Why Is There an Issue over Observed vs Admitted Hospital Stays in United States Medicare

Almost any article you will ever read concerning the issue of hospital observation under the United States Medicare system is confusing and mis-states the Medicare rules that apply to acute-care hospitalizations. Some of this confusion is because you are dealing with a large unresponsive government bureaucracy. Some of it is pure Democratic Party hate for seniors.

 

These articles are constantly claiming that seniors are stupid. In fact, just because the lefties at the Left-Wing Aging Aid Society, the Doctors Against Insurance Companies, and similar goo goo outfits don't know the Medicare rules, we seniors do know these rules.  In particular, disregard any article that throws the word "many" around generously--such as in "many seniors are being harmed." The statistics say the numbers affected negatively annually by the observation rule in Medicare are a few thousand compared to the 50,000,000 people on Medicare.

 

Generally, these articles:

1. Fail to explain that in the vast majority of cases, being observed is better financially for the senior than being admitted (not that this matters because -- and the articles never explain this either -- almost 100% of us seniors have a supplement of some sort because Original Democratic Party Medicare is such bad insurance). See recent GAO report on this subject.
2. Fail to explain that the issue is that Medicare does not cover custodial care; it does not matter how may days you are in the hospital or whether you are admitted or observed. Trying to get Medicare to pay for custodial care through the backdoor -- a nice way of saying "fraudulently" -- is the reason this is an issue. See Medicare and You booklet.
3. Fail to make it clear that even if a senior is admitted to an acute care hospital, rehab won't be covered unless the person is in the hospital 2/3 nights¹. Overnight admittance is not good enough. Also see Medicare and You.
4. Imply Medigap insurance will pay but typically Medigap does not cover things that Medicare does not cover so most Medigap plans would not cover you if items 2-4 directly above are the issue (but it might; Medigap is private insurance and policies can differ; so check your policy)
5. Fail to mention that these Medicare rules long predate the auditing of the fraud and abuse that happens in nursing homes, giving custodial care payments for people who are not entitled to them. See History of Medicare.

¹The rule on number of nights required is in a state of flux and I'm not sure what the latest exact rule is. Whatever it is, it might change before you read this.