“Observation Stays” and Hospital Payments

There is something called an “observation stay” at many hospitals that has been around and been an issue for many years but few patients and few of us in the public hear about it. Years ago, before healthcare costs went through the roof you would often hear a doctor say to a patient “Let’s keep you here overnight for observation for a day or two and if everything is OK, we’ll send you home.”

That was when things were less expensive and less complicated. Now there are clauses and loopholes that have found ways to avoid having to pay for patient care. “Observation Stays” have become one huge loophole.

The way that they work is that patients aren’t exactly admitted to the hospital so insurance may not cover some expenses. For example:

Judith Quinn was sure she had been admitted to the hospital. After all, she had stayed two weeks on a hospital ward, attended by hospital nurses, eating hospital food and examined by hospital physicians, after suffering a severe seizure.

But Quinn, 68, of La Crosse, Wis., soon learned she was mistaken. The hospital’s staff didn’t consider Quinn an inpatient. Instead, they decided she was there for an “observation stay,” a little-known category of medical care.

As a result, her Medicare coverage wouldn’t pay for the oral medications she took there or for three weeks she spent recovering in a nursing home after being discharged. Only inpatients get these benefits.

Quinn’s case and others like it are raising concern in some medical quarters about observation care—a step up from the emergency room but a step down from a formal hospital stay. More and more patients are being tossed into this category because Medicare and private insurers want to spend scarce dollars on only the sickest people in costly medical centers. Insurers’ criteria for hospital admission are getting tougher by the year.

In Illinois, as many as 320,000 people received observation care last year, up from less than 32,000 people a decade ago, according to the state’s hospital association, yet nobody seems to be noticing or doing anything about it and this is leaving numerous patients at great health and financial risk.

In some cases observation care makes sense, especially if a patient is too sick to stay at home but not well enough to stabilize. With observation care, doctors can often stabilize the patient, determine the problem, prescribe medication and send the patient home – often in less than 48 hours, saving everyone involved money.People with asthma attacks, kidney stones, dizziness, chest pain and other mild conditions would be good candidates for observation stays.

It is extremely important that you or your family find out whether you are actually being admitted or put on observation stay. Even if you are in an observation stay and they admit you for one day at the end of the observation, your medication, nursing home costs and other costs will be covered by Medicare. Without being admitted, you could be open to expenses you are not prepared to pay.

The Office of Medicare Services is currently looking into the situation and trying to determine some reasonable solutions.

Ms. Quinn’s story is an excerpt from the Tribune.