If a Medicare recipient needs to be admitted to the hospital in the near future, you will need to watch the category into which his/her stay is classified. The Medicare 30-Day Readmission Rules have imposed two classifications into which a hospital admission can be classified. The first classification is “inpatient” status. The second classification is “observation” status.
What is the difference between the two classes? If a loved one stays in the hospital for three days and is classified as an inpatient, they may receive up to 100 days of short-term rehabilitation or sub-acute care in a skilled nursing community that is covered under Medicare Part A. If an individual enters the hospital and is placed in the “observation” category, the stay is categorized as outpatient and benefits are paid under Medicare Part B. This sort of classification means that an individual is subject to co-payments and will not be eligible to receive the rehab. services in a nursing home. The bottom line is that the burden of paying for care is shifted to the patient who is in the “observation” category. The problem is that many people may not be aware of the difference between the two classifications, and that the patient does not benefit from being placed in the observation category. The Medicare program, however, will be saving a lot of money.
The new rules came to fruition through the Affordable Care Act. They are meant to cut back on the number of hospital readmissions that cost the government billions of dollars ie. the assumption is that the patient should be given the right care and discharge plans that will avoid readmitting him/her to the hospital within thirty days. If a readmission occurs within 30 days, the hospital will not be reimbursed by Medicare. The types of diagnosis that are being affected by these parameters include heart attack, pneumonia, and congestive heart failure.
What is more interesting is the role of the Recovery Audit Contractors who are offsite consultants. They review the admission statuses of Medicare recipients. They have the duty of reviewing the admission status of each recipient; but, they have the right to change the admission status from inpatient to observation. They also have the ability to change a Doctor’s classification of inpatient to observation. Sometimes, the change in status occurs after the individual is discharged from the hospital. They are paid a commission according to how much money they save Medicare. The patient needs to be prepared to appeal a dispute over his/her classification and prove medical necessity to be classified as an inpatient.
As a senior living advisor, I see pros and cons to the installation of these rules. They are an attempt to curb the unnecessary readmissions that cost the government billions of dollars. Yet, an incorrect classification into the observation category can deny a Medicare recipient the necessary sub-acute care or rehabilitation s/he needs in order to recuperate and attempt to return to society. I have also included a link to an interesting article as to how these rules are going to affect hospitals in Chicago’s poorest neighborhoods.