Tuesday, June 10, 2014

Hospital "Observation" Status - Federal Legislation Update

By:  Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho

Picture yourself in the hospital - you are 65 years old.  You have been there for a week receiving care and treatment.  You are then discharged to a skilled nursing or rehabilitation facility.  Next you find out you were not “admitted” to the hospital, but instead were there just for “observation.”  What difference does it make?  You received the same level of care.  The difference is huge.  If you are there for “observation”, Medicare (the health insurance for people over age 65) and your supplemental health insurance will not pay for your care in the hospital and in the facility.  It is a crazy rule that cheats Medicare participants and costs them breathtaking out-of-pocket expenses that can range from $6,000 to $45,000.

I am a member of the National Academy of Elder Law Attorneys, Inc. (NAELA).  They are working with other groups to change the law.  The following is a recent article provided by NAELA.  Unfortunately it appears that changing the law to eliminate the difference between “admitted” and “observation” is unlikely in this legislative session.

“The Improving Access to Medicare Coverage Act (H.R. 1179/S. 569) would change the admission standard to count outpatient “observation” time spent in a hospital toward the three-day inpatient hospital stay required before Medicare pays for subsequent skilled nursing facility or rehabilitation services.  Support for this legislation is growing.  The bill has garnered the support of 144 cosponsors in the House and 25 cosponsors in the Senate.  The next big hurdle is to find a health-related legislative vehicle to use to pass it through Congress.  During a lame duck session, there are few potential legislative vehicles. 

Judith Stein, Founder and Executive Director of the Center for Medicare Advocacy and NAELA Past President, wrote the latest NAELA: Eye on Elder and Special Needs Issues article, “Observation Stays in the Hospital: The Impact on Medicare Beneficiaries.”  In the article, Stein discussed the increased use of observation status, the costly implications of not changing this policy, and how to take action.  

On May 20, 2014, Toby Edelman from the Center for Medicare Advocacy testified in front of the House Ways and Means Subcommittee on Health.  The congressional hearing focused on current hospital issues in the Medicare program, with an emphasis on the Centers for Medicare and Medicaid Services (CMS) two-midnights policy, short inpatient stays, outpatient observation stays, auditing, and appeals.  Read Health Subcommittee Chairman Kevin Brady’s hearing announcement.”[1]


[1] Advocacy Update, May 29, 2014, Published by the National Academy of Elder Law Attorneys, Inc. (NAELA)

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