Limiting Patient Liability Related to Observation Stays
Saving Patient $$
A lot of us entered the healthcare field because we wanted to help others. We expected “caring for patients” to be the primary focus. Hopefully the patient remains the focus, but the reality of healthcare also involves tons of paperwork, lots of bureaucracy, and financial concerns for institutions and payers. Sometimes the patient gets forgotten in the financial piece. Last week, Beth Cobb reported on the Medicare Payment Advisory Commission (MedPAC) and one aspect (site-neutral payment) of their review of hospital post-acute care policies. Another issue of post-acute care considered by MedPAC at the January meeting was concern for beneficiary liability related to observation stays.
We all realize that most patients do not understand the difference in outpatient observation care and an inpatient admission. And they certainly do not understand the nuances of the financial liability based on patient status. Specific concerns related to observation stays are the financial impact on the patient due to the SNF 3-day stay policy and self-administered drugs.
SNF 3-Day Stay Policy
For Medicare coverage of an admission to a Skilled Nursing Facility (SNF), a preceding 3-day hospital inpatient stay within 30 days prior to the SNF admission is required. If a patient is in an outpatient status observation stay, the time does not count for qualification for a post-acute care SNF stay. Patients transferred to a SNF following a hospital observation stay have high out-of-pocket costs due to being discharged to an uncovered SNF stay.
The option being proposed by MedPAC to address this concern is to retain the SNF 3-day threshold, count the time spent in outpatient observation status towards the threshold, but require at least one of the three days to be an inpatient day.
In developing this option, the MedPAC committee considered:
- the impact on the beneficiary – reducing out-of-pocket costs, and
- the impact on the Medicare program, specifically
- preserving the SNF benefit as strictly a post-acute care benefit to prevent a significant increase in SNF utilization and
- limiting the financial impact on the program by not totally eliminating the 3-day policy or the inpatient requirement.
Self-Administered Drugs (SADs)
Another out-of-pocket cost for Medicare patients associated with observation stays is the costs of self-administered drugs (usually oral medications). Medicare does not cover self-administered drugs and patients in an extended stay such as observation may require their regular oral medications. Some hospitals do not bill patients for SADs, but other hospitals believe they must charge for these drugs due to laws prohibiting beneficiary inducements. Patients are billed full charges which are significantly greater than the costs of the drugs. Everyone has heard a story about a $10 aspirin.
MedPAC developed three potential options to eliminate or reduce beneficiary burden for SADs during an observation stay without additional costs to Medicare:
- Allow hospitals to waive SAD charges for observation beneficiaries
- Cap the amount hospitals can charge outpatient beneficiaries for SADs (e.g., hospital cost)
- Medicare covers SADs for hospital outpatients receiving observation
This third option would only be without additional cost to Medicare if it were designed as budget neutral.
For more information on these proposals, see the MedPAC Presentation - Hospital Short Stay Policy Issues and the transcript of January 2015 MedPAC meeting. As our article last week noted, MedPAC’s proposed options are only recommendations to be considered by Congress but it is nice to at least see this level of concern for the patient’s financial burden. Hopefully a solution can be found without shifting that financial burden to hospitals.
Article by Debbie Rubio
This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful.