If the government does not challenge the decision and patients win their appeals, Medicare could pay them millions of dollars for staggeringly high nursing home bills.

To receive coverage for nursing home care, patients must first be admitted to the hospital as inpatients for three consecutive days. Time spent in the hospital for observation doesn’t count, even though they may stay overnight and receive some of the same treatment and other services provided to inpatients.

And there’s another big difference: While inpatients can file an appeal with Medicare if they question any other coverage denial, observation patients cannot. So, in 2011, seven Medicare beneficiaries and their families sued the Department of Health and Human Services, in what became a nationwide class action lawsuit.

On Tuesday, U.S. District Judge Michael Shea ruled that the patients are entitled to appeal if they are admitted as inpatients to the hospital by their doctor but later switched to observation care by their hospital. However, he said patients whose doctors initially place them in observation care under Medicare’s “two-midnight” rule cannot appeal because that rule requires doctors to base their decision on medical judgment. If the doctor determines that a patient’s stay is unlikely to stretch over two midnights, the patient would most likely receive observation care, though there are exceptions.

Shea’s applies to all traditional Medicare beneficiaries who experienced such a switch since Jan. 1, 2009, spent at least three days in the hospital and were enrolled in Medicare’s Part A hospital benefit. If they win their appeal, most hospital expenses and any nursing home bills they paid would be reimbursed under Part A.

Shea estimated that hundreds of thousands of beneficiaries would be able to seek repayment.

Lawyers at the Department of Justice argued that doctors and hospitals make admission decisions so patients can’t ask the government to change a decision it didn’t make. A DOJ spokeswoman declined to comment on the decision or whether the government would appeal. They have until May 25 to decide.

But the physician’s decision is not final because it is “reviewed by the hospital’s ‘utilization review staff,’ a team each hospital participating in the Medicare program must have in place to review whether the physician’s decision is correct under mandatory, nationwide standards set by the Centers for Medicare and Medicaid Services,” the judge wrote.

Alice Bers, litigation director at the Center for Medicare Advocacy, one of the groups representing the plaintiffs, said the decision recognized that “Medicare coverage is subject to due process protection.”

“If I had gone home, I would have died,” said Ervin Kanefsky, 94, a plaintiff from suburban Philadelphia. He was admitted to the hospital as an inpatient after fracturing his shoulder in a fall. When he was about to leave after five days to recuperate at a nursing home, a hospital official told him his status had changed to observation. With one arm in a sling, stitches in the other and unable to hold onto his walker, he learned Medicare wouldn’t pay for the nursing home.

“I had to pay $2,000 just to get in the door,” he said, and his month-long stay in 2016 cost $9,145. He called Medicare numerous times, wrote a letter to the hospital’s president and contacted his congressman for help. “I tried every which way,” he said, to no avail.

Medicare has temporarily suspended the three-day inpatient admission requirement during the coronavirus emergency.

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• You can’t understand Medicare without getting a handle on its alphabet, from A to D.
• Medicare also has a robust role for private insurance. About one-third of beneficiaries opt to join private insurance plans that contract with the federal government to provide an alternative to the traditional, fee-for-service government program. And that business is highly profitable for private insurance.
• As Americans age, many fondly look forward to Medicare, imagining it will pay all their health bills. But the program has hefty cost-sharing requirements and doesn’t cover many expenses, including long-term nursing home care, dental care and most vision care.
• Federal officials are eager to find ways to cut Medicare’s drug costs. But that raises many questions, such as whether Medicare should negotiate with drugmakers over prices or set up its own formulary of drugs it would cover.
• An even harder question is how Medicare can work to control costs for the pricey drugs administered in doctors’ offices. Strong congressional lobbying from doctors and drugmakers has derailed efforts to do so in the past.
• A vexing issue for some seniors is getting observation care at the hospital when they are not sick enough to be admitted but are too sick to go home. Patients receiving observation care likely face bigger cost sharing than if they were admitted and Medicare won’t pay for any nursing home care.

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Yet Medicare wouldn’t pay for that. So Gordon is stuck with a $7,000 bill she can’t afford — and, as if that were not bad enough, she can’t appeal.

The reasons Medicare won’t pay have frustrated the Rhode Island woman and many others trapped in the maze of regulations surrounding something called “observation care.”

