FAQ: Hospital Observation Care Can Be Costly For Medicare Patients

NOTE: If you have suffered from the costs of being under observation, there is a class action lawsuit that has been certified. You can tell your story and possibly become part of the class by filling out the form at http://www.medicareadvocacy.org/submit-your-observation-status-story/

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Some seniors think Medicare made a mistake.  Others are stunned when they find out that being in a hospital even for a couple of days doesn’t always mean they were actually admitted.

Instead, they received observation care, considered by Medicare to be an outpatient service. The observation designation means they can have higher out-of-pocket expenses and fewer Medicare benefits. Yet, a government investigation found that observation patients often have the same health problems as those who are admitted.

Medicare officials are working to finalize a notice that will inform patients that they are receiving observation care. That is required under a federal law that went into effect in August, and hospitals will likely begin using the notices in January. Some states already require that patients be told about their status.

More Medicare beneficiaries are entering hospitals as observation patients every year. The number doubled since 2006 to nearly 1.9 million in 2014, according to figures from the Centers for Medicare & Medicaid Services. At the same time, enrollment in traditional Medicare grew by 5 percent.

Here are some common questions and answers about observation care and the coverage gap that can result. (Seniors enrolled in Medicare Advantage should ask their plans about their observation care rules since they can vary.)


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