A new class-action suit could close the ‘observation care’ gap

Here’s how Medicare patients stand to benefit

For years, Medicare patients have been burdened with unexpected bills for skilled nursing services following hospital treatment. The regulatory trap stems from something called ‘observation status,’ which is a designation given to hospital patients who are not sick enough to be officially admitted, but not well enough to be sent home.

More osten than not, individuals being ‘observed’ receive the same services as admitted patients, including diagnostic testing, 24/7 nursing care, IV therapy and other clinical treatments. But because this care is not technically ‘inpatient,’ they are forced to cover a higher portion of the bill. Observation patients are also denied nursing home coverage.

To add insult to injury, Medicare refuses to entertain appeals for any claims relating to observation care. That is—until a recent HHS class-action lawsuit hit the scene.

Patients under watch be warned

Although the outcome of the lawsuit remains to be seen, the news sheds light on a serious problem affecting Medicare-eligible patients. Due to the Department of Health and Human Services’ current ‘3-day rule,’ numerous observation care patients are being denied post-hospital services essential to their recovery.

If successful, the class-action suit will finally grant appeals for patients with observational stays of 3 days or more. According to public record, this includes some 1.3 million claims dating back to Jan 1, 2009. While many industry advocates support the cause, others—including CMS lawyers—say hospitals are to blame. Doctors, not Washington lawmakers, are the ones who determine criteria for inpatient admission.

As the legal battle commences, tens of thousands of Medicare beneficiaries will continue to incur massive bills for skilled nursing services. SpecialtyRx urges facilities to notify patients and their families when care has been flagged as ‘observational.’ Familiarizing the public with the ‘3-day rule’ is the first step toward helping people understand their financial responsibility under current Medicare guidelines.