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Schumer Says Medicare's "Observation Status" Forces Seniors to Pay Thousands Extra

Schumer’s New Plan Would Allow Time Spent Under “Observation Status” To Count Toward Medicare-Covered Services After Hospital Stays – Like Rehabilitation & Medication

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July 1st, 2013 - Binghamton, NY - Today, at Binghamton General Hospital, U.S. Senator Charles E. Schumer joined Binghamton senior citizens and hospital executives to push his plan to change the Medicare law, so that elderly patients are not charged unfairly for receiving needed nursing home care after being hospitalized or for prescription drugs. Schumer noted that “observation stays” cases in hospitals, when the elderly individual is not technically an inpatient, have been on the rise in recent years, costing America’s seniors thousands of dollars in medical bills. Currently, Medicare will only cover post-acute care in a skilled nursing home facility if a beneficiary has three consecutive days of hospitalization as an inpatient. Medicare also requires co-insurance on prescription drugs if a beneficiary falls into that category. Under Schumer’s plan, the Improving Access to Medicare Coverage Act, “observation stays” will be counted toward the 3-day mandatory inpatient stay for Medicare to cover long term rehab.
Schumer highlighted the case of Mary Opie, whose mother Mrs. O’Malley was admitted last year to a Broome County hospital under “observation status,” which was in accordance with current Medicare law. However, because she was admitted under “observations status,” Medicare won’t cover over $7,000 in bills for long-term rehab and now she and her family have to foot the bill. Schumer emphasized it is the flawed Medicare law which is costing Upstate New York seniors thousands of dollars in skilled nursing home care or prescription drug costs.
“In recent years, there’s been a huge uptick in elderly patients under “observation” status in Southern Tier hospitals and across New York– and it’s leaving seniors high and dry and hospitals no better off. A flawed Medicare law is to blame, and I have a plan to change that, so hundreds of thousands of seniors, like Mrs. O’Malley, are not hit with huge prescription drug bills or expensive rehabilitation costs after a lengthy hospital visit,” said Schumer. “This new Improving Access to Medicare Coverage Act would allow senior citizens to avoid being charged for prescription drugs out-of-pocket. If you are holed up in a hospital bed for days on end, it shouldn’t matter what your billing status is, and this plan will save seniors in Broome County thousands.”
Schumer joined representatives from Broome County Office of Aging and Community Alternative Systems Agency (CASA), Long Term Care Facility Administrators, Ms. Mary Opie, and other senior citizens.
The number of observation cases has been on the rise in recent years, a consequence of policies meant to reduce Medicare expenditures. In the Southern Tier, there are 151,561 Medicare beneficiaries who could be on the hook for an average of $356 per day in nursing care, plus cost of rehabilitation, therapy and prescription drug costs. Nursing home stays in New York cost an average of $356 per day, and a high of $528 for semi-private rooms, according to the 2012 MetLife Market Survey of Nursing Homes. This is the daily baseline cost, plus the cost of rehab, therapy services and prescription drugs that seniors could be forced to pay. Schumer highlighted that without this change in Medicare law, an unexpected trip to the hospital could cost Upstate New York seniors thousands of dollars.
Schumer highlighted the spike in observation status admissions in the past few years, in New York and across the country. The number of observation cases has been on the rise in recent years, a consequence of policies meant to reduce Medicare expenditures. According to most recent data from the American Health Care Association, New York average for observation stays was 29 per 1,000 Medicare admissions in 2009, up 32% since 2007. This number has likely risen dramatically since. This can lead to massive bills – in the tens of thousands of dollars – that senior citizens must unexpectedly pay for rehabilitation and nursing home care post-hospital visit.
Schumer launched his fight for the bipartisan Improving Access to Medicare Coverage Act to address the flawed Medicare law, sponsored by Senator Sherrod Brown (D-OH). Currently, Medicare will only cover post-acute care in a skilled nursing facility if a patient has three consecutive days of hospitalization as an inpatient, not counting the day of discharge. In addition, Medicare will only cover the cost of prescription drugs related to a hospitalization if a patient has stayed for three consecutive days as an inpatient.
In the case of Mrs. O’Malley, she was under “observation status” and therefore is required to pay for her rehabilitation costs. Unfortunately, patients are being placed in “observation status” while staying at the hospital and may unknowingly be treated under outpatient “observation status” for the entirety of their hospital visit. This then makes the patient ineligible, under Medicare law for Medicare-covered services such as stays in a nursing home or home care visits.
Under Schumer’s legislation, “observation” stays will be counted toward the 3-day mandatory inpatient stay for Medicare to cover prescription drug costs and skilled nursing facility services after a hospital visit. The Improving Access to Medicare Coverage Act of 2013 would amend title XVIII of the Social Security Act. Without being involved in billing technicalities between the hospitals and Medicare, Schumer’s plan would ensure that patients 65 and older are eligible for coverage for their rehabilitation services, as long as they are in the hospital for three days.
“Observation stays” are specific, clinically appropriate services that treat and assess a patient in a hospital while a decision is being made as to whether patients will require further treatment as hospital inpatients, or if they are able to be discharged from the hospital. Hospitals, like UHS Binghamton General, are forced to follow a flawed Medicare law in their treatment of many patients above 65 years old. In fact, Schumer noted, that hospitals are reimbursed less from Medicare for the treatment of patients under “observation” status than those that are inpatient. Hospitals also devote a significant amount of time and money to assuring that patients are properly classified as inpatients or outpatients.
Mary Opie’s mother, Marie O’Malley, was admitted to a Broome County hospital after a fall which left her with hip and shoulder injuries. She still was unable to move, though a CT Scan and X-Ray showed nothing was broken.  Mrs. O’Malley then spent 3 weeks in a rehab unit during which time she was placed under “observation status.”  Due to this designation, Mary Opie and her mother have been placed under significant financial stress. They have had to bear costs totaling $7,384.34.  This is only compounded by the fact that Mrs. O’Malley is still immobile, it was eventually found she had torn, ruptured, and severed several tendons. 
Schumer said cases like these showcase that the problem is both real and distracting for patients who should be focused on their recovery, not a bill they never expected.