Medicare's Latest Hurdle - and Why You Can't Get Involved

In early July, one of NAMSA‘s members sent me a Philadelphia Inquirer article written by Michael Vitez. The topic is “hospital admission” versus “observation status” – and a topic that I once viewed as somewhat insignificant is becoming very big news.

This story really nothing new, but 2010 applications of certain CMS rules are creating mounting problems. The basic premise is that Medicare will pay 20 days of skilled care in a skilled care facility after a three-day hospital stay. But wait – there’s more. Our Medicare clients go to the hospital because they’re sick or injured. If they’re there for a few hours and their situation is attended to on an outpatient basis, they don’t expect to need skilled care. We all do the same thing — go to the hospital when we’re sick or injured, receive outpatient treatments, go home, and everything’s fine.

But, here’s the catch: If the patient goes to the hospital with something serious, they won’t think to ask if they’re being admitted. They’ll just feel that they need to be attended to and expect that their physical ailment will be addressed. Yet, on an ever-increasing basis, the hospitals are not admitting patients because they’re afraid of miscoding the event and violating Medicare rules.

According to a Sept. 7 article from Kaiser Health News: “Claims from hospitals for observation care have grown steadily and so has the length of that care, says Jonathan Blum, deputy administrator at the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs Medicare. The most recent data show claims for observation care rose from 828,000 in 2006 to more than 1.1 million in 2009. At that time, claims for observation care lasting more than 48 hours tripled to 83,183.”

A patient’s woes

The Inquirer story refers to an 86-year-old lady, Fran Bogom, who broke her arm and went to the hospital; as a side note, she also suffers from dementia and imbalance and was eventually placed in custodial care. Bogom wasn’t admitted as an inpatient, and through a series of gaffes, indecision, and confusion, she eventually made a hospital appeal (QIO), which every Medicare beneficiary has the right to do.

The appeal turned the three-day observation status into a four-day “admittance stay,” but only after her daughter Rachael, a social worker, intervened. Without the intervention, Bogom would not have known that she had only been admitted for observation, and not for a “medically necessary” inpatient stay, which covered the three-day rule for transfer to a skilled care facility for skilled care.

For the skilled care, Medicare and the Med Supp policy paid a rehab bill of $37,776.

A possible solution in legislation
There are a few updates to this situation. First, as expected, MedPAC defended itself by making a statement on Sept. 20 that its RAC program is not at fault.

“Because observational care is classified as outpatient care, this hospital status does not count toward the three-day hospital stay policy that qualifies patients for Medicare-reimbursed skilled nursing care. Provider groups had argued that the increased use of observational care was due to hospital concerns over potential claims rejections from Medicare Recovery Audit contractors,” according to McKnight’s Long-Term Care News and Assisted Living.