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Congress Approves Bill Bolstering Medicare Patients’ Hospital Rights

Patients must be informed when they are receiving observation care

The Senate has unanimously approved legislation requiring hospitals across the country to tell Medicare patients when they are receiving observation care and have not been admitted to the hospital, according to a report from Kaiser Health News. It’s a distinction that’s easy to miss until patients are hit with big medical bills after a short stay.

The vote follows overwhelming approval in the U. S. House of Representatives in March. The legislation is expected to be signed into law by President Obama, said its House sponsor, Texas Democratic Rep. Lloyd Doggett.

The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act will require hospitals to provide written notification to patients 24 hours after receiving observation care, explaining that they have not been admitted to the hospital, the reasons why, and the potential financial implications.

Those implications can be dire. Observation care hurts seniors in two ways: it keeps Medicare’s more comprehensive hospitalization coverage from kicking in, and it means they may not get Medicare’s limited nursing-home benefit if they need care in a facility after being in a hospital.

To qualify for Medicare’s nursing home coverage, beneficiaries must first spend three consecutive midnights as an admitted patient in a hospital, and observation days don’t count.

Without that coverage, seniors could pay thousands of dollars for the nursing home care their doctors ordered, or else try to recover on their own. Observation care is a classification used when patients are not well enough to go home but are not sick enough to be admitted.

Because observation care is provided on an outpatient basis, observation patients usually also have co-payments for doctors’ fees and each hospital service, and they have to pay whatever the hospital charges for any routine drugs that the hospital provides that they take at home for chronic conditions, such as diabetes or high cholesterol levels.

A handful of states already require observation care notices, including New York, Connecticut, Maryland, Pennsylvania, and Virginia, Doggett said, but Medicare officials have been reluctant to take similar steps.

Hospitals will have to comply with the NOTICE Act 12 months after it becomes law.

Two months ago, Sean Cavanaugh, a deputy administrator at the Centers for Medicare & Medicaid Services (CMS), fielded a barrage of questions on the issue from members of the Senate Special Committee on Aging.

“There is an assumption that if [patients] are being wheeled into a hospital bed,” and they are getting treatment, then they have been admitted, Sen. Claire McCaskill, a Missouri Democrat, told Cavanaugh. When Sen. Susan Collins, a Maine Republican, repeated McCaskill’s question, asking if the CMS would require notification, he said the federal government has been “pushing very hard” to encourage hospitals to educate patients about observation care. But he said it wasn’t clear that the agency could require hospitals to do more to inform patients.

“A new legislative requirement was the most direct way to address the problem,” Doggett said.

Meanwhile, the number of claims hospitals submitted for observation care continues to skyrocket. According to the most recent data from the CMS, total claims increased 91% since 2006, to 1.9 million in 2013. Long observation stays, lasting 48 hours or more, rose by 450% to 170,219 during the same period, according to a Kaiser Health News analysis.

In 2013, Medicare officials attempted to control the use of observation care by issuing the so-called “two-midnight rule,” which required hospitals to admit patients whom doctors expect to stay at least two midnights, but Congress delayed its enforcement after hospitals said the rule was confusing and arbitrary.

Although it’s better for patients to know when they are on observation status, Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy, said they may not be able to do much about it. She said there is no set process for challenging observation care while in the hospital, unlike issues such as disputing a discharge order when admitted patients feel they are not ready to leave.

The only way to switch from observation to admitted status is to persuade a physician or the hospital to make the change, Edelman said, and that decision doesn’t apply to the time the patient has already spent on observation.

Challenging observation care after leaving the hospital can be frustrating since Medicare appeals judges may decide that a patient’s condition did not require inpatient-level care — even though they received care that could have been provided  nowhere else but in a hospital.

Sources: Kaiser Health News; July 29, 2015; and NOTICE Act; February 11, 2015.

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