Patients, like Gordon, receive observation care in the hospital when their doctors think they are too sick to go home but not sick enough to be admitted. They stay overnight or longer, usually in regular hospital rooms, getting some of the same services and treatment (often for the same problems) as an admitted patient — intravenous fluids, medications and other treatment, diagnostic tests and round-the-clock care they can get only in a hospital.

But observation care is considered an outpatient service under Medicare rules, like a doctor’s appointment or a lab test. Observation patients may have to pay a larger share of the hospital bill than if they were officially admitted to the hospital. Plus, they have to pick up the tab for any nursing home care.

Medicare’s nursing home benefit is available only to those admitted to the hospital for three consecutive days. Gordon spent three days in the hospital after her surgery, but because she was getting observation care, that time didn’t count.

There’s another twist: Patients might want to file an appeal, as they can with many other Medicare decisions. But that is not allowed if the dispute involves observation care.

Monday, a trial begins in federal court in Hartford, Conn., where patients who were denied Medicare’s nursing home benefit are hoping to force the government to eliminate that exception. A victory would clear the way for appeals from hundreds of thousands of people.

The class-action lawsuit was filed in 2011 by seven Medicare observation patients and their families against the Department of Health and Human Services. Seven more plaintiffs later joined the case.

“This is about whether the government can take away health care coverage you may be entitled to and leave you no opportunity to fight for it,” said Alice Bers, litigation director at the Center for Medicare Advocacy, one of the groups representing the plaintiffs.

If they win, people with traditional Medicare who received observation care services for three days or longer since Jan. 1, 2009, could file appeals seeking reimbursement for bills Medicare would have paid had they been admitted to the hospital. More than 1.3 million observation claims meet these criteria for the 10-year period through 2017, according to the most recently available government data.

Gordon is not a plaintiff in the case, but she said the rules forced her to borrow money to pay for the care. “It doesn’t seem fair that after paying for Medicare all these years, you’re told you’re not going to be covered now for nursing home care,” Gordon said.

No one has explained to Gordon, who has hypoglycemia and an immune disease, why she wasn’t admitted. The federal notice hospitals are required to give Medicare observation patients didn’t provide answers.

Even Seema Verma, the head of the Centers for Medicare & Medicaid Services, is puzzled by the policy. “Better be admitted for at least 3 days in the hospital first if you want the nursing home paid for,” she said in . “Govt doesn’t always make sense. We’re listening to feedback.” Her office declined to provide further explanation.

Patients and their families can try to persuade the physician or hospital administrators to change their status, and sometimes that strategy works. If not, they can leave the hospital to avoid the extra expenses, even if doing so is against medical advice.

The requirement of three consecutive days as a hospital inpatient to qualify for nursing home coverage is written into the Medicare law. But there are exemptions. Medicare officials don’t apply it to beneficiaries in some pilot programs and allow private Medicare Advantage insurers to waive it for their patients.

Concerned about the growing number of people affected by observation care, Medicare officials created a “two-midnight” rule in 2013. If a doctor expects a patient will be sick enough to stay in the hospital through two midnights, then it says the patient should generally be admitted as an inpatient.

Yet observation claims have increased by about 70% since 2008, to more than 2 million in 2017. Claims for observation care patients who stay in the hospital for longer than 48 hours — who likely would qualify for nursing home coverage had they been admitted —rose by nearly 159%, according to data Kaiser Health News obtained from CMS. Yet the overall growth in traditional Medicare enrollment was just under 9%.

Justice Department lawyers handling the case declined to be interviewed, but in court filings they argue that the lawsuit accuses the wrong culprit.

The government can’t be blamed, the lawyers said, because the “two-midnight” rule gives hospitals and doctors — not the government — the final word on whether a patient should be admitted.

The government’s lawyers argue that since Medicare “has not established any fixed or objective criteria for inpatient admission,” any decision to admit a patient is not “fairly traceable” to the government.

Like Gordon, some doctors also complain about observation care rules. An American Medical Association spokesman, who spoke on condition of not being named, said the “two-midnight” policy “is challenging and illogical” and should be rescinded. “CMS should instead rely on physicians’ clinical judgment to determine a patient’s inpatient or outpatient status,” he added.

