The healthcare consumer, especially seniors who have Traditional Medicare or a Medicare Advantage Plan, should be aware of the risks associated with being admitted as an Observation patient versus an In-patient. Many consumers that have Medicare or an Advantage Plan are not aware that they are at risks when they are “admitted” to a hospital. They assume all expenses will be covered under their insurance plan. That is a very bad assumption.
The Healthcare Consumer Navigator Center Team has researched how Observation Status works and the process necessary for the healthcare consumer to follow when admitted to a hospital. The following are several basic questions that will help answer and explain what is Observation Status. In addition, the following will examine what are some risks for healthcare consumers to understand and manage and a healthcare consumer check list to be used as a guide to manage the observation process.
What is observation care?
Centers for Medicare and Medicaid Services (CMS) defines observation care as “a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment, that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital.”
Outpatient observation services are usually ordered for healthcare consumers who present to the emergency department and who then require a specific period of treatment or monitoring in order to make a decision about their admission or discharge. The decision whether to discharge a consumer from the hospital following resolution of the reason for the observation care or to admit the patient as an inpatient can be made in less than 48 hours, usually in less than 24 hours.
Outpatient observation services require the use of a hospital bed and periodic monitoring by the hospital’s nursing or other ancillary staff to evaluate the consumer’s condition and to determine the need for an inpatient admission. Outpatient observation services can be provided anywhere in the hospital. The level of care, not the physical location of the bed, dictates the observation status. CONSUMERS BEWARE….THIS IS VERY IMPORTANT!!
What effect does observation status have on a consumer’s care and expenses?
Observation care is considered an outpatient service. This means usually co-payments/co-insurnce will apply for doctors’ fees and for each hospital service. This translates into a financial responsibility of the consumer. In addition, routine drugs that the consumer takes will not be covered. Lastly and the most critical, is that since Medicare patients have not been admitted as an inpatient and stayed three consecutive days not counting the day of discharge, they will not be eligible for nursing home benefits. This could be a huge problem for some consumers since the nursing home services will be the full financial responsibility of the consumer. Medicare will not cover the expense. CONSUMERS BEWARE….THIS IS VERY IMPORTANT!!
Why is the consumer receiving observation care?
Medicare has medical criteria for consumers to be admitted as an inpatient. When patients are to be admitted to the hospital, the hospital will monitor the level of care to determine if a consumer qualifies as an inpatient or observation status. Some examples of observation symptoms are nausea, vomiting, weakness, stomach pain, fever, some breathing problems, etc…
What is the “Medicare Outpatient Observation Notice” (MOON)?
A MOON is a standardized document that Medicare developed for hospitals to use to explain observation status. All Medicare and Medicare Advantage patients receiving observation services for 24 to 36 hours must receive a MOON. A hospital representative will contact the consumer and explain the implications of observation status. The consumer or their representative must sign the MOON. If the hospital does not inform the patient, the consequences now are unknown. See Exhibit 1.
Who can change my status from observation to inpatient?
Your admitting doctor controls what is your status.
Should hospitals explain the potential expenses the consumer may assume?
Yes. Hospitals may find it difficult to answer that questions. Force the hospital to answer the question.
Managing Observation Status
The following is a Healthcare Consumer Check List to help consumers manage Observation Status when admitted to a hospital. It is very important to start this process immediately after the consumer has been admitted to the hospital. Be aggressive when managing this process.
Healthcare Consumer Observation Check List
The above sections has given you the basic information about observation services/status. The following is a healthcare consumer check list to be used to insure you are aware of your status and how to mange through the process.
- When admitted, ask the admitting doctor if your status is inpatient or observation. This sets the stage for you or your representative to start managing your care.
- If your status is inpatient, your risk is less and your insurance should pay your bill.
- If your status is observation:
- Ask the admitting doctor to admit you as an inpatient
- If the admitting doctor said no, ask him why. The answer will probably be your symptoms have not met medical criteria for an inpatient stay. Some examples of observation symptoms are nausea, vomiting, weakness, stomach pain, fever, some breathing problems, etc…
- Ask the admitting doctor to discharge you. The doctor will probably say that he/she wants to make sure you will not get worse and wants to keep you at the hospital for 36-48 hours. Ask the doctor if he/she thinks you should go to a nursing home. If he/she says yes, remember, Medicare will not pay because you have been in observation status versus an inpatient. This situation puts the consumer at a great financial risk.
