For some time, courts have been weighing in on HHS's decision to tie a Medicare beneficiary's hospital admission status to their formal hospital admission. Formal hospital admission usually requires a written order of admission by a physician with the authority to do so and that written order is subject to retroactive audit by Medicare. This all seems pretty straightforward. Now enter the concepts of "observation status" and revokable admissions and it all gets more complicated.
I have been marveling over the recent opinion of a federal district court in Connecticut in Bagnall v. Sebelius (3:11-cv-0173-MPS). Here we see the first principle — allowing the Secretary discretion to define "inpatient" for Medicare purposes — come up against the increasingly common use of observation status, either anticipatorily or retrospectively.
Let me be clear: it is possible for a Medicare beneficiary to be admitted to an acute care hospital, treated as an admitted patient in an acute care hospital for several days, discharged from that acute care hospital to a rehab facility (having met Medicare Part A's requirement that such a discharge follow a three day acute care hospitalization to achieve maximum coverage) only to be advised as much as two weeks later that they were in fact not admitted and that their hospital admission was revoked, leaving them with coverage only under less generous Medicare Part B with co-pays and deductibles for that now identified as out-patient hospital care and for the rehab admission under Medicare Part B that may amount to thousands of dollars.
Now, when commercial health insurance companies make their nut by retroactively rescinding eligibility for health insurance we get so worked up about it that nothing less than the ACA itself tries to take this practice on by clarifying and narrowing the standard for retroactive rescissions. From the perspective of the Medicare beneficiary, these retroactive determinations of non-admission are very similar indeed and the practice grows ever yet more common.
I understand very well the push and shove between Medicare and acute care hospitals over unwarranted admissions and the particular skepticism that attaches to one night admissions. But when we have put Medicare beneficiaries who, in good faith reliance, have acted on a hospital "admission" in the middle of this dispute, I am at a loss to know who we think we are hurting and who we think we are helping.
Disclosure is the default option of policy makers lacking the will to make a difference. What might a Medicare patient's admission form now say:
Sign below to indicate you understand you are being admitted to Pleasantview Hospital, unless of course you aren't — something you can only know for certain several weeks from now, and that you accept full responsibility for all charges not covered by your insurer, unless of course they are not — something you can only know for certain several weeks from now….
In one of my favorite teaching cases from health law, a Georgia hospital argued that an incomprehensible liability clause was rendered enforceable by the addition of bold type to its presentation, so let's not omit the clarity bold type would surely add to the above clause.