Your hospital status—whether you're an inpatient or an outpatient—affects how much you pay for hospital services, and may also affect whether Medicare will cover care you get in a skilled nursing facility following a hospital stay.
You're an inpatient starting when you're formally admitted to the 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 room services, observation services, outpatient surgery, lab tests, or 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 in the hospital.
The Two-Midnight Rule
CMS adopted the Two-Midnight rule for admissions beginning on or after October 1, 2013.
In general, the Two-Midnight rule stated that:
Inpatient admissions will generally be payable under Part A if the admitting practitioner expected the patient to require a hospital stay that crossed two midnights and the medical record supports that reasonable expectation.
Observation Status
Observation services are hospital outpatient services you get while your doctor decides whether to admit you as an inpatient or discharge you; and could span several overnight stays in the hospital. This is often a complex medical decision based on your doctor’s judgment and your need for medically necessary hospital care that is expected to last at least 2 or more midnights.
Why it Matters
Under Part A of Medicare, all services related to an inpatient hospital stay are completely covered under the Medicare Part A deductible. ($1260 in 2015)
If a patient is in need of post-acute care, like at a nursing home, Part A will also cover the first 20 days at a $0 cost share – following a 3 day stay as an inpatient in a hospital (Click here to read more about Medicare’s coverage of nursing home stays in last week’s blog.)
Observation stays, covered under Part B, may include several different services; such as emergency room, labs, x-rays and tests. Under Part B, a beneficiary will be responsible for 20% of the cost of EACH service.
While no single outpatient service copay will be more than the $1260 inpatient hospital deductible, the total copayments for all services can easily add up to over that. Also, adding to that bill, could be the non-coverage of any medication you are given under observation status.
Up until this past August, many people didn’t even know they were not an inpatient in the hospital until they began receiving bills for outpatient services several weeks later.
A Recent Law in Transparency
In August of 2015, President Obama signed into law ‘the Notice of Observation Treatment and Implication for Care Eligibility Act’, requiring hospitals to provide written notification to Medicare beneficiaries within 24 hours after receiving observation care. The notification will detail the:
· Denial of admission;
· Potential financial implications; and
· Reasons for denial of admission
Medicare beneficiaries have an increasingly greater role in understanding and managing their own health care. Be sure that when you or a loved one is taken the hospital that you understand what level of care you are receiving. Not questioning the doctors about your admittance status can be a costly mistake.
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