Medicare Coverage: Uncovering Hospitals' Practices Impacting Patients

Learn how early discharge is affecting up to 600,000 Medicare recipients and what can be done to protect vulnerable patients.

Medicare Coverage: Uncovering Hospitals' Practices Impacting Patients

In an article authored by Matthew Shepard from the Medicare Advocacy Organization, serious concerns have been raised about certain hospitals' practices that prioritize financial gain over the well-being of Medicare patients. These practices have resulted in negative financial consequences for as many as 600,000 Medicare recipients, particularly those in need of post-hospital care.

Hospitals find themselves in a delicate situation: they receive higher reimbursement rates when patients are discharged earlier than the Medicare-prescribed length of stay. This has led to a troubling trend where hospitals are discharging patients prematurely, often transferring them to skilled care facilities sooner than medically warranted, all driven by financial motives.

The consequence of this trend has been a significant number of Medicare patients returning to the hospital within 30 days after their initial discharge. Medicare stipulates that a patient must have a 3-day hospital stay (equivalent to three midnights) to qualify for skilled care benefits. However, the financial incentives have led to an increased use of observation stays as opposed to inpatient stays, as hospitals receive higher Medicare reimbursements for the latter.

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In response to this situation, Medicare has instituted financial penalties for hospitals when Medicare patients return to the hospital within the first 30 days after discharge. In reaction to these penalties, hospitals have increasingly used billing codes for observation stays, creating a dilemma. Many critically ill patients end up being billed under observation status and do not meet Medicare's criteria for an inpatient stay, nor do they fulfill the requirement for skilled care benefits.

This often leaves families with no choice but to take their loved ones home or privately pay for admission to a skilled care unit. The Department of Health and Human Services' Office of Inspector General (OIG) has acknowledged this issue and is addressing hospitals' use of observation stays and short inpatient stays for Medicare beneficiaries.

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    Matthew Shepard highlights the financial impact on Medicare patients, stating that "The Medicare program and Medicare beneficiaries pay more for short inpatient stays than for observation stays." He further notes that Medicare beneficiaries often bear significant financial burdens as a result.

    The Center for Medicare Advocacy has encountered numerous cases of beneficiaries denied Medicare coverage for Skilled Nursing Facility (SNF) stays due to observation status. These include examples of patients who were initially admitted as inpatients but later reclassified as outpatients, resulting in substantial out-of-pocket expenses.

    These challenges emphasize the need for increased awareness and advocacy surrounding observation status issues within the Medicare system. The Center for Medicare Advocacy provides resources to assist beneficiaries and their families in navigating this complex issue.

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