Medicare Observation…I was a hospital outpatient?

Several months ago our office was contacted by a geriatric care manager who was looking for assistance for one of her clients.  Her client was in the hospital for at least 3 days and was discharged to a skilled nursing facility for rehabilitation.  Much to the family’s surprise, the rehabilitation center informed them that the resident did not qualify for the skilled nursing benefit under Medicare Part A because he was never considered an inpatient during his hospital stay. 

The Medicare Part A skilled nursing facility benefit may provide coverage for up to 100 days, with Medicare covering 100% of days 1-20 and 80% of days 21-100.  The 20% co-pay for days 21-100 may be covered by a Medicare supplemental health insurance policy.  The Medicare beneficiary must have been admitted to the hospital for three days within 30 days prior to the admittance to the skilled nursing facility to qualify for this benefit.

So what happens in this scenario?  Without the required 3-day inpatient admission, Medicare only covers some services that the resident receives under his Medicare Part B coverage.  This results in the majority of the cost of the rehabilitation center, such as room and board, falling on the resident to pay out of his own pocket.

Unfortunately, the practice of placing Medicare beneficiaries who are admitted to the hospital for several days and even weeks in observation status, making them really outpatients and not inpatients, is happening all over the country. To help clarify what Medicare considers outpatient services versus inpatient services, The Centers for Medicare & Medicaid Services (CMS) recently published a brochure titled “Are You a Hospital Inpatient or Outpatient?” which you can view .  CMS recommends that if a Medicare beneficiary is in the hospital ”more than a few hours” he inquire as to whether or not he is an inpatient.