Hospitalized but under “observation status”? Seniors beware

A growing number of seniors who think they’ve been hospitalized are finding that they weren’t.

The problem isn’t memory loss, confusion or dementia. Instead, seniors on Medicare who did in fact spend multiple nights in the hospital are learning later on that they weren’t formally admitted. Instead, they had “observation status” – a Medicare classification that can cost seniors thousands of extra dollars if they need post-hospital nursing care.

Medicare covers the first 100 days of care in skilled nursing facilities, but only for patients who were first formally admitted to a hospital for three consecutive days.

But federal data shows that the number of Medicare patients classified as under observation has jumped sharply in recent years. The problem stems from a well-intentioned effort by Medicare to control costs through a program that audits hospitals for possible overpayments, which began during the Bush Administration.

When that program identifies improper admissions, hospitals must refund all the Medicare payments it received, and that has spurred many to be more cautious about admissions they think could be challenged. Hospitals receive lower reimbursements for observation status patients – they are covered under the Part B outpatient program, rather than Part A, hospitalization. But at least they know they’ll get something.

Learn more about how observation status can cost thousands of dollars for unsuspecting seniors and their families, and how to guard against the problem. Download a free self-help packet from the Center for Medicare Advocacy.