Beware Hospital “Outpatient” Observation Status

Newsletter | Feb 24, 2017 | Hook Law Center

Picture this: You’re 80 years old and you suffer a fall that lands you in the hospital for a week. At the end of your stay, you are discharged to a rehab facility for three weeks of rehabilitation and skilled nursing care. The time you spend in the hospital and at rehab is stressful, but you rest assured knowing that you have Medicare coverage. Weeks later, the bills start pouring in, and you learn that Medicare has covered almost nothing. You now owe both the hospital and the rehab facility several thousand dollars. How did this happen?

Three words: Outpatient observation status. Hospital patients and their families are often blindsided by the effect of these words. Outpatient observation status is a billing code hospitals use to protect themselves from penalty by Medicare for admitting patients for treatment which Medicare believes should have been provided on an outpatient basis. Use of this code is on the rise, having doubled between 2006 and 2014, according to The Center for Medicare Advocacy. Unfortunately, this can result in Medicare patients who do not have Medicare Part B paying entirely out of pocket for their the full cost of their hospital stay, hospital prescriptions, and/or nursing facility (rehab) care following a hospital stay. The financial effects can be devastating.

Use of the word “outpatient” in this context is misleading. You may spend the night (or several nights) in a hospital and technically still be classified as outpatient. It has nothing to do with where you receive the care or what kind of treatment you receive.

To address the issue, Congress passed the Notice of Observation Treatment and Implication for Care Eligibility Act in 2015. The NOTICE Act requires hospitals to notify individuals who receive observation services as an outpatient for more than 24 hours with written and oral notification of the classification within 36 hours after they begin receiving the services. The notice must explain the individual’s status as an outpatient and the reasons for the classification. It must explain the implication of that status on services furnished, particularly the implications for cost-sharing requirements and subsequent coverage eligibility for services furnished by a skilled nursing facility. It must be written in “plain English” and be provided in the individual’s own language, and the individual or a person acting on his behalf must sign to acknowledge receipt of the notification. If the individual or his representative refuses to sign, the hospital staff who presents it must sign.

If you or a loved one is classified as outpatient observation status during a hospital stay, fighting the classification can be extremely difficult. The Center for Medicare Advocacy recommends the following:

  • At the BEGINNING of a hospital stay, have a proactive discussion with the hospital about your classification. Don’t wait to receive a written notice; try to prevent the use of outpatient observation status from the start.
  • Ask the hospital doctor to admit (or reclassify) you as an “inpatient,” based on needed care, tests, and treatments; then have your primary care physician call to support this request.
  • File an appeal with Medicare if your nursing home (rehab) coverage is denied.

File a complaint with your state health department if you did not receive a notice about outpatient observation status.

Ask Kit Kat – Frog’s Secret Weapon

Hook Law Center:  Kit Kat, what can you tell us about the frog and its powerful tongue?

Kit Kat:  Well, this is a very interesting story. I had never thought much about how a frog catches its prey, but a Ph.D. student at Georgia Institute of Technology named Alexis Noel has done some research on the matter. The frog tongue can move quite rapidly; we’re talking milliseconds from time of sticking its tongue out and retracting its tongue back into its mouth. As helpful as this is, it’s not the secret to its prowess in hunting. That is attributed to its saliva or spit which is composed of a unique substance which can change in viscosity instantly. For instance, when the prey (usually an insect) is first on its tongue, the spit is very viscous, similar to the consistency of honey, only more so. Later, the spit can change into a thinner fluid as it closes its mouth. The spit can change rapidly from one state of viscosity almost instantaneously. As a result, they can “capture meals in the amount of time it takes a human brain to think of and speak a word,” according to Noel and her colleagues.

Another thing Noel discovered about frogs’ tongues is that they are much softer than a human’s tongue. When compared to human tongues and human brains, a frog’s tongue is “slightly softer than (human) brains and 10 times softer than human tongues.” The softness contributes to elasticity, which in turn allows the frog to keep its prey inside its wide mouth and not fall out. Then to swallow the prey, the frog pushes down its eyeballs creating pressure to move the prey from the tongue to the throat. In addition, Noel and her colleagues teamed up with the Atlanta Botanical Garden to discover that 7 species of exotic frogs also had the same characteristics of extremely soft tongue tissue and the changeable viscosity of spit of the ordinary frog. These small amphibians are marvels of efficiency in securing prey to ensure their survival. What an interesting world we live in! (Ben Guarino, “Scientist cracks mystery of the frog’s powerful tongue. It’s called spit,” The Washington Post, February 1, 2017)

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