Having a loved one in the hospital is already a stressful event, as caregivers find themselves wanting to be at the hospital to advocate for their loved one while juggling other responsibilities. It is important for caregivers and Medicare recipients to know their rights under traditional Medicare or Medicare Advantage Programs and how their hospital patient status may impact the out of pocket expenses and discharge plans after their hospital stay.
According to the Centers for Medicare and Medicaid Services (CMS), Medicare reimburses different payment rates for inpatient and outpatient hospital services. In 2013, in an effort to protect Medicare A trust funds, CMS implemented the controversial “two-midnight rule,” that stated for inpatient admissions that Medicare Part A (hospital insurance) could be billed if the hospital staff expected the patient to require a hospital stay that crossed two midnights and their medical record supported that expectation.
CMS ruled that Medicare Part A (hospital insurance) was not to be billed for hospital stays expected to last less than two midnights.
These patients were then never admitted and were kept under “observation” status and their Medicare Part B (medical insurance) would be billed by the hospital.
In 2015, CMS reported that this rule led to more patients not being admitted and being kept in “observation” status. This might be due to hospitals fearing financial penalties or additional audits. This would have negatively impacted patients’ out of pocket expenses for their hospital stay and their discharge plans. As with new policies, the pendulum swung too far in one direction and starting in 2016 after reviewing the rule and feedback from stake holders, CMS decided to maintain the “two-midnight rule,” but they are allowing more flexibility for hospital staff to determine a patient’s status, updating billing policies and how this rule is enforced. However, to qualify for Medicare A payment for skilled nursing facility care after a hospitalization, CMS still requires that your loved one be formally admitted as an inpatient for a three day minimum stay in the hospital.
Your loved one’s hospital status is important. According to the Medicare Outpatient Observation Notice (MOON), being an outpatient may effect what you pay in a hospital:
Observation services may effect coverage and payment of your care after you leave the hospital:
CMS directs patients to talk to the hospital staff member giving them the MOON notice or to talk to the doctor providing their hospital care. They also direct patients to talk to someone from the hospital’s utilization or discharge planning department.