Why Hospital Admittance Classification Could Impact Medicare Coverage
May 11, 2021 | Todd Lewison
If you or a loved one is admitted to the hospital, whether for a routine procedure or an unexpected illness, it can be a stressful experience. Of the many details to keep track of, the patient’s hospital admittance status probably isn’t the most important. But the classification a patient is given for their hospital stay can affect Medicare coverage, which is why it’s important to understand the options and implications.
According to a legal brief filed by AARP, hospitals are increasingly likely to admit Medicare patients under an “observational” status. This, the brief explains, is because hospitals are worried about being financially penalized for admitting too many Medicare patients. However, there can be significant financial consequences when a hospital stay is classified as observational without the patient’s knowledge or understanding of what that means.
How Hospital Admittance Classification Affects Medicare Coverage
Under Medicare rules, when a patient goes from the hospital to a skilled nursing facility or rehabilitation center for additional care, Medicare will only pay for those services if the patient has spent three days in the hospital before the transfer. The patient must be admitted during those three days. If a patient is given an observation status, they are technically an outpatient. Then, under Medicare Part B rules, they are responsible for 20 percent of the bills for that hospital stay. This could run in the hundreds or even thousands.
This applies even to patients who are not transferred to a different facility. Any Medicare patient who is given an observation status – and therefore is technically an outpatient – is required under Medicare Part B to pay 20 percent of the bill for that stay.
Alternatively, patients who are admitted as inpatients only have to meet their deductible. Medicare Part A covers the remaining costs for the hospital stay.
Note: Those on a Medicare Advantage Plan (MAPD) generally do not have to follow these guidelines for coverage. Contact us to learn more.
A 2019 law requires hospitals to provide information to patients about hospital admittance status. However, patients who are older, who are ill, or who have language barriers may have a difficult time understanding the details. In 2020, a federal court ruled that Medicare beneficiaries have the right to appeal their hospital admittance status in order to receive coverage. However, the federal government has appealed that ruling, so that could change.
The Centers for Medicare and Medicaid Services has temporarily suspended this rule, to some extent, due to the COVID-19 pandemic. However, it is unclear how long the rule will remain suspended. It’s important to be aware of the effects of different hospital admittance classifications in the event that you or a loved one is hospitalized in the future.
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