Our Healthcare System is Full of Traps for the Unwary, and Needn’t Be: Medicare Observation Status

If you should ever find yourself thinking that you know everything there is to know about a given part of our healthcare system, please, think again.

Think again because, at that very point in time, just when you least expect it and are at your most ultra-hubristic max, you just might find yourself — d’oh! — the subject of one great-big healthcare-system-comeuppance. And if, in spite of this friendly admonition, you nevertheless choose to go forth, plowing on, fully-forward-fast, thinking that you’ve got it down cold and nice ‘n pat, then please picture yourself hanging upside down, one foot in a fully-tightened jungle lasso, slowly twisting and gently bouncing, helpless and vulnerable and incapable of making things right, because you, my friend, just stepped into a healthcare system trap for the unwary.

(Sometimes we must give thanks to lawyers everywhere for coming up with great phrases; I believe this to be one of those phrases and therefore one of those occasions, so thank you lawyers for this wonderful trap for the unwary gem of an encapsulating phrase.)

One of the more amazing traps for the unwary making news these days occurs when a person on Medicare (generally, a U.S. citizen or permanent resident age 65 or older who’s also eligible for Social Security retirement benefits) is in the hospital but not, ya know, in the hospital. And being in the hospital but not, ya know, in the hospital, can change what you might know as that person’s hundred days — yes, for those who’ve been there, I’m talking about that hundred dayschanging it from being a marvel of American ingenuity and care-free, smooth-running healthcare delivery into a nightmare of a financial shellacking and foregone though much-needed healthcare.

Allow me to explain . . .

* * *

For the vast majority of us, our Medicare benefits arrive via two main components. Generally speaking — lay speaking, that is — Medicare Part A kicks in when we’re in the hospital, while Medicare Part B covers us when we’re *not* in the hospital. So Part A covers hospital bills and Part B covers bills for going to the doctor’s office for an appointment, lab tests, etc. etc., etc., but not prescription drugs bills (those are the domain of Medicare Part D — D as in Dog many folks say, to make sure they’re being heard correctly and not mistaken for Part B as in Boy, and while we’re all swept up in the alphabet and animals, I’ll add that all you folks in Kaiser have Medicare Part C as in Cat coverage, aka Medicare Advantage, and that this post is mostly N/A to you and to your Medicare Advantage coverage).

By most measures, Medicare Part A is pretty darn nice coverage; in fact, it’s the thing most folks look most forward to on their otherwise rather numbing and at least slightly depressing 65th birthday, because that birthday marks the point at which a hospital stay for them will be far less likely to lead to their financial ruin (Medicare Part A coverage be thy name, hallelujah, amen).

True, Medicare Part A has its own quirks and its own traps for the unwary (see below . . .), but, hey, when you’re on it, you really have some nice coverage, as in, Go ahead Doc, do your thing, hit me with your best shot, and gimme the best stuff ya got . . . no well drinks for me!

Indeed, the only problem with Medicare Part A is that, to be on it, you have to be sick enough to be in the hospital.

By contrast, Medicare Part B is — let’s call it — decent coverage. It’s not as nice a coverage as Part A because Part B has lots of gaps and co-pays and the like. That’s why many people on Medicare also go out and buy gap coverage aka Medigap insurance, from a private insurance company.

And then there’s the cost part: Part A is free free free for those who are eligible, while Part B costs some money, with 2014 Part B premiums ranging from $104.90 per month for most people, i.e., those with 2012 taxable income below $85k ($170k for a couple) to $335.70 per month for people with substantial incomes, i.e., those with 2012 taxable income above $214k ($428k per couple).

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As you can guess, then, there are many occasions when a person on Medicare really wants to slide on over, to get off of Part B and onto Part A — knocking at the door of the hospital, so to speak, Benjamin Braddock style, pining for his Elaine — when that person actually might fit well enough onto Part B.

Good, caring folks in the healthcare system will help you and your loved ones navigate all this Part A vs. Part B stuff when they can, but you better believe that there are certain slidings-over from Part B to Part A which they will not take a-cotton to, e.g., if you ask your doctor to hospitalize you solely so you can be on Part A when you really would be just as well cared-for at home and would therefore be on Part B, your doctor ain’t gonna do it. But when things are grey (or gray, for that matter, the word itself being gre-ay and all meta and whatnot), many a doctor or physician’s assistant or nurse will help out in any way s/she feels s/he ethically can.

As a bottom line for this part of the analysis, then, the idea is something along these lines: if you’re going to get pretty awfully sick, then you might want to consider getting all the way awfully sick. Don’t pussy-foot around it; get fully there. Embrace the sick!

I say this only half-jokingly.

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Much less of a laughing matter is when you are physically located within the four-plus walls of the hospital, but have not been admitted to the hospital as an inpatient, with these terms being very much terms of art in this context.

