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Why your observation stay at the hospital could end with a big bill

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil; and he will answer as many as he can.

Diane: Recently I was taken to the emergency room at the local hospital. After many tests, the ER doctor said words to the effect that “it looks like you’re a keeper,” and said I would be kept overnight. After someone else got extensive insurance and personal information from me and my husband, I was rolled to a room where the area was marked “Observation.” Most people would think they are going to be observed for the duration of their stay. Wrong! I never saw a doctor and never saw a nurse once I was placed on the bed in the room, and the nurse did whatever it is they do when a patient is brought to a room. That was it. The blood takers came in. Other than that, the only time I saw a medical person was when I pushed the call button when I needed assistance.

The next day a friend of mine phoned and when I communicated to her I was in observation, she told me about difference between being covered by Part A of Medicare when admitted to the hospital as an in-patient and being covered by Part B when admitted for observation as an out-patient. No one at the hospital communicated the difference to me. I assumed I was admitted. Now, it turns out I am going to be absorbing enormous extra costs that I can’t afford.

I sure had a wake-up call! Is there any recourse? How can this be legal? It’s downright criminal. And why don’t the hospitals communicate this upfront? How would a patient know to ask upfront? I never would think to ask. Especially when the doctor says, “We’re going to keep you.”

Phil Moeller: You are not alone. There has been a huge uproar over observation stays. Beyond triggering different insurance rules by Medicare, being labelled an observation outpatient also rules out Medicare coverage for a subsequent recovery stay in a nursing home.

As a result, Congress passed a law that requires hospitals to inform you if you are being treated as an outpatient and not an inpatient. The law requires them to tell you this verbally and in writing. However, it doesn’t require them to tell you right away.

If you never received this notification, you might have grounds to argue that the hospital messed up. There is a nonprofit that has more details on this. It’s called the Center for Medicare Advocacy and it has been active in efforts to resolve observation-stay problems.

Jeanne – Mich.: I have just moved back to Michigan and am looking for new medical caregivers. The chiropractor’s office manager told her that yes, they accept Medicare, but have never dealt with my private supplemental insurance company, so they won’t accept it as my secondary insurer. I think they’re wrong but would appreciate your thoughts.

Phil Moeller: I think your doctor’s office is off base. If your Medigap supplemental insurer is duly licensed in Michigan (Medigap is regulated at the state level), then I think your doctor’s office has no choice but to accept them as your secondary carrier. Have you called the carrier? I think it would be totally on your side and would give you support to contest what your doctor’s office is telling you. Please let me know how things turn out.

Mark – Ind.: When I went on Medicare two years ago, I was advised to take a type F Medigap supplemental plan. I now pay $3,200 per year for that plan plus Medicare Parts B and D. My wife turns 65 this year, and we see that we could get Medicare Advantage PPO plans with drug and vision coverage for $2,000, including Part B premiums. If we did this, can you tell us whether she would be getting less coverage than I have?

Phil Moeller: You have raised a fundamental Medicare coverage question that people face. Medicare Advantage (MA) plans cost less — sometimes much less — than your package of traditional Medicare coverage. By law, MA plans must cover everything that original Medicare covers. In fact, many plans cover more, including basic dental-vision-hearing and often health club memberships. They also have caps on out-of-pocket expenses, thus providing a benefit comparable to your Medigap plan.

The trade-off is that people with MA plans usually must use doctors and specialists who are in their plan’s provider network. Sometimes, this is no problem at all, but sometimes it is. If you get a PPO plan, odds are you will face fewer such restrictions, but you need to do your homework before getting a policy.

Also, MA plans are, by definition, managed care plans. This means they often have more restrictive rules about getting treatment than does original Medicare.

Studies show that MA policyholders with serious health problems sometimes want to switch back to original Medicare because they are dissatisfied with the care they get from their MA plan. There also are studies, however, that show that MA plans often are a better choice for people with health problems who need help managing their disease. MA plans are more “hands-on” in that regard than original Medicare.

Lisa: I am 62 but my husband will be 65 later this year and thus eligible for Medicare. However, he doesn’t have enough lifetime earnings to qualify on his own for Social Security and I’m hoping to delay filing for Social Security until I’m 70. If he doesn’t qualify for Social Security on his own, does that automatically mean that he also does not qualify to sign up for Medicare when he turns 65? I’m confused about the relationship between Medicare and Social Security and qualifying via a younger spouse.

Phil Moeller: I have good news for you! Your husband can qualify for Medicare based on your Social Security earnings record. You need to be at least 62 to enable him to qualify, and you already are. So, when he turns 65, he can apply for premium-free Part A of Medicare and also get Part B. Then, he can get additional Medicare products – Part D drug coverage and perhaps either a Medigap plan or a Medicare Advantage plan.

Christopher: I turn 65 in October. I retired at age 62, and I’m currently on Medicaid through the Affordable Care Act (ACA). I am trying to determine if I have to switch to Medicare. As a Medicaid recipient, I have no premium to pay. I do not know what the law requires and I’m not sure where to get the information I need to make an informed decision.

Phil Moeller: If you stay on the ACA when you turn 65, you will lose whatever ACA subsidies you now receive. I do not know whether or not you would continue to qualify for Medicaid. This will depend on rules in the state where you live.

Your Medicaid ACA plan should be able to help you with the transition from the ACA to Medicare. There also is a free Medicare counseling agency with offices in all states. It’s called the State Health Insurance Assistance Program (SHIP). I suggest you contact a local office and see if someone there can help you.