Under ‘observation,’ some hospital patients face big bills
In April, Nancy Niemi entered Vidant Medical Center in Greenville, N.C., with cardiac problems. She stayed four nights, at one point receiving a coronary stent.
Then she went home, but felt faint and took several falls. Five days later, her primary care doctor sent her back to the hospital. This time, her stay lasted 39 days while physicians tried various medications to regulate her blood pressure.
Though they eventually succeeded, Niemi, 84, a retired insurance agent, had grown so weak that she could no longer walk.
“They said, ‘She really needs to go to a skilled nursing facility for physical therapy,’” recalled her son Tom Krpata, 63, who’d come from his home in Holliston, Mass., to be with her.
He agreed, but soon learned one of the brutal truths of Medicare policy: Patients can be hospitalized for days, can undergo exams and tests, can receive drugs — without ever officially being admitted to the hospital.
Instead, they’re “under observation,” which means they are outpatients, not inpatients. That can bring financial hardships — including lack of coverage for subsequent nursing home care.
That is why Niemi, on observation status through both hospital stays except for one night, had to pay for rehab herself. “By declaring her an outpatient, they really took away her Medicare benefits,” Krpata said.
Patients can appeal virtually any other claim that Medicare denies. But there is no way to appeal observation status. Even Niemi’s congressman, contacted by her family, could not help.
But a recent ruling in a case that has bounced through the courts since 2011 may be a harbinger of changes to come.
On July 31, a federal judge in Connecticut certified a class in a class-action lawsuit: all Medicare recipients who have been hospitalized and received observation services as outpatients since Jan. 1, 2009.
That means hundreds of thousands of people, Niemi among them, will be eligible to join the suit against the Centers for Medicare and Medicaid Services, with a trial expected next year.