Don’t Let Your Hospital Bill Cause a Heart Attack
Just when you’re starting to recover from your hospital stay, you get the bill, and those chest pains start to come back. But you don’t have to feel like you have no control over your health care expenses. You can take steps—both before and after a hospital stay—to ensure the best possible financial outcome.
Admitted vs. Observed
One good way to make sure you’re not paying unnecessary costs is to pay attention when you first enter the hospital. Is the hospital classifying you as an admitted patient or just for observation? The difference can mean that you end up paying for your rehabilitative care.
Because Medicare considers hospital observation an outpatient service, it won’t pay for rehabilitation. Current Medicare law requires a patient to be in the hospital, admitted as an inpatient, for three days in order to receive coverage for rehabilitation in a skilled nursing facility. After that, Medicare pays for the first 20 days of rehab or other care. Conversely, if a patient has been under observation—for all or part of that time—he is responsible for the entire cost of rehab.
Because hospitals provide observation care on an outpatient basis, patients must usually pay co-payments for their doctors’ fees and each hospital service. In addition, patients must pay out of pocket for any medications the hospital provides for pre-existing health problems. Medicare drug plans are not required to reimburse patients for these drug costs because Medicare covers outpatient costs under Part B rather than Part A. This can mean paying more out of pocket for prescription drugs.
Because Medicare has strict criteria for hospital admissions and usually won’t pay anything for admitted patients who should have been observation patients, hospitals in recent years have increased their share of observation patients. Yet, a government investigation found that observation patients often have the same health problems as those who are admitted (Kaiser Health News).
How to Avoid “Observation” Status
To prevent having to pay for skilled nursing rehabilitation after your hospital stay, AARP and Kaiser Health News recommend taking proactive steps:
• Ask about your status each day you are in the hospital, as it can be changed (from inpatient to observation, or vice versa) at any time.
• Ask your doctor whether observation status is justified. If not, ask her to call the hospital to explain the medical reasons why you should be admitted as an inpatient. However, even if the doctor agrees, the hospital may be able to overrule that decision, or Medicare can change it later when reviewing the claim.
• After discharge, if you learn that Medicare won’t cover your stay in a skilled nursing facility, ask your doctor whether you qualify for similar care at home through Medicare’s home health care benefit or for Medicare-covered care in a rehabilitation hospital.
• If you have to pay for services at a skilled nursing facility, but you believe those services should have been billed as inpatient, you can try formally appealing Medicare’s decision. When you receive your quarterly Medicare Summary, follow the instructions to challenge the charges from the hospital listed under Part B of the notice. If this is denied, you can go to a higher level of appeal, following instructions on the denial letter. Also challenge any charges from the nursing home for outpatient services such as physical therapy.
• If you are billed for care in the nursing home, ask the nursing home to submit a “demand bill” to Medicare. When it is rejected, you can appeal. The Center for Medicare Advocacy’s online “self-help packet” offers more details about how to challenge observation status.
More Medicare beneficiaries are entering hospitals as observation patients every year. The number rose 88 percent over the past six years, to 1.8 million nationally in 2012, according to the Medicare Payment Advisory Commission, which helps guide Congress on Medicare issues (Kaiser Health News). At the same time, Medicare hospital admissions stayed about the same.
The Center for Medicare Advocacy filed a class action lawsuit against the federal government in an attempt to abolish the observation status—or at least for patients to be notified and given the opportunity to make a swift appeal against the decision. However, a federal court judge in Hartford, Conn., dismissed the lawsuit, which was filed on behalf of 14 Medicare beneficiaries who were denied nursing home coverage.
The trouble is that hospitals don’t necessarily tell you how you are classified when you first come to the hospital (and Medicare doesn’t require this). So you need to be proactive to make sure you are admitted rather than observed. To counteract the overuse of observation status, in August 2013 Medicare introduced a new regulation that will require physicians to admit patients whom they expect to be in the hospital for longer than two midnights. However, the so-called “Pumpkin Rule” has gotten so much resistance from hospitals that its implementation has been delayed.
Steps to Control your Hospital Bill
In addition to inquiring about your status when you enter the hospital, you can take steps to lower health costs before and after going to the hospital.
Plan ahead. If you have the luxury of planning a procedure or surgery (that is, it’s not an emergency or you’re not restricted to certain hospitals), you can find out which hospital is the least expensive for your procedure (and is within your insurance network). Surprisingly, some of the higher-rated facilities offer the least expensive procedures. Using the billing code (available from your doctor) known as CPT (current procedural terminology), you can check Internet sites, including FAIR Health, Healthcare Blue Book and New Choice Health for rates local hospitals charge for your procedure.
Also, when planning ahead, you may need pre-authorization, so be sure to check with your insurance company.
A freestanding ambulatory surgery facility, which is less costly than the hospital, can do some elective procedures. Check with your doctor and insurer. If you need an anesthesiologist, find out if they are in the network, because they bill separately. However, if unknown, most plans will bill at the in-network rate.
Stay on top of bills. After the surgery and once you start getting bills from the hospital, make sure you stay organized. For example, you could have bills coming from the hospital, various doctors, the lab and the ambulance. Some won’t come from the hospital itself, but from the provider who performed a service.
Check all the bills for errors. For example, if the hospital discharged you in the morning, protest if the hospital is charging a full daily-room rate for the date you left. Similarly, make sure there are no charges for medications you brought to the hospital. Also, the hospital daily-room charge should include fees for routine supplies, such as gowns, gloves and sheets, and not be extra.
Negotiate bills. If you think your bill is out of line, you can check other hospitals’ rates for the same procedure and use that data to try to convince the hospital to lower your fees. You can also use Medicare rates as a guide. Even though the government program typically has the lowest reimbursement rate for hospitals and medical providers, the Medicare fees indicate the government value of that hospital service and provide a good starting point for negotiating.
Also, many hospitals are willing to work with you if you can’t pay the bill, either giving you extra time or lowering their fees. Most hospitals have generous financial-assistance programs to help trim large bills even if your household income is above the poverty line. If the hospital can’t help, public, private and nonprofit programs are available to help. The federal government’s website Healthcare.gov and the nonprofit Needymeds.org offer information on patient assistance programs.
Get professional help. If you think you were overcharged, and you’re unable to make any headway with the hospital, you can get assistance from a medical or patient advocate. These often experienced medical billing professionals can step in and look for errors and overcharges in your bill and ultimately negotiate a lower rate. Typically, there is no upfront cost. The advocates charge anywhere from 15-50 percent of the money they save you, and some put a cap on their fees.
Source: “Medicare: Inpatient or Outpatient?” AARP; and “FAQ: Hospital Observation Care Can Be Costly For Medicare Patients,” June 18, 2014, Kaiser Health News. Reprinted by Always Best Care Senior Services with permission from Senior Spirit, the publication of the Society of Certified Senior Advisors.
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