Medicare Observation vs Inpatient

  1. Can anyone tell me if a patient is admitted Observation in a hospital, is it paid 100% or does the patient pay a portion? I believe much of it, if not all, is paid under Medicare part B if they are observation and part A if they are inpatient. I ask because my boss just said we should be telling the patients they are required to pay 20% of the stay if they are observation. I never heard this. I realize there is a big issue with their needing to bring in their meds from home and the 3 night stay for SNF rule. Thx
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    About lisa41rn

    Joined: Mar '05; Posts: 166; Likes: 42


  3. by   Copper4
    My understanding is that Observation status is considered to be an outpatient status. It drives me a little nuts when people state that she was "... admitted to observation status", when in reality she has not been admitted at all. The patient did not meet inpatient level of care criteria or she would have been made an inpatient. . Observation is paid under medicare part b, and after deductible it covers at 80%. A medicare supplement would likely pick up the other portion. This often times comes as a surprise to patients especially when they are in a johnny, and in a bed. The hospital i work at has started giving out an observation status letter of explanation, in an effort to avoid lots of complaints when the bills arrive. It also is extremely important for the medicare patient to understand that these days are not considered under the 3 day qualifying stay rule that can enable coverage at an SNF, if appropriate skilled need is evident. At times people are in observation status for many days, we often times have to tell them that even if she was admitted, the days would not be considered qualifying days. It is all about level of care and appropriate use of resources. Hospitals are running scared because of the expected RAC's that medicare is implementing that may require hospitals to pay back funds, if audits determine that the level of care billed was not appropriate. OMG if this happens it could put hospitals out of business!!
  4. by   lisa41rn
    I'm not sure where you live, but in the Northeast the RACs are here and auditing records. Yeah, it's not pretty! My hospital uses the McKesson Interqual software which I believe helps to meet critieria for inpatient and observation, but I've seen some CMs really force patients to meet and I don't think that's going to work when the RACs review the records. Another local hospital just build an $85 million urgent care/surgi center, etc building and they push to get every dime they can. I worked for them a short time and felt they pushed things so much it wasn't right. I'm sure they'll be paying back millions after the RAC reviews their records.

    I've really loved CM, but there have been so many changes that I feel like some patients are really needing to leave because if they don't, the hospital will lose and Medicare won't pay. With all the changes going on, I do believe there will be some hospitals closing.
  5. by   Copper4
    I am from the Northeast as well, but only work case management per diem. I knew RAC's were coming, but have not heard anything more in terms of the effect on payment. How has it been working at your hospital? Are they recouping money, or requesting additional info ( not even sure that is an option)?? curious how this is working??
  6. by   d'cm
    "... admitted to observation status", when in reality she has not been admitted at all.

    I had a Director who also had a problem with this, insisting that if MD wrote an observation using the "admit" word we had to get it reworded or patient would considered in patient. So we had them say "keep in observation" or "transfer to observation". However, unless CMS has made a ruling supporting this intrepretation I'd say BS, because the physician's intention as to the patient status is clear. Anybody aware of a CMS / LCD/ NCD ruling on "admit to observation"?
  7. by   nurse grace RN
    The observation vs admission problem causes a great deal of problems where I work. It is a constant battle to get it right. And "RAC" audits are dreaded, and we are expecting to have to pay money back, We are instructed "not to force anyone under InterquAL". We send alot of PA referrals to our advisor.
  8. by   clhankin67
    I am a manager for a Managed Care Company. Per the Medicare Benefit Policy Manual, Chaper 6, Section 20.6, Outpatient Observation Services Effective 07/01/09 : "Observation care is a well-defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment, and reassessment before a decision can be made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. Observation services are commonly ordered for patients who present to the emergency department and who then require a significant period of treatment or monitoring in order to make a decision concerning their admission or discharge." "When a physician orders that a patient receive observation care, the patient's status is that of an outpatient."

    A Medicare FFS member will be required to pay outpatient co-pays, and will need to pay for those meds that do not need to be administered by skilled nursing (such as PO meds). This can be very confusing as the member does not understand that they are not "admitted" to the hospital and can be cost prohibitive for those on a fixed income. This may also apply to Commercial insurance, Medicare Advantage and HMO plan rules.

    I see certain hospital's that will keep a patient in OBS status for DAYS in fear of being audited by RAC for incorrectly flipping to In. I have other facilities that want 100% of cases flipped to In, and have seen IQ stretched to meet either criteria. We forget that IQ and Milliman's is considered a guideline by CMS, but they do not recognize either as the "law".

    At the end of the day, we are professionals and need to utilize effective assesment of the individual in the bed, their testing results, and our clinical judgement to assure that the member is in the correct level of care.
  9. by   QTBabyNurse
    [font="century gothic"]our facility uses the term "place patient in observation status". actually the choices are printed at the top of the physician order sheet as follows: place in observation status for (fill in diagnosis) or admit to inpatient for (fill in diagnosis). it makes it easy for the docs to just check the appropriate box and not have to worry about getting the correct verbage!