New Law Requires Hospitals to Inform Medicare Patients of Extra Costs

New law forces hospitals to inform patients







A  new Medicare law was passed on Saturday that forces hospitals to notify Medicare patients that they will be responsible for considerable medical bills due to Medicare’s refusal to reimburse for patients who are placed on “Observation.”

If a patient isn’t admitted to the hospital Medicare won’t pay, leaving the patient holding the bag. In the past patients were unaware of this till the bills began rolling in. Hospitals were failing to notify patients that they would be responsible for paying these charges if they weren’t admitted.  This only affects patients who are 65 or older, but it can have catastrophic consequences for this segment of the population.

Now facilities are required by law to notify patients of these charges before they are placed on observation so they have the opportunity to decide whether to agree to the observation status.

Medicare considered an “observation stay” as outpatient care and they refuse these claims.

If a patient is placed on observation then transferred to a nursing home the cost will become astronomical. The cost of caring for a patient in a nursing home for one year is close to $100,000.

Here’s a case from the New York Times: An 85-year-old patient was transported to the hospital after a traumatic fall. She spent a total of six days in observation.  She was then transported to a nursing home where she stayed for five months. According to the New York Times, the total cost of the stay was over $40,000. Medicare refused the claim.

The patient’s daughter said “It was extremely distressful to my mother, who was frugal her whole life,”  “She asked, ‘How can I pay into Medicare for so many years, and now Medicare won’t help pay for my care?”’

Due to the Notice act, hospitals must begin telling patients that they may accrue steep bills if they’re not formally admitted.

President Obama approved and signed the bill and the outcome will be over 1.4 million notifications being sent to patients in January.

Medicare only pays nursing home claims of 100 days at a time, then the patient must be re-evaluated. But they stipulate that the patient must have spent three days in the hospital as an inpatient.

Dr. Jyotirmaya Nanda addressed the U.S Senate in 2015. She represented the American Hospital Association “Hospitals seek to deliver the right care at the right time in the right setting.”

Nanda went on to say “While a complex issue, observation services ultimately reflect high standards of care and quality regulations to which hospitals adhere.”

The Times reported, hospitals “have found themselves in a squeeze.” They began using the observation status more and more in response to pressure from Medicare auditors. The auditors, The Times wrote, are private contractors who in many cases “challenged decisions by doctors to admit patients to a hospital, saying the services should have been provided on an outpatient basis.”

According to the Times, when Medicare investigates a claim through an auditor and they reveal that the payment was incorrect based on the patient’s status while in the hospital, they attempt to collect the costs from the hospitals. If they are successful the auditors will keep a percentage of the money.

“Hospitals risk loss of reimbursement, monetary damages and penalties from auditors when they admit patients for short, inpatient stays, even when that admission was made with the best medical judgment of the treating physician at the time the patient was seen and the care was indisputably medically necessary,” Said Nanda

The Times wrote, Judith A. Stein, the executive director of the nonprofit Center for Medicare Advocacy. “The new law is an important first step, but Congress and the administration need to do more to protect [Medicare] beneficiaries,”

This is a step in the right direction with health care costs. All facilities should be required to post the cost of all their procedures and should be equipt to answer calls for potential patients who are calling around checking on prices for their medical needs.

There has been excessive secrecy with facilities refusing to post their costs.  Guilting people into paying exorbitant bills because “it’s your health.”  But most people are not wealthy enough to hand over a blank check.  If healthcare facilities were required to post their costs it would breed competitiveness and it’s capitalism at its best.

It’s time patients were more informed about their healthcare and the cost prior to treatment of any kind.




Comments 7

  1. Yogini Nurse

    It;s about time this happened. So many patients have been stuck with ridiculous bills that they could never pay. Poor retired people with no income. It’s not bad enough that they’re sick, but they were required to pay appaling amounts of money to the hospital and they had no idea that would happen. I think hospitals should be required to absorb the costs to the patients they didn’t tell prior to the law as well.

  2. So glad about this. It’s about time these hospitals took responsibility for all the nonsense charges they come up with. I think that this is a start, but we still have a long way to go.
    More needs to be done for Medicare patients that have worked hard their whole life and paid into Medicare only to face this when they really need it.
    It’s time for a change. Medical facilities should be making much bigger efforts to notify patients of all costs up front. The only reason they haven”t before is because they’re greedy and their charges are extreme. They need to be more honest

  3. This happened to my Grandmother before she passed away. She accrued about $76,000 because the hospital failed to tell her that she would be stuck with the bill. She should never have been on observation. She was dying and was sent to a nursing home after only three days. I wish she didn’t have to go through that type of stress in her last days.

Leave a Reply