A National Problem Hits Pennsylvania Patients

An increase in the use of observation status has negatively affected numerous patients nationwide, as well as in Pennsylvania.

According to US Sen. Chuck Schumer (D-New York), it was the plight of an elderly couple that drove him to co-sponsor federal legislation, introduced Feb. 13, 2013, to stop Medicare from denying skilled nursing facility payments to Medicare beneficiaries who have not been admitted for at least three days. The bill, “Improving Access to Medicare Coverage Act of 2013,” would count observation stays toward the three-day minimum requirement.

An 88-year-old retired tax attorney broke his pelvis on Nov. 12 when he stumbled in an Albany parking lot. After spending four days in the local hospital and three weeks at a rehab hospital, he was billed $6,000 for his follow-up care. He was never admitted to the hospital, but rather classified as an “observation” patient. Under Medicare rules, he did not qualify for inpatient rehab care, even though he was immobile and in severe pain.

Medicare only pays for inpatient rehabilitation following a serious hospitalization, defined as at least three days as an admitted patient.

The Pennsylvania Medical Society (PAMED) delegation brought this issue to the American Medical Association in 2012, and the American Medical Association (AMA) vowed to “advocate that patients be subject to the same cost-sharing requirements whether they are admitted to a hospital as an inpatient or for observation services.”

Organizations such as the Center for Medicare Advocacy, the National Senior Citizens Law Center, and the National Medicare Advocates Alliance all advocate changes to existing Medicare observation policy.

In addition, a national lawsuit, Bagnall v. Sebelius, has been filed claiming that the use of observation status violates federal laws as well as the Fifth Amendment to the Constitution.

PAMED is “, and is exploring partnering with national and state organizations to provide physician and patient educational materials and the AMA to readdress the place of service designation of “outpatient” that is currently associated with observation status

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