So you might be sitting there thinking, Oh good, I’m in the hospital, which at least means that I don’t have to worry about my gappy Medicare Part B coverage and having to deal with my gap coverage insurance company (or, if you’re going without gap coverage, sitting there worrying about how you’ll pay for everything that falls into the gaps).

But you’d be wrong. Unwary, meet trap. Foot, meet jungle lasso.

You’d be wrong because, until you are officially admitted to the hospital (via paperwork and signatures and doctors oh my), you’re in a twighlighty, netherworldy, zombie-ish, purgatory-ish status known as Medicare observation status. And that means you are on Medicare Part B (as in Boy of Boy oh Boy, Part B? Really?) coverage. And whether you are in a bed and whether you spend the night is completely irrelevant; for Medicare purposes you are not in the hospital.

All things being equal, you really, really do not want to be under Medicare observation status. Neither fish nor fowl, neither in nor out, neither all-the-way sick nor all-the-way healthy, you really gotta go one way or the other. And might I suggest doing your best to get admitted as an inpatient? Remember: Part B is gappy and gappy rhymes with . . .

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I am a big fan of Medicare, and I am also a big fan of the Medicare website. For a Big Iron, Big Gov’n’mint website, I give the site a grade of A-minus, and the Medicare program, while far from ideal, has helped hundreds of millions of people, and done so in a way that is far more effective and far less costly than that which our private health insurance companies hath wrought, so I give it a grade of B-plus (yes, as readers of my stuff can surmise, I would’ve been happy to have seen Medicare-for-All pass rather than Obamacare).

But this chunk of language from the website floors me (hyperlink and bold-fonting in original):

Your hospital status—whether you’re an inpatient or an outpatient—affects how much you pay for hospital services (like X-rays, drugs, and lab tests) and may also affect whether Medicare will cover care you get in a skilled nursing facility (SNF).

  • Your inpatient stay begins on the day you’re formally admitted to the hospital with a doctor’s order. That’s your first inpatient day. The day before you’re discharged is your last inpatient day (the day of discharge doesn’t count as an inpatient day.)
  • You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, and the doctor hasn’t written an order to admit you to the hospital as an inpatient. In these cases, you’re an outpatient even if you stay in the hospital overnight in a regular hospital bed.

If you’re in the hospital more than a few hours, you or a family member should always ask your doctor or the hospital staff if you’re an inpatient or an outpatient. Make sure to ask each day during your stay.

You got that? According to the Medicare website, you need to ask, every day and starting at the two- or three-hour mark, whether you or your loved one, apparently quite ensconced within the hospital, is in the hospital for Medicare purposes.

This is not something that most people would think to do, even if they know about this A vs. B, inpatient admittance vs. outpatient observation trap for the unwary. Indeed, having written this piece, if I’m ever in this situation and am functioning, I’m pretty sure that I have a good chance of remembering to ask this question, but I also know, from having been in intense medical situations before (never, thankfully, with me as the patient . . . ), that, in that context, it’s very easy to forget to ask questions that you intend to ask — even questions that you’ve written down ahead of time and made part of your when-talking-to-the-doc checklist!

So putting this ask-everyone-you-see-about-your-inpatient-versus-outpatient-status onus on a person under Medicare observation status or that person’s family seems a bit . . . bass ackward. It’s an important info-loop that is likely to never occur.

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So what does it matter? I mean, if someone has great gap coverage so that Medicare Part B for them is not all that gappy, what is the big deal about being in the hospital in Medicare observation status? After all, in that situation the gap coverage fills in the gaps in Part B, so the relatively gappy nature of Part B is not much different from the inherently not-very-gappy nature of Part A, right? So in this narrow regard there’s not that much difference between Part A and Part B then, right?

Well, no. You really want to be on Part A if at all possible.

And that’s what you want because where this really matters and makes for big-dollar differences is when someone on Medicare gets released from the hospital and needs to go to a Medicare-eligible skilled nursing facility (abbreviated as an SNF, though many people simply go the forced-acronym route and call it a Sniff). In this context, a Sniff operates like a Medicare Part A half-way house for people who aren’t sick enough to be in the hospital, but who, following a Medicare Part A hospitalization, are also not well enough to be at home, usually because they need a lot of ongoing therapy each day to help them gain back as many of their previous baseline abilities as possible.

So picture an elder person who had a stroke or broke a hip or something along those lines, and who received all the proper medical treatments for that health issue but who still needs a whole lot of physical therapy or occupational therapy or speech therapy or etc., etc., etc. to regain/relearn/reacquire some of the capabilities that the health issue took away. That is where Medicare Part A Rehab comes in.

