Medicare Tip: How being “Admitted” versus under “Observation” at the Hospital Makes All The Difference

When a Medicare beneficiary is hospitalized, whether you are coded as “admitted” or under “observation” makes all the difference in the world if you are looking at Medicare paying any cost of care for your rehab in a nursing home in Michigan.

I just finished my Wester Michigan University-Cooley Law School student finals and as part of the final exam I had a question regarding a loved one being in the hospital for observation for 3 days then needing 2 months of rehab.  The crux of the issue was how Medicare treats people who are in a hospital for observation versus being admitted to the hospital.

The difference is whether Medicare will pay any cost of care for the rehabilitation.

Access, Area Agency on Aging 1-B newspaper had a great article discussing this as well.

Medicare Part A Coverage of Rehab

If you are on Medicare Part A and spend 3 midnights in a hospital and are admitted you can have part of your rehabilitation in a nursing home covered by Medicare.  Medicare will pay 0-20 days with zero out of pocket coast.  21-100 days you may have a co-pay of $152 per day or supplemental insurance that will pick up the slack.  After 100 days Medicare runs out, and to re-qualify for rehab, you need to go 60 days without a claim.

Medicare Requires “Admittance” to Cover Rehab

It can be confusing the difference between observation and admittance, but it’s important to understand the difference.  Medicare Part A will only cover the rehabilitation following a hospitalization if a patient is classified as admitted for at least three consecutive midnights at the hospital.  The time  spent under observation does not count towards the requirement.

Hospitals Push More To “Observation”

According to the Center for Medicare and Medicaid Services, there’s been more than 300% increase in hospital observation care stays from 2006 to 2010.

What this means is that families will need to really push the hospital to getting admitted versus just being under observation.

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