NAHU is calling on all members to contact their federal
legislators and urge them to co-sponsor H.R. 3650 and S. 2048 through our recently
released Operation Shout campaigns.
Currently, Medicare beneficiaries who are not officially
admitted to a hospital may be classified under “observation status,” which is
treated as an outpatient procedure for billing purposes. Unfortunately, the
common practice of placing a beneficiary on observation status can have
significant financial consequences for Medicare beneficiaries since Medicare
Part A and its related coverage rules only apply to actual inpatient care
admissions. This may lead patients, many who are extremely sick and may need
skilled nursing care, to spend many days in the hospital and be charged for
services that Medicare would have otherwise paid had they been admitted.
Furthermore, hospitals have up to one year to retroactively change admission
status to observation, leading unsuspecting beneficiaries with thousands of
dollars in bills for SNF care they believed would be covered by Medicare.
The issue stems from policies designed to prevent
unnecessary hospital readmissions, where Medicare would penalize hospitals when
patients would be re-hospitalized within a month of being discharged. Hospitals
with readmission rates above the national average would receive lower Medicare
reimbursements, thereby in theory incenting hospitals to adequately treat
patients the first time and avoid re-admissions. However, in response to the
policy, some hospitals increasingly placed patients under observation status,
allowing them to provide care for patients whose conditions were not poor
enough to be admitted without the hospital being penalized for a re-admission.
Regardless if care was performed in the inpatient unit, these visits would be
classified as outpatient procedures and billed under Medicare Part B, which
could result in higher cost-sharing for the patient.
While this observation-status loophole has been temporarily waived
during the pandemic, as of now it will be enforced again once the public health
emergency comes to an end unless Congress passes this fix beforehand. That is
why it is more important than ever to contact your legislators and ask them to
finally put an end to this practice. Click here to take action on
the House bill and click here to
take action on the Senate bill.