By Adria Gross
Learn more about Adria on NerdWallet’s Ask an Advisor
Imagine you go to the emergency room with chest pains, and the doctor on duty sends you to the ICU for overnight observation. By the next morning, the pains have stopped and you’re sent home … only to receive a staggering bill stating that your stay in the ICU was not covered as “hospitalization” by Medicare Part A. Only the doctor’s services were covered, under Part B.
“Admitted to the hospital” does not always mean what people think it means, and this has led to confusion, great upset and huge hospital bills for some. It stems from Medicare’s “two-midnight” and “three-midnight” rules.
In order to be covered by Medicare Part A (hospitalization and medication), a person must stay in a hospital for two or more nights as an admitted patient on an inpatient basis. The three-night inpatient hospital rule is required for Medicare to agree to cover a subsequent stay in a rehabilitation or skilled nursing home facility.
A patient may be under the impression that he or she was admitted and treated on an inpatient basis, when in fact the treatment or procedure was performed on an outpatient basis, or the patient was kept under observation as an outpatient. In those cases, only doctors’ services and outpatient services are covered by Medicare Part B, with associated deductibles and copays. Further, if a Medicare patient leaves the hospital and is transferred to a rehab or skilled nursing home, the care in that facility will not be covered by Medicare Part A unless the patient has first met the three-day inpatient stay requirement. This adds greatly to unexpected health care expenses.
Coverage for inpatient or outpatient procedures
Currently, the hospital informs a patient that he or she is being admitted for surgery or a procedure. This is where the problem starts for many. What the patient may not know, and may not be clearly told until it’s too late, is that they were not admitted as an inpatient, but as an outpatient (under observation).
This situation is not only confusing and upsetting; it has major ramifications for Medicare coverage. As an outpatient, the patient must pay for:
- Hospital room and board.
- Rehabilitation/skilled nursing fees if he or she goes to a rehab facility after leaving the hospital. Rehabilitation daily fees often range between $400 and $800 a day, not including additional fees for physical therapy, speech therapy and/or occupational therapy.
The Medicare website states:
“You’re an inpatient starting when you’re formally admitted to a hospital with a doctor’s order. The day before you’re discharged is your last inpatient day.
“You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, X-rays, or any other hospital services, and the doctor hasn’t written an order to admit you to a hospital as an inpatient. In these cases, you’re an outpatient even if you spend the night at the hospital.
“Note: Observation services are hospital outpatient services given to help the doctor decide if the patient needs to be admitted as an inpatient or can be discharged. Observation services may be given in the emergency department or another area of the hospital.
“The decision for inpatient hospital admission is a complex medical decision based on your doctor’s judgment and your need for medically necessary hospital care. An inpatient admission is generally appropriate when you’re expected to need 2 or more midnights of medically necessary hospital care, but your doctor must order such admission and the hospital must formally admit you in order for you to become an inpatient.”
Moving quickly is crucial
In a recent three-day period, two different cases related to this issue were directed to MedWise Insurance Advocacy. In the first case, the patient was still in the hospital and was able to have the hospital change his status from “admitted outpatient, under observation” to “admitted inpatient.” This averted a great financial burden.
In the second case, it was too late to request an alteration. Prior to hospitalization, the patient was informed he was going to be admitted. By the time he realized he had been admitted as an outpatient, he had been discharged from the hospital and sent to a rehabilitation facility for five days. He was now being required to pay the full rehab bill before being released. Since this client was already out of the hospital, it was impossible to revise the hospital status of “outpatient admitted” to “inpatient admitted.”
If a patient is not covered for Part A and does not have a supplement for Medicare, they will be covered for Part B (outpatient) at only 80% of the 100% allowed rate. Many patients on a limited budget cannot afford such astronomical and surprising fees.
What you can do
This lack of transparency on the part of hospitals is unsettling, to say the least. What can be done about it?
Hospitals must put clear communication with patients about their admission status and Medicare coverage at the top of any treatment plan. Patients and their families must be aware of the potential for confusion about how they are being admitted—“inpatient admittance” or “outpatient admittance”—and ask questions of their physicians or hospitals either before or upon being admitted to the hospital. Find out how the hospital plans to categorize your stay, and whether subsequent sub-acute care will be covered and if the three-night minimum inpatient stay is being met.
It is difficult enough having to go through medical procedures or surgeries; there is no reason to compound the situation by discovering that Medicare won’t cover hospital stays or rehabilitative treatment because of inpatient vs. outpatient status.