Going to the hospital is a frightening and confusing experience. Unfortunately, so is getting your bill after you’ve been discharged, especially if you have Medicare.
That’s because Medicare Part A and Part B treat different types of hospital care differently. Part A provides hospital insurance; it covers care when the hospital admits you as an inpatient. Part B is your medical insurance; it pays for doctor visits and outpatient care.
But what about when your doctor sends you to the hospital for observation care? Is it inpatient (Part A) or outpatient (Part B)? Here’s what you should know about your Medicare benefits and hospital observation.
What is observation care?
“Observation care” is the term used by Medicare for services provided to patients who aren’t sick enough to be admitted but can’t be safely sent home right away. As a patient, it’s hard to tell the difference between observation care and inpatient care. You’re in a hospital room, in a hospital bed, getting tests, nursing care, and even medications. You may even be in the intensive care unit or other specialized floor.
You may spend the night, and perhaps even two, since observation status can last as long as 48 hours. Fewer than 24 hours, however, is the norm.
So what makes your care “observation care?”
The only difference between observation care and inpatient care is that your doctor hasn’t formally admitted you. He hasn’t written orders to make you an inpatient.
There may be many reasons for this. Imagine you are having chest pain and go to the ER. Lab tests don’t show signs of a heart attack, but your EKG is mildly abnormal. Because you have several cardiac risk factors, your doctor sends you to the telemetry unit overnight for monitoring and additional lab work.
Your doctor isn’t comfortable sending you home right away, even though you don’t appear to be having a heart attack. But you don’t meet the standards for admission, because you aren’t acutely ill or actively having a cardiac event.
Or imagine that you have a colonoscopy at your hospital’s outpatient surgery center. Everything goes well, but you have a reaction to the anesthesia and feel groggy and sick to your stomach after the procedure.
Your doctor decides to keep you overnight to make sure there’s no underlying medical problem. You can’t really go home in your current condition, but there’s nothing suggesting a serious complication at the moment.
Observation care helps your doctor determine the safest course of action under the circumstances.
How does Medicare treat observation care?
This is the part that gets confusing. If you’re getting observation care, it’s considered outpatient care under Medicare—even though you’re in the hospital.
Outpatient care is covered by Part B, not Part A. That means you pay your 20% coinsurance or copayment amount under Part B for services that would be covered at 100% (after your deductible) under Part A if you had been formally admitted.
For example, if your doctor orders x-rays or lab tests while you’re under observation care, you’ll pay your coinsurance amount under Part B. If you were admitted, Part A would cover those tests at 100% (again, your deductible applies).
It also means that “maintenance” medications, or prescription drugs you normally take at home, aren’t covered at all, unless you have a Part D Prescription Drug Plan. On the other hand, IV medications and injectable drugs would be covered under Part B.
The Part B coinsurance amounts can actually make observation care more expensive out-of-pocket than an actual admission and Part A deductible if you don’t have the right supplemental coverage.
People with popular Medigap plans like Plan F and Plan G can rest assured that their Medigap plan will cover that 20% coinsurance.
Why does it matter if I’m under observation and not an inpatient?
Other than the financial issues above, there’s another important consideration when it comes to observation care. Observation care doesn’t count toward your hospital stay requirement if your doctor recommends skilled nursing home care.
Part A covers up to 100 days in a skilled nursing facility (SNF), but only if you have a qualifying hospital stay. In order to get SNF benefits, you must be a hospital inpatient for at least three days before you’re transferred to the SNF. Observation days aren’t included in the qualifying-stay requirement.
Let’s look at the chest pain example above. Imagine that during your day of observation care, your doctors discovers you have a blocked artery and you need a stent to open it up. Your doctor admits you for stent surgery, and two days after the procedure, he refers you to an SNF for cardiac rehab.
In this case, you don’t meet the qualifying-stay requirement for Medicare to cover your skilled nursing care. Although you were technically in the hospital for three days, you were only an inpatient for two days; the first one was as an outpatient under observation.
Now Medicare won’t pay for your SNF care, which is quite expensive.
What can I do if I’m getting observation care?
In 2017, Medicare changed the guidelines about observation care. If you’ve been under observation for 24 hours, the hospital must give you a Medicare Outpatient Observation Notice (MOON).
The hospital has to explain why you’re under observation and how observation status affects you financially.
Although you can’t appeal the MOON to Medicare, you can help protect yourself from getting dinged by this issue between hospital observation and Medicare. Follow these steps:
- Talk to your doctor and ask him to admit you as an inpatient.
- If your doctor won’t admit you, ask the hospital for a written notice explaining why they insist on observation status.
- Tell the hospital you want documentation from your doctor showing why admission is medically necessary.
Even though you can’t appeal a MOON, you may appeal your hospital care after the hospital discharges you. You’ll need to talk to your doctor as soon as you’ve received your MOON to get support for your appeal. Make sure your doctor is aware of the potential issue with hospital observation and Medicare.
Get Someone on your Side with Medicare
Hospital observation and Medicare is tricky. Did you know that Boomer Benefits clients can simply call us from the hospital? We’ll walk you through exactly what you need to do to ensure coverage.
Our Client Service Team provides free back-end support for all our Medigap policyholders. Reach out to us today to get someone on our side so that you’ll never be alone with Medicare.