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Hospitals often classify hospitalized Medicare patients as outpatients, even though their hospital care may be indistinguishable from the care they would receive if they were formally admitted as inpatients.  This issue – called Observation Status – has been a serious problem for Medicare beneficiaries for many years,[1] chiefly because patients who do not have at … Read more

An increasing number of patients in hospitals are not formally admitted as inpatients, but as “outpatients” on “observation status.”  Although they receive whatever medical and nursing care, diagnostic tests, medications, and food they need, their status as “outpatients” means that they do not satisfy the three-day inpatient hospital prerequisite for Medicare coverage of post-acute care … Read more

In the annual update to Medicare reimbursement of acute care hospitals for outpatient care (July 8, 2015)[1] the Centers for Medicare & Medicaid Services (CMS) includes proposed revisions to the “Two-Midnight Rule” and its enforcement. If the proposed changes lead to an increased number of patients being formally admitted as inpatients (rather than, as now, … Read more

Effective July 1, 2015, Virginia has become the fifth state to enact legislation requiring hospitals to inform patients when they are in Observation or other outpatient status, and the consequences of not being admitted as inpatients.  Senate Bill 750[1] requires hospitals to provide oral and written notice to patients who are receiving “onsite services” (including … Read more

This CMA Alert highlights a recent individual ALJ decision that sets out an important but often unrecognized beneficiary right to a written notice when he or she is about to use hospital “Lifetime Reserve Days.”  A hospital’s failure to provide appropriate notice in this context can lead to the waiver of a beneficiary’s liability for … Read more

Observation Status – hospital patients’ classification as outpatients, which makes them ineligible for Medicare Part A coverage of their subsequent stay in a skilled nursing facility (SNF) when they do not have “inpatient” status for at least three consecutive midnights – is an ongoing issue that the Center for Medicare Advocacy has discussed many times.[1]  … Read more

At its January 16, 2015 public meeting, the Medicare Payment Advisory Commission (MedPAC), the government agency that advises Congress on Medicare payment policy, addressed observation status as part of its discussion of hospital short stay policy issues.[1]  MedPAC Commissioners preliminarily, but unanimously, voted to move forward on a recommendation to count time in observation status … Read more

Medicare patients considered hospital outpatients on Observation Status may be helped by a decision issued on January 22, 2015 by a federal appeals court.  A three-judge panel of the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on “Observation Status” in hospitals may have an interest, protected by … Read more

Medicare patients need to be aware that if they were hospitalized after October 1, 2013, hospitals may be contacting them about their bills. Final rules that were published in August 2013 and became effective October 1, 2013 created a new regulatory provision, 42 C.F.R. 414.5, "Hospital services paid under Medicare Part B when a Part … Read more

The use of “Observation Status” – treating certain hospitalized Medicare patients as outpatients when their care is indistinguishable from that of formally admitted inpatients – continues to garner considerable public and Congressional attention. It remains an unresolved problem that has serious financial consequences for Medicare patients and their families.[1]   On July 30, 2014, the Senate … Read more