Another Medicare Hidden Trap

Howard Lipset of www.thecfo.wordpress.com discusses how the way hospitals are coding patients is affecting Medicare coverage.This is a summary of a major article published in this month’s AARP Bulletin.

The article discusses a woman who fractured her spine, spent 5 days in the hospital, wearing an ID bracelet, eating hospital food and receiving nursing care but when she was transferred to a rehab facility she learned that Medicare was not going to cover her rehab because the hospital had never formally admitted her,  but had classified her as an outpatient under observation.

Medicare will pick up 100% of the first 20 days of rehab but only if the patient has spent three full days in a hospital as an admitted patient.    And hospitals are increasingly classifying more patients (up by 34%) as under observation.

According to Medicare rules, the hospital makes the classification decision.   But the hospital may be doing it to protect themselves against new policies that penalize  hospitals  for unnecessary admissions and frequent re-admissions of the same patient.  (HL Note:  Is this starting to sound like the panel that will decide who receives medical treatment and how much?)

Two years ago Medicare held a session at which 2,200 hospital administrators , physicians and patient advocates discussed the topic of Observation Status.  Almost everyone who spoke felt the practice was harmful and should be discontinued.  But nothing got done, so the Center for Medicare Advocacy filed a class action law suit against the US Health and Human Services Commission.

Not only can a patient not admitted lose 20 days full rehab coverage but their original Medicare coverage is no longer under Part A (hospital insurance) but Part B (doctor’s and outpatient care) which can mean higher out of pocket costs for someone who thought they were covered in full

And to make matters worse, the hospital is not required to advise the patient of their status, when it can change on a daily basis.  Rather than concentrate on Fraud, Medicare seems pre-disposed to attack the patient with policies that seem to have significant unintended consequences.

The American Medical Association told Medicare that it supports abolishing the three day rule.

But Medicare officials shamefully are taking no action except to defend the class action.

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