HHS’ Office of Inspector General urged CMS to count observation care days toward the three-day minimum needed for nursing home coverage. It’s No. 1 on a of the 25 most important inspector general’s recommendations the agency has failed to implement.

The Medicare Payment Advisory Commission, which counsels Congress, has made .

However, Colin Milligan, a spokesman for the American Hospital Association, is more positive about the “two-midnight” rule. It “recognizes the important role of physician judgment,” he said.

Medicare isn’t dictating what physicians must do, said a physician who has researched the effects of observation care. “It’s a benchmark upon which to base your decisions, not a standard or a mandate,” said Dr. Michael Ross, a professor of emergency medicine at Emory University School of Medicine in Atlanta. He supervises observation care units at Emory’s five hospitals and was chairman of a CMS advisory subcommittee on observation care.

Other physicians claim that since HHS pays hospitals and doctors to treat Medicare patients, the agency’s policies weigh on their decisions.

“One of the hardest things to do is to get physicians to predict what will happen with patients — we like to hedge our bets and account for all possibilities,” said Dr. Tipu Puri, a physician adviser and medical director at the University of Chicago’s medical center. “But we’re being forced to interpret the rules and read between the lines.”

In the meantime, observation care patients who get follow-up care at a nursing home may soon receive a puzzling notice. A Medicare issued last month “strongly encourages” nursing home operators to give an “” to patients who arrive without the required prior three-day hospital admission.

But that notice says they can choose to seek reimbursement by submitting an appeal to Medicare — an option government lawyers will argue in court is impossible.

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It was an act of defiance — and desperation. Like millions of people who are sick or old and the families who care for them, this physician was disheartened by the health care system’s complexity and its all-too-frequent absence of caring and compassion.

Shanawani, a high-ranking physician at the Department of Veterans Affairs, had learned the day before that his 83-year-old father, also a physician, was hospitalized in New Jersey with a spinal fracture. But instead of being admitted as an inpatient, his dad was classified as an “observation care” patient — an outpatient status that Shanawani knew could have unfavorable consequences, both medically and financially.

On the phone with a hospital care coordinator, Shanawani pressed for an explanation. Why was his dad, who had metastatic stage 4 prostate cancer and an unstable spine, not considered eligible for a hospital admission? Why had an emergency room doctor told the family the night before that his father met admission criteria?

Sidestepping Shanawani’s questions, the care coordinator didn’t provide answers. Later, another senior nurse in the hospital unit didn’t respond when he asked her to find out what was going on.

Inflamed, Shawanami let loose on .

The threads I will share w/U will be about the RIDICULOUS stuff I have had 2 navigate in my dad's care.

The theme: MY DAD THE MD & ME, THE MD BUREAUCRAT, 2 ADVOCATES, WHO NAVIGATE THIS EVERY DAY 4 PATIENTS, can BARELY HANDLE THE CRAZINESS. & that means lay people R IN TROUBLE

— Hasan Shanawani MD (@hshanawaniMD)

Within hours, Shanawani’s posts were widely shared and other people, some of them also doctors, recounted similar experiences. Within days, he had thousands of followers, up from fewer than 100 before his tirade.

LITERALLY was holding off tagging until end of thread. Thank you for sharing your dad’s story! If the system is broken for you, it is broken for the rest of us.

Thanks for the shoutouts to PT and the RN.

— Liz Salmi (@TheLizArmy)

Thanks for this. For all of us who have to deal with the medical system regularly, it is horrific to navigate and heartbreaking how much one person has so much authority. Please keep fighting. And sharing.

— Jane (@janewarlick)

Physicians wrote that Shanawani’s posts about observation care opened their eyes to the adverse impact it can have on patients and families. (When someone is in observation care, he or she can face copayments for individual tests and medical services under Medicare Part B — expenses that can quickly add up. Also, Medicare will not pay for short-term rehabilitation in a skilled nursing facility for observation care patients.)

Thanks so much for sharing this experience—I will be ever more sensitive to these admission criteria. Sad that these obstacles consume so much of from our time and energy.

— Prad Tummala (@PradTummala)

Really interesting. Thanks. Now I understand why I get pressured sometimes to make patients “obs” by hospital administration.

