening services as well as the cost of hospital prescriptions and medical supplies. If the patient needs rehabilitation in a nursing home after they leave the hospital, the costs can be even higher. Medicare coverage will only extend to subsequent rehabilitation care in the nursing home if the patient spends three (3) consecutive days in the hospital as an admitted patient and time spent in observation care does not apply to this time frame, according to the CMA. As Medicare has no limit on outpatient services, the combined costs of services and treatment can add up quickly.


In 2014, nearly 1.9 million patients received observation care, up 103 percent since 2006. Despite the fact that “outpatient” status affects how Medicare covers the patient’s care, it does not affect where the patient receives the care or what kind of treatment he or she is provided. This subjects the patient to large hospital bills and, for those who don’t have Medicare Part B, they would be responsible for the entire cost of the hospitalization.


Complaints about the costs related to observation care prompted Congress to pass the Notice Act. This legislation does not change the patient’s financial responsibilities, but it does require hospitals to inform patients that they are in observation care after 24 hours and what the costs might be.


Individuals may find it difficult to fight observation status; however, there are proactive measures that they can do to take action. According to the CMA, a patient should ask the hospital’s doctor to “admit themselves as an inpatient” based on the needed care, tests and treatments. The individual should also contact their regular physician and ask them to contact the hospital’s doctor to support his or her request.


If the patient’s rehabilitation care is denied, the individual should consult the legal guidance of an elder care lawyer to file an appeal with Medicare. If the individual was not informed that he or she was in “outpatient” observation status after 24 hours, he or she should file a complaint with his or her state’s health department.


If you or a loved one requires the guidance of a Long Island elder law attorney, the experienced and compassionate lawyers at Tully Law, PC are available to help. With a Long Island office conveniently located in Melville, our firm is available to help meet the needs of Nassau and Suffolk County elders and their loved ones. For more information about our services or to schedule a consultation, call (631) 424-2800.

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