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DECEMBER 27, 2017

The difference between being labeled an inpatient or outpatient may seem minor when you are lying in a hospital bed, but it can cost a patient big money in the end.

This difference is something financial advisors should be aware of and warn their clients about when they enter the hospital, says Rosanne Roge, managing director of R.W. Roge & Company, a private wealth management firm in Bohemia, N.Y., and Beverly, Mass.

“This difference in hospital status is something that advisors should make their clients aware of because it could cost them thousands of dollars,” says Roge, who specializes in financial geriatrics.

If a patient is admitted to a hospital for at least three days, the subsequent costs of any nursing home care, including rehab or therapy, is covered by Medicare Part A for the first 20 days and most costs are covered for another 80 days.

But a patient can be in a hospital for several days under observation, without being formally admitted by a doctor. The stay is considered outpatient care and can include emergency department services, observation services, outpatient surgery, lab tests, X-rays and other various hospital services.

If a patient is not admitted and remains an outpatient under observation, he is covered by Medicare Part B, which only covers 80 percent of most medical expenses. In addition, any subsequent nursing home stay is not covered at all. Nursing home costs for skilled care vary by region of the country but range between $165 a day in the South and Midwest and $235 on the East Coast.

Two-thirds of hospital patients who are on observation status as outpatients end up paying substantial out-of-pocket costs, according to the AARP Public Policy Institute, and another 10 percent pay more than if they had been admitted as an inpatient.

Efforts are being made to help patients. A federal law was passed last year that requires hospitals to notify patients if they are being admitted or are only in the hospital for observation. Roge says she knows of patients who have challenged hospitals and insisted on being admitted so they would receive full Medicare coverage.

Another bill has been introduced by U.S. Representative Joe Courtney a Democrat from Connecticut, that requires Medicare to cover nursing home care after any three-day hospital stay, whether the patient was classified as an inpatient or outpatient. The bill has bipartisan support but has not moved for years.

A class action lawsuit has been filed against The Centers for Medicare and Medicaid Services by the Center for Medicare Advocacy and others. The suit seeks compensaton for those patients who were forced to pay medical expenses because they were classified as outpatients under observation.

Patients have a bill of rights for all Medicare coverage that includes having all their questions answered, understanding treatment choices, filing grievances about quality of care, and obtaining a review of payment.

“One of the best options for your clients is to have a patient advocate go with the client to the hospital,” says Roge. “A scared and worried patient is not going to think to ask the right questions.”

Roge advises all of her elderly clients to keep a packet of information including emergency contacts, doctors’ names, medical power of attorney, prescriptions, Medicare information and other pertinent information that can be taken with them to the hospital.

Information on patients’ rights and advice can be found on the Center for Medicare Advocacy website. Advisors should put this information on their websites and send it to clients in emails, newsletters or blogs, Roge says.

“Being aware of the options is the most important thing for clients,” she says. “They don’t want to find out this information after the fact. Informing them is a practical way an advisor can help and clients are always grateful.”–observation-36368.html