How a Medicare-Covered Hospital Stay Could Cost You Thousands

A seemingly insignificant label can add tens of thousands of dollars to Medicare beneficiaries' out-of-pocket costs after a hospital visit. Here's what you must understand.

How a Medicare-Covered Hospital Stay Could Cost You Thousands Photo by ALPA PROD / Shutterstock.com

When Medicare beneficiaries are treated in a hospital, whether they are labeled “inpatient” or “outpatient” can make a costly difference in the bill — potentially increasing out-of-pocket costs by thousands of dollars.

You probably think these two terms simply define whether the person spent the night in the hospital. But Medicare uses the words differently.

For example, for 95-year-old Mary Higgins of Wilmington, Delaware, was admitted to a hospital for “observation” last year. After the visit, she received care at a skilled nursing facility — and was hit with a $2,340-per-week bill, CBS MoneyWatch reports.

Why did it happen? Because Higgins was admitted for “observation.” So, despite being in the hospital for five days, Medicare labeled her as receiving outpatient care, Medicare. CBS explains:

“Although Medicare doesn’t cover general custodial nursing home care — such as help with daily living, administering medicine, etc. — it does pay for prescribed follow-up treatment in a skilled nursing facility with specialized care. To qualify for this benefit, though, Medicare patients must have previously stayed in a hospital [as an inpatient] for three days, not counting the day of discharge.”

How Medicare defines inpatient and outpatient

Your classification as an inpatient or outpatient is what Medicare calls your “hospital status,” and it can affect your out-of-pocket costs for a variety of services. As Medicare defines these terms:

  • “You’re an inpatient starting when you’re formally admitted to the hospital with a doctor’s order. The day before you’re discharged is your last inpatient day.
  • You’re an outpatient if you’re getting emergency department services, observation services, outpatient surgery, lab tests, or X-rays, or any other hospital services, and the doctor hasn’t written an order to admit you to a hospital as an inpatient. In these cases, you’re an outpatient even if you spend the night in the hospital.”

Note that the difference between these two statuses can be nuanced, essentially coming down to what a doctor writes in your chart. As Medicare puts it, “your doctor must order [inpatient] admission and the hospital must formally admit you in order for you to become an inpatient.”

So, you don’t want to make any assumptions about your hospital status.

How to learn more about your Medicare hospital status

Ideally, you should educate yourself about Medicare terminology before you next find yourself in the hospital. Perhaps start by reading:

Once you’re in the hospital, ask about your Medicare hospital status as soon as possible.

The Center for Medicare Advocacy notes that, under a federal law that took effect in March, hospitals must provide Medicare beneficiaries with what’s known as a Medicare Outpatient Observation Notice, or MOON, within 36 hours if they are receiving observation services as an outpatient for 24 hours.

As CBS reports, however, even 36 hours might be too long to go without knowing your Medicare hospital status, considering the possible financial repercussions of your status. The publication advises:

“Make sure you or whoever is assisting you in the hospital finds out what your admission status is. If it’s observation, ask if it can be changed. This isn’t easy to do. You may need to enlist the help of your general practitioner or family doctor. He or she knows your medical background and can help convince the hospital doctors that you need inpatient coverage because you may require follow-up care.”

Were you aware of how a Medicare beneficiary’s hospital status can impact out-of-pocket costs? Let us know below or on Facebook.

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