Medicare Denies Post-Hospital Care Costs for Patients ‘Under Observation'

A Connecticut man was charged with a $7,700 bill for the weeks he spent in a rehabilitation center unknowingly “under observation,” a patient status that is not covered by Medicare.

“Well I’m glad I’m still around,” said the victim, Angelo Verdini, a North Haven resident who will turn 90 in March.

After several appeals, he says he fears he will have to fight Medicare until his death.

“The trouble is I wasn’t aware that Medicare was not going to be paying for my stay at the rehab which was going to be a little more than a $400 fee per day,” said Verdini.

At the end of his stay, he was stuck with a $7,700 bill for the weeks he spent in a rehabilitation center, after a car accident left him with a neck fracture.

After the accident, Angelo was rushed to an emergency room that was part of St. Raphael’s Hospital in New Haven, where he was subjected to a slew of tests. He spent five days in the hospital room where he felt like an admitted patient.

“I couldn’t tell the difference and I don’t know if anyone else who has experienced it could tell the difference,” said Verdini.

But there was a huge difference. He later discovered that he was “under observation” and not admitted. As a result, Medicare did not cover post hospital care.

“Hospitals are under a great deal of pressure to consider patients on observation status,” said Judith Stein, executive director for the Center for Medicare Advocacy, who has been helping Angelo with his appeals.

“For the patient, the most problematic is if he needed to go to a skilled nursing facility [nursing homes] Medicare won’t pay unless the patient received three-day inpatient hospital care,” said Stein.

LISTEN: Pei-Sze Cheng on WNYC: How Your Patient Status Could Affect Your Hospital Bill

Observation stays do not count towards that three-day minimum. It is a costly distinction and observation stays are on the rise.

According to the most recent healthcare spending data, the number of Medicare outpatient observation visits increased approximately 96 percent since 2006. At the same time, other data shows that while outpatient services steadily increased, inpatient services were on a steady decline for the same period.

“It is an incredible burden on us to make sure we get the patient status correctly,” said Dr. Ohm Deshpande the Director of Care Management at Yale New Haven hospital.

Yale New Haven hospital now owns St. Raphael’s. They can’t talk about Angelo’s case specifically, but they say they are just following the strict guidelines set by Medicare.

“It really has to do with what Medicare will pay for after the care,” said Deshpande. “I think that the quality of care is exactly the same. We are providing whatever the patient needs medically.”

The Center for Medicare Advocacy is suing the federal government to give Medicare patients the right to appeal their decisions; something Angelo believes could have helped him tremendously. Instead, he must pay for his hefty medical bills on his own with his fixed income.

“Well I’m disenchanted with Medicare and the medical people and I’m going to stay as long as I can to pursue it,” said Verdini. “But I don’t know what else to do now except some help that you people might help other people to be aware of.”

Something else that could help patients is the Notice Act, which takes effect this August, 2016. The act requires hospitals to tell patients in writing when they are under observation. Until then, patients must make sure to check their own status while in the hospital.

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