Berge & Berge, LLP Blog

Saturday, October 15, 2016

New California Law Helps Seniors Avoid "Observation Status" In Hospitals

What are the medical and financial risks for elderly patients placed under observation? 

Elderly patients who are placed under "observation" are often under the mistaken impression that they have been formally admitted to the hospital and that their care will be covered by insurance. They may even spend days or weeks in a hospital room while still under observation. In many instances, they are never told about their status. But being under observation means less medical and nursing care for seniors and less insurance reimbursement, leaving patients with huge bills. 

Hospitals have used the strategy to scrimp on costs and provide a lower level of care—until now. A new law requires more accurate disclosure to patients, better care, and more reporting to the government of services provided to patients under observation.

Fewer Nurses for "Observation Status" Patients

Under California law, hospitals are required to provide a certain number of nurses per admitted patient. But, before passage of the new law, these requirements have not included patients under observation. The loophole allowed hospitals to provide a lower nurse-to-patient ratio when declaring patients to be under observation. 

Patients Receive "Outpatient" Reimbursement and Must Pay the Difference

Medicare and private insurers view seniors not actually admitted to be receiving "outpatient" treatment, even if the patient is in the hospital for an extended period of time.

To receive Medicare reimbursement for long-term care, elderly patients must be officially admitted and spend three days in the hospital. Their hospitalization under observation would not be reimbursed, subjecting them to considerable medical bills that they would have to pay themselves.

Patients who were not told that they were receiving less care and less reimbursement for their hospital stay can find themselves personally responsible for huge costs. In one instance, 96-year-old retired teacher, who had suffered a fractured pelvis and elbow in a fall, was kept under observation and then sent to a nursing home for rehabilitation. Because she had not been officially admitted, her long-term Medicare coverage never began. She received a bill for $19,000, with Medicare paying only for her ambulance ride.

New Law Contains Rules for Nursing Care Standards and Disclosure

The new law, which takes effect starting in 2017, provides that:

• Observation units must have the same level of staffing as an emergency room.

• Patients must be informed that that being held under observation is an outpatient service and that they may not receive third-party reimbursement. Units set aside for patients under observation must also be marked as such.

• Hospitals must report the services they provide to patients under observation to the Office of Statewide Health Planning and Development. 

• Hospitals may not try to avoid these requirements by placing observation units under a different name.

Even under the best circumstances, when the elderly are hospitalized, there are concerns about the level of nursing care and the likelihood of unreimbursed costs. Until now, "observation status" has greatly exacerbated both of these problems. While the new law will help, an eldercare attorney can advise you on the best strategies for avoiding mistreatment by medical professionals and hospital administrators. Your attorney can help you seek remedies if you have already been a victim.

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