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Medicare’s Observation Policy Comes Under Scrutiny

Medicare is launching a pilot program to determine whether relaxing its payment rules can help patients who require nursing home care after a hospital stay and then are charged thousands of dollars. Seniors are often unexpectedly required to pay for nursing home care because they were considered to be under “observation” in the hospital, rather than an inpatient.

Medicare only pays for nursing home care if it follows a three-day inpatient hospital stay. Staying overnight in a hospital does not automatically make you an inpatient. Often the stay is classified as observation, which is considered outpatient care. If you are dismissed to a nursing home after being in the hospital for observation, you will be responsible for paying for your care.

Currently, if a hospital bills for an inpatient stay, but Medicare decides the patient should have been classified as under observation, then the hospital can lose its entire Medicare reimbursement. Therefore, hospitals are often reluctant to classify a patient as inpatient. The pilot program would allow the hospital to rebill Medicare for observation services if the inpatient care bill is rejected. The program is being implemented at 380 hospitals and will run for three years.

For more information and background on the issue please visit elderlawanswers.com

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