AARP Fights to Protect Right of Medicare Patients to Challenge 'Observation Status'

AARP and AARP Foundation have filed a legal brief arguing that Medicare beneficiaries treated in the hospital under a so-called "observation status" rather than being formally admitted should be permitted to appeal that categorization. The manner in which patients are classified can cost many older Americans thousands of dollars in healthcare costs, especially for rehabilitative treatment needed in skilled nursing communities after leaving the hospital. Often the case is that Medicare enrollees who are hospitalized believe they have been admitted as a regular patient, but are classified as being under observation, even if they get the same treatment and care as someone formally admitted. Such beneficiaries are often shocked to discover that Medicare has not covered their rehab costs because they were not officially inpatients. Last April, a federal district court judge ruled that beneficiaries can appeal their designation as being under observation to the Medicare program, and be reimbursed for some of their hospital and rehab costs if they win that challenge. The federal government has appealed that ruling. The legal brief states that hospitals are increasingly classifying patients as being under observation status out of concern with the U.S. Centers for Medicare and Medicaid Services fining them for over-admitting patients. Legislation strongly backed by AARP has been introduced in Congress that would allow the time patients spend in the hospital under observation status to be counted toward the three-day hospital stay that Medicare demands before it will cover care in a skilled nursing community.