Beware of Hospital “Observation” Status

Q.   My husband was discharged from a five-day stay in the hospital to one month in a nursing home rehab.  The rehab told us that we had to privately pay for his short term rehab, which totaled more than $12,000.  Whatever happened to Medicare covering rehab? 

A.   Your husband fell into the costly “medical observation” trap.  Without formal “inpatient admission” to the hospital, his Medicare rehab benefit was never triggered.  Read on to protect yourself in the future.

For seniors to qualify for Medicare rehab benefits, a hospital must formally admit the senior as an inpatient for at least three days and three nights.  If the hospital then discharges the senior to a nursing home for rehab, Medicare picks up the short term rehab costs.  Historically, this worked pretty smoothly.  Now seniors are falling into the relatively new “medical observation” trap.

Due to recent Medicare cost control initiatives, hospitals now frequently accept seniors on “medical observation” status only.  This means that the Medicare rehab benefit is not triggered, and the senior is responsible for increased hospitalization costs as well as for all nursing facility rehab costs.

Incredibly, hospitals code many seniors as “medical observation” despite multi-day hospitalizations and treatment by the same doctors in the same hospital rooms as “inpatients”.

To make matters worse, in the chaos of a hospital admission, seniors rarely recall being told they are on medical observation status only.   Even to the extent that they are told, they never understand the financial implications.  It is days or weeks later that they learn the dire consequences when they get hit with a huge nursing home rehab bill.

These seniors deserve Medicare to cover their rehab expenses.  A 99 year old client recently fell and suffered terrible injuries to her face and body.  Without multi-day hospitalization, she could have died.  The hospital argued to my client’s shocked family that the senior would be “observed” rather than “admitted as a patient.”  When she arrived at the nursing home rehab, the family was told it would be nearly $500 per day for her rehab.

So what can readers do to protect themselves and their loved ones?

First, ask the hospital to confirm in writing whether the senior’s status is “medical observation” or “inpatient” admission.  If the hospital will not put it in writing, make certain they clearly confirm the senior’s admission status.

Second, do not play down the senior’s need for inpatient hospitalization.  Many of my clients are very proud – and rightfully so – but they sometimes play down their health impairments or injuries, and their corresponding need for help.  They grew up in the Great Depression area and they are self-reliant.  Plus they just want to return home from the hospital.  But if overnight hospitalization is required, it is far better for the senior to be admitted as an inpatient to avoid the risk of having to privately pay for any required nursing home rehab.

Third, for seniors hospitalized on “medical observation” status only, they must request to speak to the treating physician ASAP and demand a full explanation of why the hospital will not formally admit the senior as an inpatient.  Advocacy can help here!  The squeaky wheel gets the most grease.

Fourth, consider enlisting the help of your primary care physician to advocate to the hospital that you should be admitted as an inpatient rather than simply observed.

Fifth, if the hospital’s treating physician has not justified to the senior’s satisfaction why the hospital will not admit the senior as an inpatient, contact the hospital’s ombudsman and administrators to plead your case.

I cannot downplay the importance of this issue.  To the extent that a senior requires rehab in a nursing facility, observation status means that they could be forced to privately pay the nursing facility tens of thousands of dollars.  The time to fight this decision is during the hospitalization.

Sixth, consider filing a Medicare appeal of the hospital’s decision.

We and other patient advocates are pushing for Medicare reforms to clarify that all seniors hospitalized for three days qualify for Medicare-covered rehab, regardless of observation vs. inpatient status. But in the current political climate, such reforms stand little chance of passing Congress.  So you must become your own advocate in the hospital.

I will conclude by warning that even if a senior is formally admitted as an inpatient to the hospital, Medicare covered nursing home rehab can terminate a lot sooner than the senior requires to safely return home.  For this reason, I advise families in this scenario to work with a qualified elder law attorney to discuss planning options to protect the senior’s home and savings, and to help the senior qualify for programs that can help them return home with the assistance they may require.

(Patrick G. Curley is a Certified Elder Law Attorney, is selected to MA Super Lawyers, and serves as a member of the Board of Directors of the MA Chapter of the National Academy of Elder Law Attorneys.  He practices law at Curley Law Firm LLP at 1 Common Street in Wakefield.  Do you have an Elder Law or Estate Planning question?  E-mail questions to Info@CurleyLawFirm.com or call 781.245.2222 x10 to be considered for future columns).

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Do you have an Elder Law or Estate Planning question? E-mail questions to Info@CurleyLawFirm.com or call 781.245.2222 x10 to be considered for future columns).

About Curley Law Firm LLP

Serving clients throughout Massachusetts, Curley Law Firm LLP draws upon more than four decades of combined Estate Planning and Elder Law experience to ensure that you can achieve your planning goals.

Attorneys Patrick Curley and Lucy Budman are two of fewer than two dozen Certified Elder Law Attorneys (CELA) in Massachusetts. Attorney Mark Curley has practiced in the areas of Estate Planning and Elder Law for over three decades.

The value of working with a firm with CELAs on the team is the peace of mind you receive - knowing that you will get the very best advice available to protect yourself, your family and your assets. A CELA is a recognized expert in legal matters dealing with Estate Planning and Elder Law including Trusts, Wills, Asset Protection against Medicaid and nursing home costs, Medicaid (MassHealth) benefits planning and applications, Probate and Trust administration, Guardianship and Conservatorship, and VA benefits planning.

At a time when many lawyers claim to practice "elder law", having a CELA-led team working on your planning means having one of the very few experts in the Commonwealth on YOUR team.

For experienced representation and quality service from attorneys who will help you achieve your planning goals, please schedule a confidential Initial Consultation by calling us at (866) 406-8582 or visit our website at www.CurleyLawfirm.com

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