Rule on short hospital stays may change

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Ricardo Alonso-Zaldivar

Medicare has proposed to ease a coverage policy on short hospital stays that has been criticized because it can result in higher costs for seniors.

Under Medicare, coverage for inpatient and outpatient care is determined under different payment rules. A hospital admission classified as inpatient is covered by Medicare Part A, which can result in lower hospital bills for beneficiaries and, often even more important, is required for Medicare coverage of post-hospital skilled nursing care.

Under the “two-midnight rule,” which went into effect in October 2013, patients qualify for inpatient care (and follow-up rehab coverage) only if they will require a hospitalization of at least two midnights’ duration.

Outpatient care, in contrast, is covered by Medicare Part B, which generally covers doctor bills but not hospitalization or post-hospital rehabilitation costs.

Who is an inpatient?

The problem arises when patients are placed in a hospital room for treatment but are officially admitted for “observation” (an out-patient status) without being informed of the Medicare coverage implications.

In cases when such patients are discharged for follow-up skilled nursing care, they are often surprised to find Medicare will not pay for their subsequent rehabilitation, even if they spent three or more days in the hospital.

A congressional moratorium that prevents Medicare from carrying out the two-midnight policy expires Sept. 30.

The new proposal from Medicare would, based on a doctor’s judgment, allow certain hospital stays not on the “inpatient only” list — and expected to require less than two midnights of hospital care — to nonetheless be covered under inpatient payment rules and thus eligible for Medicare Part A reimbursement.

The doctor’s decision is subject to medical review and requires supporting documentation in the medical record.

The proposed new policy will not take effect until November, following a public comment period that ends Aug. 31. To submit comments on the proposed rule, go to and follow the instructions under the ‘‘submit a comment’’ tab. You may also mail written comments to Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1633–P, P.O. Box 8013, Baltimore, MD 21244–1850.

Maryland was one of the first states in the country to pass a law requiring hospitals to notify patients of their observation status.

Patients must be warned that outpatient status “may increase the patient’s out-of-pocket costs for their stay.”

— AP, with additional reporting by

Barbara Ruben