— David Saenger, MD, FACC (@saenger_david)

Shanawani’s distress revolved around three key issues, he explained in a lengthy conversation.

• Hospital staff didn’t acknowledge his family’s concerns or address them adequately: How can an old man with terminal prostate cancer and a broken back be sent home without measures to ensure his safety?
• No one seemed to care or be willing to listen: When family members asked that lower doses of painkillers be administered to Shanawani’s father, who had become delirious during previous hospitalizations, they felt nurses were disapproving and disrespectful.
• And the decision to put his father in observation care was misguided and handled curtly.

There were two options for his father, the physician said: vertebroplasty, a surgery in which a bone cement is injected into the spine, or a fitted spinal brace. Shanawani’s father and the family decided against surgery but were told that he couldn’t receive a brace in the hospital because that option was available only to inpatients. Outside the hospital, it would take time to arrange an appointment with a spine specialist and get a brace. In the meantime, with an unstable spine, “my father was at risk of permanent paralysis,” Shanawani told me.

Because Shanawani has declined to identify the hospital in question, indicating only that it placed highly in U.S. News and World Report’s and was based in New Jersey, the institution’s perspective on these issues cannot be shared. It is possible that the hospital’s explanations would cast the physician’s story in a different light.

But Shanawani’s experiences are, by all accounts, widespread. “I wish I could say that this was in any way unique or an isolated event,” said Dr. Richard Levin, chief executive of the Arnold P. Gold Foundation, which focuses on humanism in health care, who reviewed the physician’s Twitter stream. “But his description of a broken system is so common.”

Theresa Edelstein, vice president of post-acute care policy and special initiatives at the New Jersey Hospital Association, acknowledged that “we need to focus on and be better at” attending to the “humaneness and patient-centeredness of care.” She made it clear this was a general comment, not a response to the situation Shanawani had described.

“If a patient is expressing concern about their observation status, the whole [hospital] team should be involved in understanding what the concerns of the patient and the family are,” Edelstein said.

Currently, patients with Medicare coverage cannot appeal a hospital’s decision to place them in observation care. The Center for Medicare Advocacy and Justice in Aging have filed a class-action suit in U.S. District Court in Connecticut seeking to establish such an appeal right. After years of litigation, a trial date has been set for mid-August, according to Alice Bers, the lead lawyer for the plaintiffs and litigation director at the Center for Medicare Advocacy.

But all patients have the right to a safe discharge under a separate set of regulatory requirements, and that can be grounds for an expedited appeal, Edelstein noted.

Ultimately, a physical therapist made it possible for Shanawani’s father to be admitted to the hospital once he failed a test she administered. And a palliative care nurse gave the family the sense of being cared for, which they so desperately needed. “She was a ‘one-in-a-million’ person,” said Shanawani, weeping as he spoke of her. “She said ‘We will fix this, we will figure this out with you, we’re working on the same side of the table.’”

“It takes just one person to really listen to make a profound difference in a patient’s care,” said Grace Cordovano, a professional patient advocate at Enlightening Results LLC in West Caldwell, N.J.

Social media outlets such as Twitter and Facebook are a powerful new avenue for people to seek redress for health care grievances, Cordovano noted. “If you tag a facility, a customer service representative typically responds quickly with ‘Please message me. We’re sorry you’re experiencing this, we’d like to help.’ Often, you get a better response than by going through the normal chain of command.”

Shanawani’s position — he’s deputy chief informatics officer for quality and safety at the VA — helped generate a high-level response to his tweets. New Jersey’s commissioner of health, Dr. Shereef Elnahal, a former colleague of his, reached out to the hospital’s leadership, and meetings with the CEOs of the hospital and its parent system followed. Also, the U.S. Senate Committee on Health, Education, Labor & Pensions has asked Shanawani for his input.

“I have incredible privilege, and I know how to navigate bureaucracies,” the physician told me. “But still, hospital staff provided us no guidance, no assurance, no knowledge, until two people willing to help came along. I don’t know how to fix this.”

For now, this physician has other things on his mind: On April 30, his father took a turn for the worse and was rehospitalized. Shanawani knew this was likely at some point, but he had hoped it wouldn’t be so soon. “It starts all over again,” he wrote to me in an email.

