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The problem for Medicare patients is that if they are treated under observation status they can be hit with expenses they never anticipated. Because they are technically outpatients, their hospitalization is covered under Part A of Medicare. This is the part of Medicare that pays for hospital costs above the standard deductible of $1184. In comparison, Medicare Part B is where observation services are billed. And if you were treated under observation status, you would have to pay 20% of the cost. Plus, if you were under observation, you would also have to pay out of your own pocket for any medication you received while you were in the hospital. If you have a Medicare prescription plan, you could file a claim for reimbursement but if your plan didn’t cover the drugs you were given or if the hospital was not in your network you could receive little or no reimbursement.
What this can mean
According to one report that was released earlier this year, in 6% of all observation stays last year, patients had to pay more than $1184 for their Part A deductibles. In addition, when these patients were discharged, many of them were hit with huge bills for rehabilitation care. Medicare will pay for as many as 20 days of rehabilitation at a skilled-nursing facility but to qualify you must have spent three successive nights in the hospital as an inpatient. This means that if you were treated in observation status and never admitted, you would not qualify for this help.
What you could do
If you are hospitalized and on Medicare, you should learn whether or not you are an inpatient or an outpatient under observation status. If you suspect you are in observation status and will eventually need rehabilitation be sure to ask your doctors to help you get your status changed before you are discharged. There is a Medicare rule that became effective on October 1 that doctors should admit anyone they expect will be required to stay in the hospital for two or more nights as inpatients. However, in order to qualify for rehabilitation services, that three-night minimum is still in place and you would have to be an inpatient for all three nights.
If you are in a skilled-nursing facility
In the event you find yourself in a nursing facility and discover that Medicare does not cover your stay, you should file an appeal on both your nursing home and hospital bills. You will find instructions for doing this on the quarterly Medicare Summary Notice. And here’s a video with more information about the appeals process and the forms you will need.
If you can't avoid these bills
If you were treated as an outpatient under observation status and find that not all of your costs were covered, you could find yourself in the same bind as many Americans, which is facing huge medical bills that you can't pay. Many Americans with this problem have chosen to file for bankruptcy. In fact, medical bills is the number one reason why people file for a Chapter 7 bankruptcy. And, yes, bankruptcy will leave an indelible stain on your credit reports that will last a minimum of seven years but could be your best option if you find yourself facing big medical bills. It's possible to get an attorney to handle a chapter 7 bankruptcy for $500 or less. If you don't own your own home, you could even have a do-it-yourself bankruptcy and save the $500. There is a fair amount of paperwork involved and you would ultimately have to appear before a bankruptcy judge but, depending on your circumstances, it could be well worth the effort