(WASHINGTON) -- An increasing number of chronically ill patients are scratching their heads to learn that during hospital stays of up to 13 days, Medicare never considered them inpatients.
In some cases, they're unaware of their "observation status," until billed for a share of diagnostic tests, prescription medications and other services Medicare covers more generously for inpatients.
Shock frequently sets in when they need aftercare and find out they'll have to pay out of pocket.
Two non-profit organizations, The Center for Medicare Advocacy and the National Senior Citizen Law Center, filed a class-action lawsuit last week against Health and Human Services Secretary Kathleen Sibelius on behalf of seven Medicare patients with chronic ailments ranging from Parkinson's disease to cancer, who were admitted to hospitals but remained outpatients.
The suit filed in U.S. District Court in Hartford, Conn., alleges that admitting patients under "observation status" is illegal and that "improper classification" deprived them of Medicare Part A coverage for hospital and nursing home stays. Medicare Part B benefits covered a smaller share of costs.
The Center for Medicare Advocacy met in September with federal health officials, but has received "no relief from the administration," said Judith Stein, the center's founder and executive director.
Such cases also have unintended consequences. Medicare recipients who cannot afford a nursing home stay might try fending for themselves, or rely on relatives' help. A client's grandson who left work to bring his grandfather home lost his job because he had no family leave benefit, Stein of the Center for Medicare Advocacy said.
Hospitals nationwide are struggling with the policy, too, said Dee Aust, Overlake's director of care management. When observation patients aren't counted as inpatients, their return within a month isn't counted as a re-admission.
The solution, says Dr. Kenneth R. Dardick, a Harvard-trained family doctor who practices in Mansfield, Conn., "is to stop this charade. It seems to me that this is all driven by an attempt to save money. Instead of taking care of my patient, I have to argue with utilization management people about how this patient should be labeled. It doesn't make my care more effective."
Commercial health insurers tend to follow Medicare's cues, and Dardick said he already had a couple of cases in which health insurers refused to pay him or the hospital for a patient's admission, such as that of a 45-year-old woman with chest pain and a family history of early heart attack.
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