Under provisions in the Affordable Care Act of 2010, some Medicare recipients are suddenly finding themselves without a safety net when in need of subsequent care at a skilled nursing facility.
It has resulted in the proposal of new legislation in Washington — along with a national class action lawsuit challenging what the nonprofit Center for Medicare Advocacy of Connecticut calls an “illegal policy.”
In order for a person who is discharged from a hospital to a skilled nursing facility or nursing home to have the stay covered by their health insurance — under Medicare reimbursement rules — the patient must have had a three-day stay as a hospital inpatient in the days prior, said Paul Connor, president and CEO of Eastern Long Island Hospital in Greenport.
But there’s a bit of a loophole that’s hurting people financially. A new policy implemented in 2013 has created what’s known as an “observation status.”
Patients on observation can be staying on a hospital’s inpatient floor — and even receiving inpatient care — but still be considered outpatients to Medicare, said Toby Edelman, a senior policy attorney for CMA.
So, what does this mean? According to Medicare rules, if you, your mother or your father has been in the hospital for three-plus days, those days don’t count toward the three-day hospital stay required for health insurance coverage at a skilled nursing facility.
In other words, “Medicare will not pay” for the subsequent care needed at a skilled nursing facility, Mr. Connor said.
“That has caused significant problems for some people,” he said, adding that he isn’t aware of it being an issue on the East End.
However, Mr. Connor stressed how important it is for people to understand whether they’re considered inpatients or are on observation.
“I hear people talking about this with a little bit of concern in the community,” he said, noting that ELIH has seen an increase in “observation” patients.
When the new policy began in October 2013, he said, ELIH saw about eight “observation” patients per month. It now sees about 28.
“If you can, try to get the status changed while [the patients] are in the hospital,” Ms. Edelman said. “The physician is the most important ally” in achieving inpatient status, she said, as they determine how a patient should be admitted.
If a physician expects that a patient will require hospitalization for at least two full days, or two “midnights,” they should meet qualifications for admittance to the hospital, according to the new rules. If not, the patient should be placed on observation status.
If a status change is not achieved, the patient can send an appeal to Medicare, she said, noting that “patients have to fight to get reimbursed” and that skilled nursing facilities can cost hundreds of dollars per day. New York is one of the few states that requires hospitals to provide Medicare patients with both oral and written notice before they’re placed on observation status.
Before being moved from an emergency room and admitted to the hospital, patients are required to sign a form stating they have been notified that they are on observation status and are therefore an outpatient, said Kate Reich, director of revenue cycle at ELIH.
Mr. Connor noted that financial concerns over observation status has caused at least one Medicare patient to turn down medical care and leave the hospital.
Ms. Edelman said CMA knows of more than 600,000 patients who were transferred to a skilled nursing facility and then left to foot the bill for the subsequent care.
“We are challenging it across the board,” she said of litigation about the policy. Ms. Edelman added that a patient’s hospital status “is supposed to be a medical decision” — not one based on health insurance reimbursement.
Legislation known as the Improving Access to Medicare Coverage Act of 2013 has also been introduced. It would alter the policy deeming “observation” patients as inpatients with respect to satisfying the three-day inpatient requirement. It would also allow for Medicare coverage at a skilled nursing facility.