Avoid going into hospital as observational

If you have the misfortune to stay overnight in a hospital bed, make sure you’re admitted to the hospital.

A month ago that statement would have made no sense to me. How could you occupy a hospital bed without being admitted?

In the last few weeks my mother spent three postsurgery nights in Presence St. Joseph Medical Center in Joliet without being formally admitted as an inpatient. Although she was on a floor with admitted patients, the nurses cared for her like any other patient, and she received physical therapy, her status was “observation” (outpatient). That allowed Medicare to deny coverage for her subsequent 23 days in a skilled nursing facility.

Observation status isn’t rare, my family has learned. According to a Department of Health and Human Services Office of Inspector General report, more than 600,000 hospital stays of at least three days were called observation in 2016, and the number is rising. No matter how long observation patients are hospitalized, they don’t meet Medicare’s requirement of three inpatient midnights to have subsequent stays in a skilled nursing home covered. In addition, since observation status falls under Medicare Part B (outpatient care), medications administered in the hospital might not be covered.

Medicare pays hospitals about one-third less for an observation stay than for an admission. Although hospitals reportedly dislike the observation classification, they also have incentives to use it. Medicare penalizes hospitals that its auditors believe wrongly admitted patients. If observation patients return to the hospital within 30 days, the hospital avoids Medicare’s readmission penalty because they were “outpatients” the first time.

My mother’s saga began when she fell and broke three bones in her upper left arm. Surgery was risky for a 92-year-old, but the orthopedic surgeon said that without it she would live in pain the rest of her life.

Arm surgery doesn’t normally require an overnight stay afterward, but Mom’s cardiologist wanted her to stay one night to be safe. By the next day, the hospitalist (her own internist wasn’t allowed to see her), a rehab physician, and physical therapists said she couldn’t be released because she was shaky on her feet. Her weak legs were as much a concern as her arm.

It was then that we heard the term observation status from a social worker. She, and every other hospital representative we’ve since spoken with, said Medicare guidelines made a change to admitted status impossible. Mom’s own doctors think otherwise. It’s hard to know whom to believe. We may file an appeal with Medicare.

Mom ended up spending three days in the hospital getting physical therapy, mostly to help her walk, and then the hospital practitioners recommended she go to a nursing home for rehabilitation. We took their advice.

Mom and Dad haven’t received a final bill from the rehab facility, but judging from the one month’s fee they paid upfront, we figure it will be more than $4,500. They are fortunate to have savings, but I wonder how many people have thousands of dollars available for unexpected medical expenses. I’m not even talking about uninsured people, but those who, like Mom and Dad, have health insurance. They are paying out-of-pocket for expenses that Medicare would have covered had they been properly admitted to the hospital.

Yes, properly is subjective, but I can’t accept that observation status is right. I’m going to inform the Center for Medicare Advocacy about my mother’s case so that she can be added to their growing list of observation horror stories and included in their class action lawsuit. There is also legislation before Congress, the Improving Access to Medicare Coverage Act of 2019, that says patients under observation status at a hospital for at least three days satisfy Medicare’s requirement for skilled nursing coverage.

For those anticipating a hospital stay soon, the CMA advises getting your doctor’s help to be admitted as an inpatient and asking to see the paperwork to confirm admission. If you notice the word “observation,” ask to speak to someone who will formally admit you, and don’t be afraid to argue. Recheck your status every day because sometimes the hospital reverses it.



The number of hate groups has surged to record highs under Trump’s presidency, growing 30 percent, following three years of consecutive decline near the end of the Obama administration.
— Southern Poverty Law Conference

Counties where Trump held campaign rallies in 2016 reported 226 percent more hate crimes than counties that did not host rallies.
— Analysis by University of North Texas political scientists


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  • This is good to know! Thank you for an excellent and informative post. I hope your Mom is doing better, now.

  • Thank you. My parents are going to be moving into an assisted living apartment near my brother's home. It's a relief to know that they won't be living independently anymore at ages 99 and 92.

  • Sorry to hear about this Marianne. This Medical Insurance they always have a trick up their sleeve, don’t they.

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