Guest column: For Seniors: Navigating observation status and Medicare coverage

Published 1:32 pm Friday, September 22, 2023

Guest column by Martha Jones Sichko

Medicare can be tricky to figure out, especially regarding “observation beds” at a hospital. Observation beds for seniors are like a middle ground between going to the hospital and staying home. They’re for folks who need extra care and attention from doctors but don’t need a regular hospital stay. The following simplifies the Medicare policy and offers insights.

Martha Jones Sichko

Whether you’re an inpatient or an outpatient affects how much you pay for hospital services and if you qualify for Part A skilled nursing facility care.

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If your doctor determines that your condition requires monitoring and evaluation but not inpatient care, Medicare Part B (not Part A) will typically cover your stay in an observation bed/status because Medicare considers it outpatient, even if you spend a night in the hospital. This is where “tricky” comes into play.

Seniors will be responsible for certain costs, such as copayments and deductibles. Each day, you should always ask a hospital representative if you’re inpatient or outpatient.

Beyond the problem of waiting in an observation bed because an inpatient bed isn’t available, confusion surrounds reimbursement for medication (e.g., IV, insulin) received from the hospital while in observation status.

In speaking with a Medicare representative, she stated that the law requires Medicare-enrolled hospitals and skilled nursing facilities to file a claim on behalf of the Medicare beneficiary for all covered and non-covered services. This includes medications given while in the observation bed. She conveyed that if a hospital does not submit or accept a Medicare decision, it constitutes an assignment violation.

Part B generally covers medications the hospital administers as Part of your outpatient care. However, many drugs may not be covered. And you might be surprised with the hospital bill. Save that bill.

If Medicare Part B doesn’t accept the claim submitted by the hospital for medication provided in observation status, check with your drug plan (Medicare Part D) for reimbursement. In other words, medications prescribed for you to take after leaving the observation bed would typically fall under Medicare Part D, not Part B. Don’t hesitate to call hospital billing and have them help you understand it or if they submitted it to Medicare on your behalf. You might need drug codes to submit it for reimbursement.

Other essential notes — Medicare has time limits for how long you can stay in observation status.

Your observation status can also affect your access to Medicare’s skilled nursing facility benefit. Medicare only covers skilled nursing after a 3-day minimum inpatient hospital stay. Some Medicare Advantage plans do not require this, so check with your plan.

If you think you should be an inpatient instead of an observation status, speak up because sometimes you get more coverage. If they don’t, you have the right to appeal their decision.

Need more help? Contact the State Health Insurance Assistance Program (SHIP) at 1-800-333-2433 (MN) to receive free guidance to appeal any decision made by your Medicare Part D insurer.

Martha Jones Sichko is a senior advocate, helping to ensure affordable, accessible health care in Freeborn County.