Doctors and hospitals are often hesitant to formally admit Medicare patients into a hospital. This is because, if they are later found to have done so inappropriately, Medicare will not reimburse them for the costs.
Instead of formally admitting patients, many doctors keep the patients in the hospital under observation. The distinction in status makes no difference to the patients at the time. They will receive the same treatments. However, it makes a big difference if a Medicare patient is later admitted to a nursing home for treatment and rehabilitation.
Under such circumstances, Medicare will not cover the nursing home stay unless the patient was formally admitted into a hospital for at least three days. This leaves many patients without insurance coverage for their nursing home care and they are required to pay for their stays.
Congress has moved to help alleviate this problem as the New York Times reports in “New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage.”
Under the new law Medicare patients who have been in a hospital under observation for 24 hours must be given notification about their status and what that can mean for subsequent Medicare reimbursement. This should give patients the opportunity to speak with their doctors and request that they be formally admitted to the hospital.
Some members of Congress are also seeking to fix the problem completely and allow time spent in a hospital under observation to count the same as time spent formally admitted to a hospital as the same for reimbursement purposes.
Reference: New York Times (Aug. 6, 2016) “New Medicare Law to Notify Patients of Loophole in Nursing Home Coverage.”