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But guess what? You don’t get Medicare Part A Rehab coverage unless you’ve been on Part A for at least three consecutive days, i.e., unless you were admitted as an inpatient to the hospital and stayed thusly admitted for at least two days following that admittance day (e.g. if you are admitted on a Monday and get out Wednesday, you are one day short) (factoid I learned from dealing with this stuff: the measure of how many Medicare patients a facility has on a given day is often called heads in beds, and is determined by the number of Medicare patients’ heads in the facility’s beds at midnight at the end of that day).

And that means that even a thousand days of being in the hospital under Medicare Part B observation status won’t get you onto Medicare Part A Rehab benefits. It’s a case of:

If less than a 3-day (or more)
Medicare Part A inpatient admitted
hospitalization thou hath dost had,
then no any-day Medicare Part A Rehab
coverage shall ye doth enjoy!

Of course, we can surmise that many (most?) people who need Medicare Part A Rehab spend at least three days in the hospital as an inpatient. But we also know that, from 2006 to 2009, Medicare observation status stays of more than 48 hours tripled from about 28k people to 84k people. Now my guess is that some of those tens of thousands of people probably fell into this trap for the unwary and got hurt, don’t’ch’ya think?

And of course of course, if you find yourself being one of those people needing Sniff-based rehab after a long-ish, non-qualifying, under-observation hospital stay, then you can always pay for your rehab yourself. Nice, right? Except that, in most places, that Sniff will cost you at least $200 a day, and in many it will be $300 or more (do you mind sharing a room?), so prepare yourself for $10k a month in costs. But hey, stop your grousing: breakfast, lunch and dinner are included . . .

So, yea, all things being equal, if you’re on Medicare, then whenever you are in a hospital, you want to be fully admitted, especially if you have something that is going to take some ongoing therapy following your hospitalization.

*  *  *

Now that’s a lot of persnickety detail, eh? So let’s attach all of this to something a lot of Baby Boomers know: the hundred days.

So have you ever heard about an elder person at a Sniff being in their “hundred days”? Many boomers have run into this concept (me, for one), because many of their parents have contended with their hundred days.

Stated in its most elementary way, Medicare Part A Rehab coverage caps out at a hundred days. But, what with the rules about re-sets and re-admissions and the like, and what with the hundred-day period broken into different layers of increasing copays (some of which gap coverage might pay) and other twists and turns, the rules about coverage leave elementary behind pretty fast. So it can be complicated and intimidating and very confusing for all involved (so much so that I’ve even seen the hundred-day period calculated very, very incorrectly!).

Generally, as long as the Powers that Be at the Sniff believe that the patient is making progress, the patient’s Medicare Part A Rehab coverage can least for 100 days. But once the patient plateaus, that’s the end of Part A Medicare Rehab coverage. So it’s buh-bye to Medicare Part A picking up the tab, and that usually means buh-bye to the patient staying at the Sniff.

Now you better believe that, after plateauing and leaving the Sniff, a lot of elder folks still need some sort of ongoing care, and that is where Long Term Care insurance comes in, as well as homecare services (not as expensive as you might fear!), assisted living facilities (pretty much as expensive as you fear, but not as bad as Sniffs!), and for those who can afford it, self-paid Sniff stays and the like — all of which are a topic for some other post.

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So remember: as you or your loved one — up there in years and on Medicare — lie moaning in a hospital after some sort of unhappy health event, be sure to, between moans, ask this of every hospital person who happens by:

Have I been admitted as an inpatient?

And if what you hear back is anything other than an unqualified affirmative answer, then keep asking questions:

When will I be admitted? Who do I have to speak to in order to get admitted? You’re not going to have me sleep here without being admitted, are you!?

Be pushy. Be persistent. Or, better yet, have someone do all that for you.

And if you and all your loved ones are not yet 65 or older, it’s good to practice these questions in the meantime, because, ya know, it’s unnatural to ask these questions at that time, and some day it might behoove you to do so. So take the opportunity to build up your vocal muscle memory and your pushiness and stick-to-it-iveness.

I’m only half-joking.

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Short proviso’y add-on and exhortation:

Yes, I know that, as I sit here, perhaps ensconced at my own hubristic max, writing this piece in my lay-knowledge way and based mostly on my recent experience with my father, I myself might be hanging from the jungle-lasso, having just fallen into a trap for the unwary and written something that is totally wrong. D’oh! So it behooves you to not unquestioningly take my word for any of this. Also, things change. The three-day rule mentioned above might become a two-day rule. Etc.

Which is to say, when it’s your time and you are finding yourself in a situation at all like this, read read read, ask ask ask, bother bother bother, press press press, greasy-wheel-it, greasy-wheel-it, greasy-wheel-it. And if you think you understand how a particular something within the system works, make sure that you are able to have two different people (at least two!) from within the system give you 100% identical answers to your questions about that particular something. In writing is nice . . .



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