Medicare Hospital Observation Status

By: Debra K. Schuster

Enrolling in Medicare allows older adults to take advantage of many services and benefits. Some of the rules surrounding those benefits can be challenging to understand, including those governing stays in nursing facilities.

Medicare pays for skilled rehabilitation and nursing care in a skilled nursing facility (SNF) if a Medicare beneficiary is admitted as a hospital inpatient for three consecutive days (through three midnights).

This benefit may cover up to 100 days of skilled therapy or nursing care so long as a Medicare beneficiary meets the hospitalization requirement, is admitted to an SNF within 30 days of discharge from a hospital, and has a physician’s order for such care that is related to the diagnosis that led to the hospitalization.

Medicare allows hospitals to place Medicare beneficiaries on “observation status” for up to 48 hours if the hospital believes Medicare will not pay for inpatient care.

The financial consequences of not being admitted as an inpatient can be devastating. A patient may be in a hospital bed on an inpatient floor, with all indicators of being admitted as a patient, including a hospital identification wristband, treatment from physicians and nurses, meals, medication, and all other hospital services one would ordinarily receive as a hospital patient. On the day of discharge, the patient is often told to go to a facility for rehabilitation or skilled nursing care, but because they were not actually admitted as an inpatient, Medicare will not pay for this care or the services provided in the hospital if the Medicare beneficiary does not have Medicare Part B coverage.

If a hospital does not admit a Medicare beneficiary as an inpatient within 36 hours, the hospital is required to provide the individual or his/her legal representative with a written notice, called a Medicare Outpatient Observation Notice, advising the individual that he/she is on observation status and that Medicare may not pay for the services they receive in the hospital and for skilled rehabilitation and nursing care in an SNF.

There are legitimate circumstances for which Medicare will not pay for inpatient admission, such as custodial care (personal, non-medical care), so observation status gives physicians the time needed to evaluate whether a patient meets the Medicare inpatient admission criteria. Therefore, a Medicare beneficiary or his/her legal representative may ask the physician to contact the hospital, if the physician feels it is appropriate, and request that the individual be admitted as inpatient. Additionally, when a Medicare beneficiary initially comes to the hospital, they (or their legal representative) should ask the admission and/or social services departments whether inpatient admission is feasible under the circumstances. Unfortunately, there is no way to appeal a hospital’s decision to place an individual on observation status, so timely advocacy is essential.

The attorneys at Paule, Camazine and Blumenthal, P.C. can assist individuals and families with Medicare issues such as this and many other health and elder law issues.

Disclaimer

Debra Schuster

Debra Schuster

St. Louis elder law attorney Debra K. Schuster focuses on helping social workers, geriatric and care managers, financial planners, and others who help with elder care issues. In addition, Ms. Schuster facilitates conversations about elder law issues for families faced with making difficult decisions for their loved ones.