We’re eager to hear from readers about questions you’d like answered, problems you’ve been having with your care and advice you need in dealing with the health care system. VisitÌýkffhealthnews.org/columnistsÌýto submit your requests or tips.

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Under aÌý, hospitals across the country must now alert Medicare patients when they are getting observation care and why they were not admitted — even if they stay in the hospital a few nights. For years, seniors often found out only when they got surprise bills for the services Medicare doesn’t cover for observation patients, including some drugs and expensive nursing home care.

The notice may cushion the shock but probablyÌýnot settle the issue.

When patients are too sick to go home but not sick enough to be admitted, observation care gives doctors time to figure out what’s wrong. It is considered an outpatient service, like a doctor’s visit. Unless their care falls under a new Medicare bundled-payment category, observation patients pay a share of the cost of each test, treatment or other services.

And if they need nursing home care to recover their strength, for it because that coverage requires a prior hospital admission of at least three consecutive days. Observation time doesn’t count.

The new notice drafted by Medicare officials must be provided after the patient has received observation care for 24 hours and no later than 36 hours. Although there’s a space for patients or their representatives to sign it “to show you received and understand this notice,” the instructions for providers say signing is optional.

Some hospitals already notify observation patients, either voluntarily or in more than half a dozen states that require it, and New York.

Doctors and hospital representatives still have questions about how to fill out the new observation care form, including why the patient has not been admitted. During a conference call Feb. 28, they repeatedly asked Medicare officials if the reason must be a clinical one specific for each patient or a generic explanation, such as the individual did not meet admission criteria. The officials said it must be a specific clinical reason, according to hospital representatives who were on the call.

Atlanta’s Emory University hospital system added a list of reasons to the form that its doctors can check off, “to minimize confusion and improve clarity,” said Michael Ross, medical director of observation medicine and a professor of emergency medicine at Emory. Emory also set up a special help line for patients and their families who want more information, he said.

The form also explains that observation care is covered under Medicare’s Part B benefit, and patients “generally pay a copayment for each outpatient hospital service” and the amounts can vary. But Ross said “this wording may be antiquated.” Medicare revised some billing codes last year to combine several observation services into one category. That means beneficiaries are responsible for one copayment if the observation stay meets certain criteria.

The new payment package also includes coverage for some prescription drugs to treat the emergency condition that brought the observation patient to the hospital, said Debby Rogers, the California Hospital Association’s vice president of clinical performance and transformation. Other drugs for that condition will be billed under Part B with separate copayments, she said.

But patients will have to pay out-of-pocket for any medications the hospital provides for preexisting chronic conditions such as high cholesterol, and then seek some reimbursement from their Medicare Part D drug plans for any covered drugs.

Yet, Ross said, most observation visits are less expensive for beneficiaries than a hospital admission if they stay a short time, which the inspector general’s report also concluded. Doctors should “front load” tests and treatment so that the decision to admit or send the patient home can be made quickly. “If you get them out within a day, they are more likely to go back to independent living as opposed to needing nursing home care,” he said.

Last summer, Judy Ehnert’s 88-year-old mother had a bad fall and broke her wrist. Following surgery, and additional complications, hospital officials told the family she would be kept for observation but she would need to go to a nursing home to recover. When the family learned what observation care meant, said Ehnert, a retired bookkeeper who lives in West Fargo, N.D., “that’s when we blew a cork.”

Then, after a few days in observation, Ehnert’s mother contracted an infection and she was admitted to the hospital. “Her care was totally the same, in the same room, with the same doctor, the same nurse.” And Medicare covered her nursing home care.

“That’s what I expected at her age,” Ehnert said. “I always thought that’s what Medicare was for.”

This story was updated to correct the spelling of Judy Ehnert’s name.

KHN’s coverage related to aging & improving care of older adults is supported by and its coverage of aging and long-term care issues is supported by .

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The sticker-shock can happen when people go to the hospital but health care providers are not sure what’s wrong. If the patient is not sick enough to be formally admitted, but still not healthy enough to go home, they can stay in the hospital for “,” which Medicare considers an outpatient service. That can mean higher out-of-pocket expenses for the patient.

