‘Observing’ seniors is costly

Hospital patients pay more when they are mislabeled

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Many Pennsylvania seniors are surprised to find out that, despite being admitted to a hospital overnight — and often much longer — and having a battery of tests run and procedures performed, they are not considered inpatients but instead are termed on “observation status.”

More than semantics is involved.

When this happens, in many cases the hospital stay and potential post-acute care and rehabilitation in a skilled nursing facility are not covered by Medicare. For Pennsylvania seniors who have found themselves in this situation, not only is their classification as on “observation status” surprising, it is confusing and costly to them and the hundreds of nonprofit facilities that provide their longer-term care.

Although proposed legislation making its way through the Pennsylvania General Assembly would potentially improve patients’ understanding of their status, ensuring continuous, effective care and a safe, seamless transition from hospital to nursing facility for seniors must be a collaborative effort between both facilities until the problem is addressed at the federal level.

Observation status is an outpatient designation. Under observation status in the hospital, patients are monitored and provided “clinically appropriate services … while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital,” according to the Centers for Medicare and Medicaid. Seniors admitted to the hospital for days can be considered observation status the entire time.

This designation can have devastating financial effects on seniors, especially because most times it is not until they are discharged or arrive at a transitional care facility that they learn of the status. As a result of being classified on observation status, seniors are left on the hook for much more than their standard Medicare co-pay. Any subsequent stay in a post-acute or skilled nursing facility is not covered.

For the hundreds of nonprofit nursing homes in Pennsylvania that provide care to seniors after they are discharged from hospitals on observation status, their mission trumps finances and most times, despite enormous economic challenges and razor-thin margins, they provide the care, essentially “eating” the cost.

A bill requiring hospitals to explicitly inform patients on observation status of the financial implications passed the Pennsylvania House of Representatives last month and is pending in the Senate. This is all to the good, but a state law requiring notification of observation status before seniors reach a post-acute care facility is not enough. Only when the federal government addresses the underlying cause of the mislabeling will the symptoms go away.

In March 2013, federal legislation was proposed that would amend the Medicare law to, among other things, count a beneficiary’s time spent in the hospital on “observation status” toward the three-day inpatient hospital stay requirement for Medicare coverage of skilled nursing care. The bill is in limbo.

In the meantime, many nonprofit nursing facilities across the state have been working closely with partner hospitals to ensure seniors understand their observation status and the ramifications. The open dialogue and willingness of hospitals to work with nursing facilities is a demonstration of their patient-centered focus. Nursing facility-hospital relations are key to successful care management and service coordination, ultimately aiding in diminishing readmissions and unnecessary long-term stays.

When seniors are transferred from a hospital to a nursing home for additional care, the focus for the senior must be on getting better, not paying the bills.

The collegial collaboration between hospitals and nursing facilities to remedy the situation is important and necessary, but until Congress makes meaningful changes to the observation status rule, seniors will continue to suffer the unintended consequences.

Ron Barth is president and CEO of LeadingAge PA, an association of nonprofit, long-term senior care providers.

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