Review of “How this Medicare loophole can lead to surprise medical bills” by Philip Moeller.  

Today is August 11, 2019. An article from PBS NewsHour has touched on something I have long been telling my clients to be on the lookout for. The difference between inpatient admission to a hospital and outpatient admission or observation care. The difference affects later qualification for Skilled Nursing Facility (SNF) coverage. As Moeller’s article title indicates, not being admitted as an inpatient to a hospital can lead to surprise medical bills. Imagine being admitted to the hospital for a number of days, then being told you now need Skilled Nursing care. 

Then be transferred to the Skilled Nursing Facility and upon your discharge learning. Medicare doesn’t cover your stay because you didn’t qualify because you were not admitted as an inpatient to the hospital. Remember if you have a Medicare Supplement and Medicare does not cover an event. Then your Medicare Supplement will not cover as well. This is something that does happen and knowing the difference can help you avoid a costly Skilled Nursing Facility stay. You can find Moeller’s article by CLICKING HERE.

When a Skilled Nursing Facility (SNF) May Not be Covered

Medicare will not approve your Skilled Nursing Facility stay without you being admitted as an inpatient for at least three days. The first day you are admitted to the hospital counts as your first day. However, the day you are discharged does not count towards the three days. The easiest way to determine if you qualify is if you are an inpatient for three midnights in a row. For example, if you are admitted as an inpatient on a Monday at 11:59 PM. Then discharged at 11:59 pm on a Wednesday you are in the hospital on three separate days. But because the day you are discharged doesn’t count as a day for Skilled Nursing Facility coverage, you did not obtain the three days or three midnights.

However, if you were discharged anytime on Thursday in this example. Then you would have been in the hospital for three consecutive midnights and would qualify for Skilled Nursing Facility coverage. You are an inpatient on Monday, Tuesday, Wednesday, and Thursday. This is four days. But remember the day you are discharged does not count. Notice, you satisfied three midnights in this case and would likely qualify for SNF coverage in this scenario. 

What Part of Medicare Pays for Skilled Nursing Facility?

The big concern is which part of Medicare will pay for your hospital stay. And if you qualify to have a Skilled Nursing Facility covered by Medicare. If you are admitted as an inpatient, Medicare Part A will cover your hospital stay (not including doctors seeing you). “Medicare Part B (Medical Insurance) covers most of your doctor services when you’re an inpatient. “You pay 20% of the Medicare-approved amount for doctor services after paying the Part B deductible.” This quote is from Medicare’s official document titled Are You a Hospital Inpatient or Outpatient? You can view the document by CLICKING HERE. The $1,364 Part A deductible is your responsibility. Having a Medicare Supplement will most likely pay your Part A deductible. 

If you are in the hospital and not admitted as an inpatient but are under observation care even though you might be staying overnight, then you will be treated under the Medicare Part B rules. If you don’t have Medicare Part B then you will be responsible for 100% of the costs, and if you have Medicare Part B, then you are responsible for 20% of the approved amounts. This is why it is important to add the optional Medicare Part B coverage. If you don’t do so when you are first eligible you may incur a penalty later and have to delay coverage. If you have the correct Medicare Supplement Plan, then your Medicare Supplement can pick up all of your Part B costs.

How Observation Care will not Qualify for Skilled Nursing Facility Coverage

For example, you are in the hospital and never officially admitted as an inpatient and are only there for observation care. After your observation care, you are able to be discharged from the hospital but need to go to the SNF. Medicare will not cover your stay in the SNF. As we know, the rule of Medicare is you need to be admitted to the hospital as an inpatient for 3 consecutive days (day of discharge does not count) to qualify for skilled nursing care. In addition, there can be a combination of inpatient and outpatient in the hospital.

For example, you are in the hospital for 3 consecutive days, but the first day you are in the hospital you are under observation care and the next 2 days you are an inpatient. After the 3rd day, you are told you need skilled nursing care. Because you were an outpatient for 1 day and only an inpatient for 2 consecutive days, you will not qualify for Medicare to pay your SNF stay. Medicare Coverage of Skilled Nursing Facility Care p.17 CLICK HERE FOR MEDICARE DOCUMENT

Why Patient Admissions to hospitals are under outpatient and not Inpatient? 

