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Weekly Tips & Insights

Analysis on Observation vs. In-patient Status for Medicare Beneficiaries

Often, hospitals put Medicare beneficiaries on observation status, which means they aren’t actually admitted to the hospital - even while wearing an identification wristband and laying in a hospital bed.

Know your status

Do you know if you’re a hospital inpatient or on observation status? Not knowing the difference can mean missing out on thousands of dollars in coverage. Here’s some clarification:

Medicare covers up to 100 days of skilled nursing care and rehabilitation, including:

  1. physical therapy

  2. occupational therapy

  3. speech therapy

Insurance holders only receive this coverage after they’ve been a hospital inpatient for three consecutive days and nights. Even when a patient does have hospital inpatient status, if they are discharged before the three day and night stay and need skilled rehab or nursing care, Medicare will not pay for it.

If a patient has been in a hospital for any duration of time under observation status, Medicare will not pay for any needed skilled rehab or the hospital stay under Part A, which will result in a much higher copayment for the patient.

Watch: Deb Schuster, Elder and Disability Law Attorney discuss observation vs. in-patient status in her personal life as a caregiver.

How to get coverage

If you or a loved one is a Medicare beneficiary and needs to go to the hospital, it’s imperative that you talk to your physician and advocate for hospital inpatient admission in order to ensure skilled rehab services and hospital stay will be covered.

After gaining this inpatient status, there are steps you can take to make sure you remain in the hospital for three consecutive days and nights. If you are discharged before that time period, you can contact the Social Services Department and appeal. Tell them you feel you were discharged prematurely because you need additional care. A third-party reviewing agency must request your hospital records, then speak with you, your physician and hospital staff to determine if you are stable for discharge. Often, the amount of time it takes for this review to occur takes at least a day, which can help you account for that essential third day that allows for Medicare-covered rehab or skilled care.

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