Observation Stays & Medicare

[insurehound]

I heard today that some hospitals are coding Medicare readmits as "Observation Stays' in order to help reduce their readmission rates. From my understanding, by doing this, the patient could be on the hook for a lot of money!

Are Hospitals Claiming Inappropriate Observation Stays to Avoid Medicare’s Inpatient Readmission Regulations? | Medicare Fraud 101

"In addition to setting off Medicare fraud alarms, this billing and coding practice has also caught the ire of patient groups. In fact, a class-action lawsuit has been filed against HHS, arguing that the rampant inappropriate use of observation status has illegally denied patients Medicare coverage and burdened them with hospital bills that racked up to hundreds or even thousands of dollars. Notably, patients who are under observation status rather than admitted are covered by Medicare Part B instead of Medicare Part A, which results in patients picking up a larger share of the healthcare tab."

 

[Midlevel]

It has become popular the last couple years. I have had client's have back surgery and they are just under "observation". Therefore, they are stuck with 20% copay on their MAPD and do not get reimbursed from a GTL (or other companies hospital indemnity plan). Becoming more and more common because Medicare does not want them admitted if they can have them out of their in a reasonable amount of time.

I guess you are referring to readmits now that I reread your original post, I haven't ran into that problem yet.

 

[macmarill]

Besides the "observation" status I have seen more outpatient surgery with 48-72hr outpatient stays, which are not an "admission". That as well is billed under part B status. As a former rehab nursing director it is about reducing the liability risk and getting the most for the stay.

 

[bluediamond]

Yep, been happening a couple of years here in Florida and the patient pays more. One of my clients was in the hospital 5 days and billed as outpatient, he was just there for observation.

Had another client recently that his doctor had a prior authorization for an actual hospital admission and while he was undergoing surgery someone within the hospital called the insurance company and told them to change it to outpatient, this insurance company did and his bill was outrageous. He appealed with the Med Advantage plan and won, but he had a letter from his doctor with pre auth number.

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Besides the "observation" status I have seen more outpatient surgery with 48-72hr outpatient stays, which are not an "admission". That as well is billed under part B status. As a former rehab nursing director it is about reducing the liability risk and getting the most for the stay.

Getting the most? I take it you mean money? They should have their contracts pulled from the insurance company.

 

[dcarrfla]

I guess consumers/patients have to be on their toes even more than ever. It's a shame. I'll be sure and get a pre-auth from my own Dr from now on.

Denise

 

[Daytona_Guy]

I heard today that some hospitals are coding Medicare readmits as "Observation Stays' in order to help reduce their readmission rates. From my understanding, by doing this, the patient could be on the hook for a lot of money!

More and more clients are calling to ask about this.. probably from news stories like this:

 

[macmarill]

Happy New Year All!
What I try to do with my clients who insist on MA's as their chosen insurance is inform them on how to talk with their physician. When they go in for their consult with the doctor, they need to ask if they would be staying over night? If the doctor says yes, then the patient can request that it be an "in-patient admission". By telling the doctor that on their insurance there is a big cost difference for them, the doctor then understands that the patient is educated. For the most part it will be coded as an admission if the doctor gives orders for that admission.
Educating clients on how to speak with their doctors really helps.
Great thread.
Marcia

 

[goillini52]

It has become popular the last couple years. I have had client's have back surgery and they are just under "observation". Therefore, they are stuck with 20% copay on their MAPD and do not get reimbursed from a GTL (or other companies hospital indemnity plan). Becoming more and more common because Medicare does not want them admitted if they can have them out of their in a reasonable amount of time.

I guess you are referring to readmits now that I reread your original post, I haven't ran into that problem yet.

I just called GTL and asked them about this and after asking a supervisor, the marketing person said that if "in" the hospital, even though not admitted they'll pay on the Advantage Plus in Illinois. If I call tomorrow and ask another person...I might get a different answer.

 

[Bob_The_Insurance_Guy]

Here is what I tell my clients: being under observation is like not being arrested at the police station. If you're not arrested and you don't have to stay. If you're not admitted, then you don't have to stay. They can observe you in your home.

If you bitch and fight enough they'll admit you.

I tell them that GTL will not pay for an observation night. I'd rather underpromise and over deliver, then make a promise that can't be kept that's out of my control.