Hospital billing trick saddles the ill with unexpected costs
Observation status is a confusing concept. It allows
It began as a way to keep people in the emergency department a little longer to decide if their condition was severe enough for hospital admission.
Observation status has now morphed into an accounting trick to help the government save health-care dollars, said Dr.
"It's purely a billing designation. Patients can get the same medical care under both [observation and inpatient]," she said.
"How can you be put in a hospital and not be considered an inpatient? It's not even logical," she said.
There has been a nearly 20 percent decrease in inpatient discharges from hospitals and a more than 44 percent increase in outpatient visits for
"Part of the decline in discharges and growth in outpatient service is due to increased use of observation services as a substitute for inpatient care," the report stated.
Observation status also often leaves patients responsible for paying the enormous cost of going into a skilled nursing facility for rehabilitation services after their hospital stay.
In many cases,
'Learned the hard way'
The retired
"I just assumed if they put you in a bed you were admitted. Then I learned the hard way,"
When patients are designated as "inpatient status," their bill is covered by Medicare Part A, except a small co-pay. When a hospital stay is designated as "outpatient observation," however, the bill falls under Medicare Part B.
Medicare Part B does not cover drugs a patient is given in the hospital for any preexisting medical conditions. For example, if a patient has diabetes and takes insulin shots on a regular basis, insulin shots given in the hospital would be billed to the patient. These type of drugs are called self-administered drugs by hospital and
Medicare Aetna's negotiated price for
The couple were particularly upset when they requested an itemized bill and discovered one dose of a drug he was taking at home, Victoza, cost
"That was for a single shot, not for the whole vial,"
"I said to them on the phone, 'I pay
That admission to
The Shermans, however, fought back and with the help of the
The couple learned, in January, that the hospital will allow people to bring their self-administered drugs from home, which can help observation status patients keep some of those medication charges off their hospital bill.
All of the hospital systems in
"You can bring your medication, but they need to be in the bottle, and we need to follow the outlined process at the various facilities," said
Nursing center costs
Being admitted to the hospital on observation status also has major financial implications for patients who leave the hospital, but go into a skilled nursing center for rehabilitation services for further recuperation.
In 2014 about 20 percent of
But those admitted on observation status are increasingly finding their insurance will not cover the bill and they must pay out of pocket, said
"I had a patient in 2010 who needed to go to a skilled nursing facility, had stayed in the hospital for several days, and I was told she didn't meet inpatient criteria,"
"Here is this woman who should have only been worried about getting better, but had to worry about this billing issue," she added.
Some who are denied coverage go without the services ordered by their doctor,
"Some of them will go to stay with family members, various things. We get real creative, you know, church members, whatever so that the patient's safe at home," she said.
"We don't want to just accept that observation level of care. It's more costly for the patient and it's less of a reimbursement for the hospital too,"
His bill, however, has been introduced in previous sessions of
"There are people in
The fact that patients will have to be notified they are in observation status beginning in August is a step in the right direction,
Meaningful changes will come when people start putting pressure on
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