Under ‘Observation,’ Some Hospital Patients Face Big Bills

Paula Span | The New York Times | September 1, 2017

In April, Nancy Niemi entered Vidant Medical Center in Greenville, N.C., with cardiac problems. She stayed four nights, at one point receiving a coronary stent. Then she went home, but felt faint and took several falls. Five days later, her primary care doctor sent her back to the hospital. This time, her stay lasted 39 days while physicians tried various medications to regulate her blood pressure. Though they eventually succeeded, Mrs. Niemi, 84, a retired insurance agent, had grown so weak that she could no longer walk.

“They said, ‘She really needs to go to a skilled nursing facility for physical therapy,’” recalled her son Tom Krpata, 63, who’d come from his home in Holliston, Mass., to be with her. He agreed, but soon learned one of the brutal truths of Medicare policy: Patients can be hospitalized for days, can undergo exams and tests, can receive drugs — without ever officially being admitted to the hospital. Instead, they’re “under observation,” which means they’re outpatients, not inpatients. That can bring financial hardships — including lack of coverage for subsequent nursing home care.

That’s why Mrs. Niemi, on observation status through both hospital stays except for one night, had to pay for rehab herself. “By declaring her an outpatient, they really took away her Medicare benefits,” Mr. Krpata said. Patients can appeal virtually any other claim that Medicare denies. But there’s no way to appeal observation status. Even Mrs. Niemi’s congressman, contacted by her family, couldn’t help. But a recent ruling in a case that’s bounced through the courts since 2011 may be a harbinger of changes to come...