- Expect a visit from a hospital staff member, case manager, social worker, etc.., within 24 to 36 hours after you have been admitted into an observation status. They are required to provide you with a written notice (MOON) for you or your representative to sign (See Exhibit 1). They will also explain why you are in observation status and what are the next steps. If they do not, demand that they do explain everything.
- Request the amount of out of pocket expense you will incur while you are in observation status. The hospital may not know or say it is very difficult to estimate the expense. Your answer is” I am surely not the first person in observation status at this hospital. Please estimate my expenses.”
- Be aggressive. Ask questions about your status 3, 4, 5 times a day. Ask to see the your Case Manager daily for them to update you on your status. You have a right to know what is going on.
The following is an example of the form mentioned above with several comments from the HCNC Team.
THE HCNC TEAM HAS MADE SEVERAL “COMMENTS” ON THE FORM FOR THE HEALTHCARE CONSUMER TO BE AWARE OR TO ASK THE HOSPITAL STAFF OR DOCTOR
Medicare Outpatient Observation Notice
Patient name: Patient number:
You’re a hospital outpatient receiving observation services. You are not an inpatient because:
HCNC COMMENT: HOSPITAL SHOULD EXPLAIN WHY…. ASK A LOT OF QUESTIONS OF THE HOSPITAL AND DOCTOR
Being an outpatient may affect what you pay in a hospital:
- When you’re a hospital outpatient, your observation stay is covered under Medicare Part B.
- For Part B services, you generally pay:
- A co payment for each outpatient hospital service you get. Part B co payments may vary by type of service.
- 20% of the Medicare-approved amount for most doctor services, after the Part B deductible.
HCNC COMMENT: FIND OUT OR ASK IF YOUR SUPPLEMENTAL INSURANCE WILL PAY FOR THE CO PAYMENTS, COINSURANCE AND DEDUCTIBLES
Observation services may affect coverage and payment of your care after you leave the hospital:
- If you need skilled nursing facility (SNF) care after you leave the hospital, Medicare Part A will only cover SNF care if you’ve had a 3-day minimum, medically necessary, inpatient hospital stay for a related illness or injury. An inpatient hospital stay begins the day the hospital admits you as an inpatient based on a doctor’s order and doesn’t include the day you’re discharged.
- If you have Medicaid, a Medicare Advantage plan or other health plan, Medicaid or the plan may have different rules for SNF coverage after you leave the Check with Medicaid or your plan.
HCNC COMMENT: THIS IS CRITICAL. IF THE CONSUMER IS GOING TO A NURSING HOME, ASK A LOT OF QUESTIONS TO INSURE YOU HAVE NO SURPRISES
NOTE: Medicare Part A generally doesn’t cover outpatient hospital services, like an observation stay. However, Part A will generally cover medically necessary inpatient services if the hospital admits you as an inpatient based on a doctor’s order. In most cases, you’ll pay a one-time deductible for all of your inpatient hospital services for the first 60 days you’re in a hospital.
If you have any questions about your observation services, ask the hospital staff member giving you this notice or the doctor providing your hospital care. You can also ask to speak with someone from the hospital’s utilization or discharge planning department.
You can also call 1-800-MEDICARE (1-800-633-4227). TTY users should call 1-877-486-2048
Your costs for medications:
Generally, prescription and over-the-counter drugs, including “self-administered drugs,” you get in a hospital outpatient setting (like an emergency department) aren’t covered by Part B. “Self- administered drugs” are drugs you’d normally take on your own. For safety reasons, many hospitals don’t allow you to take medications brought from home. If you have a Medicare prescription drug plan (Part D), your plan may help you pay for these drugs. You’ll likely need to pay out-of- pocket for these drugs and submit a claim to your drug plan for a refund. Contact your drug plan for more information.
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