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Q:  Is a Hospital Stay really a Hospital Stay?

A:  Not necessarily, if you are a Medicare recipient.

If you are on Medicare and have to stay in a hospital overnight or longer, you might want to be aware of what status the hospital has on your record. Why? Because if you are classified by the hospital as “outpatient observation,” your bill might be a lot higher for the services you receive while you are in the hospital; and you may not be covered at all for any necessary post-acute care in a skilled nursing facility. You may be classified as an outpatient even if you are in the same room and receiving the same services as another who is classified as an inpatient, and even if you are in the hospital overnight or for several days.

If the hospital classifies you as an inpatient, your hospital services are covered under Medicare Part A. If the hospital classifies you as an outpatient, your hospital services are covered under Medicare Part B. This can make a significant difference in the services for which the patient is covered.

For instance, prescription drugs, which are covered under Medicare Part A for an inpatient, must be covered by Medicare Part D for an outpatient (because Medicare Part B does not cover prescription drugs). The hospital pharmacy is not likely in the Part D Plan’s network, so you will be charged the out-of-network price for necessary drugs. Furthermore, some drugs used by the hospital may not be on the plan’s formulary and may not be covered at all, especially, as is usually the case, if the patient made no arrangements with the Part D plan in advance.

Another major impact of hospital classification status is whether or not post-acute care in a skilled nursing facility is covered. Medicare will cover up to 100 days in a skilled nursing facility, but only following a three-day hospital stay. If you are in the hospital for three or more days, but classified as an outpatient, Medicare will deny coverage for your post-hospital care at the skilled nursing facility for lack of the required three-day prior hospitalization. Skilled nursing care is, on average, $345/day, and without Medicare coverage, the patient will be required to pay this out-of-pocket.

Many patients discover this unfortunate situation only after they receive the bill in the mail, because according to the Center for Medicare Advocacy, hospitals and skilled-nursing facilities are not giving patients notice of non-coverage.

The Center for Medicare Advocacy has heard repeatedly about Medicare beneficiaries throughout the country whose entire stay in a hospital is classified as “outpatient observation.” In one particular instance, a patient who was in the hospital for fourteen (14) days was billed to Medicare as “observation status.” In some cases, the doctor will order an admission, and later, the hospital retroactively reverses the decision and classifies the patient as an outpatient.

For more information, see the Center for Medicare Advocacy’s website, or go directly to their article about classification status.