PHCA Testifies Before House Aging Committee in Support of Legislation That Would Protect Seniors from Unexpected Health Care Bills

HARRISBURG —Russ McDaid, Chief Operating Officer at the Pennsylvania Health Care Association, today told the House Aging and Older Adult Services Committee that PHCA supports HB 1907 because it helps to address the rapidly growing problem of seniors receiving care in hospitals on “observation status” and later finding they are not eligible for post-acute care covered by Medicare.

HB 1907 is known as the “Hospital Observation Status Consumer Notification Act” and was introduced by State Rep. Stan Saylor (R-York County) in December.

The legislation was crafted to address the growing trend of hospitals caring for patients for days without formally admitting them as patients. The hospitals classify these individuals as “outpatient” even though they are receiving care in a hospital room. This classification system has serious and costly financial implications for patients whose insurance will not cover outpatient care — and especially for seniors, who often need post-acute care in a skilled nursing facility following a hospital stay.

The legislation requires hospitals to provide oral and written notice to a patient if he or she is receiving care as an “outpatient” under “observation status” rather than being admitted as an “inpatient” after 23 hours in the hospital.  It also requires hospitals to explain the ramifications of the observation status to the patient.

“Too many seniors who need rehabilitation after a hospital stay are finding out too late that their rehab won’t be covered by Medicare because the hospital held them in observation status rather than inpatient status. Some Pennsylvania seniors have faced enormous medical bills,” McDaid said. “Rep. Saylor and the many legislators who co-signed this bill should be commended for introducing this important measure of protection.”

Medicare pays for up to 100 days of post-acute rehabilitation care in a skilled nursing facility following a three-day, inpatient hospital stay. However, if the Medicare beneficiary is an outpatient under observation status, Medicare will not cover the cost.

Brad Jacobs, Register of Wills and Clerk of Orphan’s Court in York County, told the Committee how his family was unaware that his mother, Winifred Jacobs, was on observation status at York Hospital for several days in 2009 until it was time to move her to a skilled nursing facility for rehabilitation near their home.  In the hours before her discharge, they learned her care wouldn’t be covered by Medicare because she was never actually admitted to the hospital.

“She was receiving 24/7 care, services, meals. We had no way of knowing that she was never formally admitted to the hospital,” Jacobs testified. “And, let me remind you that we were only learning this on the day she was to be discharged from the hospital.  We had little time to make phone calls and decisions.”

Winifred Jacobs and her family were given two choices:  pay for her own costly rehabilitation at the nursing facility, or move to a rehabilitation hospital for a three-day admission to meet the Medicare requirement, then move again to the nursing facility. The family chose the latter.

“From our family’s perspective, the most unfortunate part of this experience is that Mom had to make three moves instead of two,” Jacobs said, who added, “And this cost Medicare a lot of extra money.”

The legislation directs a hospital to provide oral and written notification to a patient of his or her outpatient status if the individual has not been formally admitted as an inpatient and is being treated outside of the emergency room, including being provided with a hospital bed and meals, for more than 23 consecutive hours. The bill also stipulates that a hospital train staff members who would communicate with patients about outpatient status and potential financial implications.

The measure builds upon federal legislation introduced earlier in 2013 that would count a patient’s time in the hospital as an outpatient in observation status toward the three-day mandatory inpatient stay threshold for Medicare to cover post-acute skilled nursing care.

The number of seniors being seen under observation has increased by 69% nationally in the past five years, according to the Centers for Medicare and Medicaid Services.  An Office of Inspector General analysis of 2012 Medicare claims showed that more than 600,000 hospital stays of at least three nights were labeled observation stays.

As a result, thousands of otherwise eligible individuals did not qualify for Medicare nursing home coverage, which mandates 72 hours as an inpatient as a prerequisite, and the out of pocket costs to the consumer were often much more costly.