Even if you don’t sell many, or any, Medicare plans, it’s important for financial professionals like you to stay abreast of the big issues.
Perhaps the most pressing issue in Medicare circles right now is the confusion surrounding Medicare observation status.
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Despite a recent attempt to fix the problem, many seniors still don’t fully understand how it works until it hits them in the wallet. It can affect not only your older clients—or perhaps your clients’ parents—but own senior family members as well.
Observation Status v. Hospital Admittance
Here’s the root of the problem. Medicare requires a patient to be admitted to the hospital and spend at least three days as an inpatient in order for follow-up care in a nursing home to be covered.
However, more ER doctors are categorizing seniors for observation, not admittance. Seniors under observation status not only experience unexpected costs (observation status is covered under Medicare Part B, not Part A), but worst of all, are ineligible for Medicare’s nursing home benefit.
What’s driving this? As you might suspect: money. These days, hospitals are using observation status to avoid Medicare penalties that are incurred when patients are readmitted within 30 days. (This is due to the Hospital Readmissions Reduction Program (HRRP), an Affordable Care Act provision intended to discourage excess readmissions.)
In some cases, Medicare considers readmission evidence that the hospital discharged a patient prematurely and can withhold reimbursement for the initial hospitalization.
But there’s no penalty for observation stays. Which is why, according to one Kaiser Health study, the number of patients under observation status has increased 69% within just five years.
Observation patients sleep in the exact same bed that they would if they were admitted. They receive the exact same care. Which is why, until a recent change, many patients had no way to know whether they were admitted as an inpatient or for observation only.
The Medicare Outpatient Observation Notice (MOON) Provides Clarity
Until recently, unless a patient or family member knew to ask what the patient’s status was, they were often left in the dark, until they started receiving hospital bills or were denied Medicare coverage for a rehab stay.
In an attempt to correct this, the Centers for Medicare and Medicaid Services enacted a new regulation earlier this year, requiring hospitals to provide patients under observation for more than 24 hours with written and oral notice.
You may have heard some buzz about the Medicare Outpatient Observation Notice, aka MOON, which notifies patients that they are receiving observation services, not inpatient.
The mandate, which went into effect in March, 2017, requires that patients receive a MOON notice within 36 hours of being admitted into the hospital for observation. That allows patients and their families to take action.
Make Sure Your Clients Know about This
Most likely, many your clients are not aware of this recent notice requirement. Every senior and family member needs to understand what’s at stake when they’re under observation, so they can take steps to minimize expensive financial surprises. This would make a great topic for your next client newsletter or e-newsletter.
If hospitalized, your clients should not wait until they’re served with a MOON to ask about their hospital status. If they believe their particular medical condition warrants admission, they can ask their hospital doctor to change the status. If it is after the fact, it is important to act on this sooner rather than later.
To effectively appeal their MOON status, your client’s argument must be based on valid medical considerations. For this reason, they might be better served to ask their primary doctor to intercede or ask a private patient advocate to assist in their appeal.
The bottom line is, knowledge is power. Even if they’re flat on their back in a hospital bed, your clients don’t need to take this lying down.
— Read For Hospital Patients, Observation Status Can Prove Costly on ThinkAdvisor.