Hospitals can bill observation patients for a larger share of the cost of any treatment and tests than admitted patients. Any routine medications they usually take at home may not be covered at all in the hospital. In some parts of the country, Medicare observation patients have been charged for prescription drugs, including $18 for one baby aspirin.

And because observation patients have not spent the required minimum of three straight days as an admitted patient, Medicare will not cover their follow-up nursing home expenses after discharge. Observation care doesn’t count.

But patients may not even know they have been placed on observation care status when they’re lying in a hospital bed.

“I don’t think the average person knows the difference,” said Sen. Ed Hernandez (D-West Covina).

Hernandez introduced the legislation requiring hospitals starting Jan. 1 to tell all patients if they are getting observation care.

The state’s observation care notice would not necessarily spell out the details, but it would warn patients that their status could affect what their insurance will cover.

After they get the notice, Medicare observation patients can try to ask their doctors to change that status. If their doctor prescribes nursing home care, they’ll have to pay the bill but can try appealing to Medicare for reimbursement, or they can go home and recover on their own.

Members of private Medicare Advantage plans should ask their plans about their observation care policies, since they can vary.

The number of Medicare observation patients at the nation’s hospitals doubled since 2006 to nearly 1.9 million in 2014, according to the most recent statistics from the Centers for Medicare & Medicaid Services.

In California, the number of people hospitalized for observation, regardless of their type of health insurance, was 417,366 in 2015, also more than twice as many as in 2006. The rate rose far faster than the percentage of patients admitted to the hospital (14 percent, to 3.54 million) during the same time, according to the California Office of Statewide Health Planning and Development.

Hospital officials have blamed the increase, in part, on stepped-up enforcement of the strict criteria Medicare has set for hospital admissions to avoid paying for unnecessary treatment. Medicare won’t pay anything for admitted patients who instead should have been placed in observation.

“We hope this legislation takes care of the problems we have seen associated with patients not being aware that they are actually not admitted into the hospital even though they are physically located in the hospital,” said Bonnie Castillo, associate executive director for the California Nurses Association, which represents more than 90,000 nurses and is a leading advocate for the bill.

The legislation also would require the nation’s first minimum nurse-to-patient staffing ratios in observation care units for hospitals that have separate units for those patients.

“We are still the only state that has these very specific mandated ratios for every unit of the hospital that have to be adhered to every minute of every day,” said Jan Emerson-Shea, a spokeswoman for the California Hospital Association, which represents 400 hospitals. Those staffing rules, however, excluded observation care units.

“We wanted to make sure hospitals didn’t use observation care as a loophole to avoid any of the minimum nursing staffing requirements,” said Sen. Hernandez.

If Gov. Brown signs the legislation, as many expect, Hernandez said California’s observation care notice could be combined with a that hospitals also must use next year.

While the federal notice provides more details in a standardized form, it is only for Medicare patients and only after they’ve spent 24 hours in observation. To comply with the state requirements, California hospitals would have to give it as soon as possible to all observation patients, no matter what health insurance they have.

Although the state hospital association neither opposed nor supported the Hernandez legislation, the observation notice is important, said Debby Rogers, the association’s vice president of clinical performance and a former emergency room nurse.

“Our goals are to make decisions in the best interest of the patients, and providing notification of their status we think helps them, and at the same time informs them if there are risks,” Rogers said.

But a notice alone is not enough, said Bonnie Burns,Ìýa training and policy specialist at California Health Advocates, a Medicare advocacy group based in Sacramento.

“It is a baby step that at least tells them there is a problem,” Burns said. “The issue for many beneficiaries is that the time spent in observation doesn’t let them access the Medicare nursing home benefit. The better fix would be to allow people to use their Medicare benefit if they have been under observation.”

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Some seniors think Medicare made a mistake.Ìý Others areÌýstunned when they find out that being in a hospital even for a couple of days doesn’t always mean they were actually admitted.

Instead, they received observation care, to be an outpatient service.ÌýThe observation designation means they can have higher out-of-pocket expenses and fewer Medicare benefits.ÌýYet, aÌýgovernmentÌýÌýthat observation patients often have the same health problems as those who are admitted.

