With Medicare and other insurers scrambling to control costs, “observation stays” in the hospital have become a loophole that could leave you footing the bill for thousands in uncovered costs. Your hospital status — whether you are an inpatient or an outpatient — makes a huge difference in how much you will have to pay for hospital services like X-rays, drugs and lab tests. But figuring out whether you are an inpatient or outpatient, believe it or not, isn’t always clear.
Even if you stay in the hospital overnight, Medicare still considers observation services as outpatient care and requires you to pay a bigger share of the costs. Your inpatient status is also important to determining whether Medicare will cover care you receive if you are later released to a skilled nursing the facility.
When you are a hospital inpatient, Medicare Part A covers inpatient services. Generally that means you (or your Medicare supplement) will pay a one-time deductible ($1,132 in 2011) for all of your hospital services for the first 60 days, although costs may be somewhat different if you’re enrolled in a Medicare Advantage plan. In addition, Medicare will only cover the care you receive in a skilled nursing facility if you had a “qualifying hospital stay.” To qualify, you must be a hospital inpatient for at least 3 days in a row, and Medicare doesn’t count the day of your discharge.
If you are in for observation, Medicare considers you an outpatient, and your services are covered under Medicare Part B. Generally, this means you will have a co-payment for each individual outpatient service. In some cases, your total copayments for all services may even be more than the inpatient hospital deductible. In addition, most of the prescription drugs you get in an outpatient setting aren’t covered by Part B and you would need to check with your drug plan to find out whether the drugs would be covered.
What you can do:
• Ask whether you are an inpatient or outpatient: If admitted to a hospital, it’s highly important that you, or your designated caregiver find out immediately whether you are being admitted to the hospital as an inpatient or an outpatient. Even if you are admitted as an inpatient, the hospital can switch you to observation (and outpatient) status, but the hospital is required to notify you.
• Put a medical emergency plan into place, before you need one: Having no plan for emergencies, especially if you live alone, or with a spouse who also needs special care means you need to have a medical emergency plan in case something happens to you. Often doctors will order observation care when you are too sick to safely go home. Although this can still occur even with the best-laid plan, you may be able to reduce the length of an observation stay if you have someone who will take care of you once you are released.
To learn more about how Medicare covers hospital services, see your copy of the “Medicare & You” 2011 handbook that you received last fall, call 1-800-MEDICARE (1-800-633-4227) or visit www.medicare.gov .
Sources: “Are You a Hospital Inpatient or Outpatient?” CMS, December 2009, Product No. 11435.