Hospitals find it can be worth more money to them to not admit patients as inpatients. According to the book taking Medicare, published by Senior Marketing Specialists and authored by Dan Mangus, a leading trainer of independent insurance agents in the United States on Medicare, “Medicare contracts with private companies as recovery audit contractors (RACs). RACs audit is a lot more than whether a patient’s stay is observational or an admission. Their salaries are directly proportional to the amount of money they are able to recover through audits. And the observational-admission revenue differential has been seen as attractive for recovery efforts.

To avoid these potentially costly RAC audits, hospitals and doctors began classifying more and more hospital visits as observational. Between 2006 and 2012, Medicare hospital visits were about flat, but observational visits rose nearly 90 percent to 1.8 million. Mr. Mangus cites the Medicare Payment Advisory Commission (MedPAC) as his source and states the MedPAC advises Congress about Medicare.” Mr. Mangus also cites in his book a website from The Centers for Medicare and Medicaid Services.

Moeller provides a real-world example of a Medicare Beneficiary having shoulder surgery with a 6-day hospital stay. The total 6-day hospital stay was under observation care. Because he was on observation care during his hospital stay, Medicare did not fund his SNF stay. And never met the 3 consecutive days needed as an inpatient to qualify for SNF. Congress has enacted a law requiring hospitals to tell patients when they are in the hospital and under observation care. In my opinion, this is a wonderful requirement. But if the Medicare Beneficiary doesn’t know why it is important to know whether you are an inpatient or under observation care they could still be hit with surprise medical bills.

Costs of Skilled Nursing Facility

As we know, Medicare does not cover all the bills. If you qualify for a Skilled Nursing Facility stay you are still responsible for coinsurance. If you satisfy the three days as an inpatient in the hospital and will be assigned to a Skilled Nursing Facility there is still coinsurance you are responsible for. And a maximum number of days you qualify for during a benefit period (CLICK HERE to learn more about a benefit period, please see our article about Medicare Part A. The maximum number of days Medicare will cover you in a Skilled Nursing Facility is 100 days per benefit period. Fortunately, the first 20 days have a $0 (zero dollar) coinsurance. 

However, for the next 80 days or days 20 through 100 there is a coinsurance due of $170.50 per day. If you max out the 100 days the Medicare Beneficiary is responsible for coinsurance up to $13,640. This is why many people find it extremely important to have a Medicare Supplement to help cover what Medicare doesn’t pay for. In addition, Medicare has no maximum out-of-pocket limit as most plans do for people that are under 65 or individual or group coverage. The Medicare Supplement Plans that cover 100% of the Skilled Nursing Facility coinsurance are C, D, F, G, M, and N. CLICK HERE to see the chart of all Medicare Supplement plans  

Conclusion

As we know Medicare and be confusing, because of its many rules and can lead to surprise costs. If a Medicare Beneficiary remembers to ask if their admission is as an inpatient or under observation care while in the hospital can help prevent surprise costs. Remember, if not admitted to the hospital for three consecutive days they are not going to qualify for Skilled Nursing Facility coverage. Medicare Part A covers while in the Skilled Nursing Facility or hospital.  However, Medicare Part B covers doctor visits even admitted as an inpatient.

This is why it is important to add the optional Medicare Part B coverage. If you don’t do so when you are first eligible you may incur a penalty later and have to delay coverage. I hope that this blog post has been helpful in answering any questions you have about Medicare. If there is anything else you would like to know, please feel free to ask me a question and I’ll be happy to help you out!

About The Author — Christopher Duncan

I’m Chris Duncan, owner of Trusted Benefits Direct. As your Medicare advisor, I want you to know that my business offers superior solutions for everyone. I do not work for insurance companies, which allows me to serve you at a high level without any hidden agendas or conflicts of interest. All resources are provided at no cost. Because people must find peace of mind when looking ahead years down the line.

As an insurance agent, it’s my goal to make your life easier. That includes the process of securing all types of coverage for you and your loved ones, including Medicare Supplements, Medicare Advantage, Medicare Part D, Final Expense life insurance services, and retirement security plans. You can reach me toll-free at 800-910-3382 or get a free quote on MedicareRateQuote.com with just a few clicks! Don’t forget that I also offer contact forms if you would like more information from trustedbenefitsdirect.com – click here now!

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