Jane Hardin: Hospitals using ‘observation’ code to get around Medicare rules

I would welcome an in-depth article by The Bee on how hospitals use the term “under observation” to skirt Medicare quality-control rules. In Medicare, that term means you are an outpatient even if you are occupying a hospital bed. Consequently, Medicare will not pay for your days in the hospital. Further, if you are sent for short-term rehab in a nursing facility, Medicare won’t pay for that either. How do I know? My 91-year-old mother is caught up in this nightmare.

Hospitals hate the new rules that pay them for care outcomes, not days in the hospital. They are dinged if a patient is readmitted within 30 days. Their ratings, which consumers rely on when searching for plans, take a nose dive. This “under observation’’ code has exploded in private health insurance. If your stay is coded as “observation,” you were not actually admitted. We hear about Medicare fraud, but what about hospital fraud that preys on ill patients?

The Notice Act signed into law by President Obama requires hospitals to notify patients of the “observation” status, but doesn’t have any teeth. Hospitals are under no obligation to change the code. Your choice is to pay the freight or rip mom or dad out of the hospital and take your chances.

This story was originally published July 6, 2017 at 4:58 PM with the headline "Jane Hardin: Hospitals using ‘observation’ code to get around Medicare rules."