Hospital admission status can cost seniors

In a health-care emergency it’s difficult to think about finances. But overlooking this detail could devastate your finances.

The Centers for Medicare and Medicaid Services has a three-day rule that says Medicare will not pay for care in a skilled nursing facility after a patient is discharged from a hospital unless the patient was admitted to the hospital as an inpatient for at least three days. Observation days do not count toward this three-day hospital stay.

Here’s where it gets confusing. There’s a big difference between “admission” and “observation.”

Even if you or an aging loved one is moved out of the basic emergency room to a private room, the hospital may not have actually admitted the patient. In fact, it’s growing more likely that the hospital will put the patient on “observation” status.

The reasons for this trend are pretty obvious. In 2012, Medicare started financially penalizing hospitals for “readmissions” — something that happens when a patient is sent home too early or has a relapse of some sort. The penalties are meant to be an incentive to good care. In October 2019, those penalties increased sharply for readmission of Medicare patients within a month of their discharge.

Medicare expects to collect over $563 million in penalties this year, and last year 83% of hospitals had to pay some readmission penalty.

Clearly the hospitals must deal with the expensive issue of readmission, and the easiest way to do that is not to admit patients in the first place. That explains the growing number of patients who are placed on observation status when they arrive.

If a patient does not meet the minimum requirement of having a threenight stay in the hospital as an admitted patient, Medicare will not pay for its promised 100 days of critical inpatient nursing care. This issue doesn’t just apply to emergency admissions. Medicare also pays for up to 100 days of inpatient rehabilitation services after three overnight stays as an admitted patient.

Don’t let the emergency room administrator move your aging mom out of the ER until she is officially admitted. Insist upon it. The administrator will assure you that your mom will get the same care as if she were admitted. That’s true — but unless the papers read “admitted,” you should object.

You’re entitled to fight the observation status. And you can do that by refusing to sign the papers they will bring to you before they move the patient out of the emergency room. That will make them pay attention — and you will likely win this battle, especially if an IV is involved or an MRI or more sophisticated care is needed. But seniors who are alone and hurting often don’t know their rights.

Every ER has a direct connection to the financial services office and a case administrator. So if someone says he or she can’t change you or a loved one’s status, you can talk directly to hospital administrators. Don’t let them force or threaten or promise that it will be done the next day.

Every day is valuable — unless you are prepared to pay a fortune for home health care or pay privately for a rehabilitation facility.

Medical costs are enough of a burden for seniors, even with the benefits of Medicare. Knowing your coverage, your rights and your hospital admission status can save you a fortune. And that’s The Savage Truth. Terry Savage is a registered investment adviser.