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Hospital Observation vs. Admitted Status

Here’s a Riddle:   When are you in the hospital, but not “in” the hospital? 

Answer:  When you are in an Observation Stay.

More often than ever, seniors find themselves in a hospital for an accident or illness, only to later learn when they try to access skilled nursing benefits, they were never formally admitted to the hospital.  They were instead under what is called an Observation Stay.  So, what’s the difference between admitted versus observed, and does it matter?

Hospitals bill Medicare for most hospital stays for those seniors who qualify.  Medicare has different payment categories for inpatient (admitted) individuals, and for those who are under “observation” status.  Hospitals can also be penalized by Medicare for unnecessary hospitalizations.  Therefore, they are increasingly avoiding a formal admission process in favor of utilizing this observation status which often includes an overnight stay.

So why does it matter?  Medicare offers recipients a skilled nursing benefit that includes rehabilitation and nursing services in a certified skilled nursing center.  To take advantage of this benefit, Medicare requires a 3-day hospital stay.  This means the individual must be admitted to the hospital.  Observation stays do not count toward this 3-day requirement.  The pitfall is that if mom or dad unknowingly were in an observation stay, and needs follow up rehabilitation in a skilled nursing facility, Medicare will not cover this stay because they did not meet the 3-day rule.

Ohio Senator Sherrod Brown has introduced Federal legislation to make the time spent in an Observation stay count toward the 3-day rule.  There is also proposed legislation that would mandate hospitals to inform patients whether they were in Observation or Admitted status.  These are great measures, but will take time to become law.

The takeaway for families of seniors who are Medicare beneficiaries is to never assume that just because mom or dad is in the hospital that they have been admitted.  You must ask the hospital caseworker if the status is admitted versus observation.  If you think mom or dad may need a short skilled nursing or rehabilitation stay following the hospitalization, then you should also persistently ask that they be given “admitted” status so that their well-earned Medicare benefits will be available to them.

Topics such as this can be confusing, especially while being faced with the hospitalization of someone you care about.  To ask questions and to learn more about skilled nursing and rehabilitation services, assisted living, and other Medicare benefits, please contact us.  We look forward to being there for you!

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