Medicare officials are working to finalize a notice that will inform patients that they are receiving observation care. That is required under a federal law that went into effect in August, and hospitals will likely begin using the notices in January. Some states already require that patients be told about their status.

More Medicare beneficiaries are entering hospitals as observation patients every year. The number doubled since 2006 to nearly 1.9 million in 2014, according to figures from the Centers for Medicare & Medicaid Services. At the same time, enrollment in traditional Medicare grew by 5 percent.

Here are some common questions and answers about observation care and the coverage gap that can result. (Seniors enrolled in Medicare Advantage should ask their plans about their observation care rules since they can vary.)

Q. What is observation care?Ìý

A. Hospitals provide observation care for patients who are not well enough to go home but not sick enough to be admitted.Ìý This care requires a doctor’s order and is considered an outpatient service. The hospitalization can include short-term treatment and tests to help doctors decide whether the patient meets the medical criteria for admission. Medicare officials have issued the so-called Patients whose doctors expect them to stay in the hospital through two midnights should be admitted. Patients expected to stay for less time should be kept in observation.

Q. What effect does observation status have on patients’ care and expenses?

A. Because observation care is provided on an outpatient basis, patients usually also have co-payments for doctors’ fees and each hospital service, and they have to pay whatever the hospital charges for any routine drugs the hospital provides that they take at home for chronic conditions such as diabetes or high cholesterol.

Observation patientsÌý, even though their doctors recommend it.Ìý To be eligible for nursing home coverage, (or through three midnights) as an admitted patient, not counting the day of discharge.

Q: Why are more Medicare patients receiving observation care instead of being admitted?

A.ÌýMedicare has strict criteria for admissions as an inpatient and usually won’t pay anything for admitted patients who should have been in observation care. Partly in response to stepped up enforcement of these rules, hospitals in recent years have been placing more patients in observation.

Q. Will the cost of my maintenance drugs be covered when I am in the hospital?

A.ÌýNo,ÌýÌýfor patients in the hospital in observation care.ÌýSome hospitals allow patients to bring these medications from home.ÌýOthers do not, citing safety concerns.

If you have a separate Medicare Part D drug plan, the coverage decision will be up to the insurer.ÌýIf the plan covers your maintenance drugs at home and agrees to cover them in the hospital, it will only pay prices negotiated by the plan with drug companies and in-network pharmacies. Most hospital pharmacies are out-of-network. So even if your plan covers these drugs, you may be left paying most of the bill. However, you can ask hospitals if they would .

Medicine to treat the symptoms that brought you to the hospital may be covered as an outpatient service under Part B.

Q: How do I know if I’m an observation patient?

A. The only way to know for sure is to ask. “Unless people are in an observation unit, the difference between observation and inpatient care is basically indistinguishable,” said Toby Edelman, a senior policy attorney at the Center for Medicare Advocacy.Ìý

Q. Can I change my status in the hospital?

A. If your doctor says you are too sick to go home and you are receiving services that can be provided only in a hospital, ask your doctor to admit you to the hospital by changing your status to inpatient. However, even if your doctor does that, you can be switched back to observation status during your hospital stay.

Q.ÌýWhat can I do if I’m already in a nursing homeÌýand I find out Medicare won’t cover my nursing home care?

A. You have two options, Edelman said. You can agree to pay the bill but continue to seek coverage through a Medicare appeal or you can leave the nursing home.

If you opt to stay in the nursing home, follow these steps to see if Medicare will reimburse you, she said. Ask the nursing home to fill out a formÌýcalled the “.” The form will show what services you need, the estimated cost and the reason why Medicare will probably not pay. The facility will check off the first reason, “no qualifying 3-day inpatient hospital stay.” Then you can checkÌý off the form’s option one, asking the facility to submit it to Medicare along with documentation supporting your need for these services. You will not be billed until Medicare issues a decision.

If Medicare does not pay the bill, you will receive information on how to appeal that decision. Although Medicare officials caution that hospital patients cannot appeal their observation status, the “notice of exclusion” applies to the nursing home charges and clearly states in bold type: “I understand that I can appeal if Medicare decides not to pay.”

For more information on filing an appeal, visit the Center for Medicare Advocacy’s .

This is an updated version of a article first published Sept. 4, 2013.

This article was produced by Kaiser Health News with support from .

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