865-203-2040 karen@sisgrouptn.com

There is a slight gap when it comes to Medicare coverage in regards to a hospital stay and a surprise bill could be the result. In an effort to reduce costs, Medicare asks that hospitals don’t admit patients immediately, but rather place them under observation to determine if they should be admitted. This has a domino effect on costs to the beneficiary. While Federal regulations typically prevent Medicare beneficiaries from getting surprise charges, there are a few issues when it comes to hospital stays.

Admission to the Hospital and Prescriptions

Medicare Part B does not pay for prescription medications when you are put under observation (considered outpatient) in the ER. However, your prescriptions ARE covered if you are admitted into the hospital directly. If you are under observation, Part B will not cover any prescriptions used during the overnight stay. What this means is that if you are in the ER and they want to keep you overnight for observation you must ask that you are admitted.

Skilled Nursing Care and Hospitalization

Patients who need skilled nursing care after being hospitalized for a health issue could see an additional bill if they are classified as “outpatient” when they are admitted into the hospital. This care is covered by Medicare, but only if the patient has been formally admitted as an inpatient for at least three days. Any time prior to being listed as an inpatient will NOT count towards the 3-day requirement.

Additional notes:

  • If you refuse your daily skilled care or therapy, you could lose your Medicare skilled nursing facility coverage.
  • If your break in skilled care lasts more than 30 days, you will have to start over with your 3-day hospital stay to qualify again.

>>Related Reading: Medicare Changes 2024 – What Medicare Beneficiaries Need To Know

Inpatient vs. Outpatient – Other Scenarios

There are other key points to note where you may incur costs when you are not admitted into the hospital and remain an outpatient. Examples include:

  • You have outpatient surgery, but the provider decides to keep you overnight due to a concern. Medicare Part A pays nothing in this example, while Medicare Part B covers provider services and hospital outpatient services such as lab tests or IV medicine – you will be responsible for a copayment for all outpatient services.
  • You are admitted as an inpatient, but your provider determines the status should change to outpatient. Medicare Part A pays nothing in this example, while Medicare Part B covers provider services and hospital outpatient services – you will be responsible for a copayment for all outpatient services.

The best thing to do if you are at the hospital is to just ask what your status is. The hospital will provide you a Medicare Outpatient Observation Notice (MOON). You must get this notice if you are under outpatient observation services for more than 24 hours.

Observation Care

As mentioned above, if you have been under observation for 24 hours, the hospital must give you a Medicare Outpatient Observation Notice (MOON). The hospital is required to provide notice to you with an explanation of your status as an outpatient and the financial implications of that status with regard to Medicare cost sharing and coverage.

Unlike other Medicare notices, patients do not have appeal rights with a MOON. However, there are a few steps you can take to protect yourself:

  • Have a conversation with your doctor. Ask that you be admitted as an inpatient.
  • If your request to be admitted as an inpatient is denied, request a written notice as to why they require you to remain in observation status.
  • Inform the hospital that you want documentation from your doctor explaining why admission is not medically necessary.

Although appealing a MOON is not something you can do, once you are discharged you may be able to appeal the hospital care. You will want to speak with your doctor as soon as you receive the MOON to get support for your appeal and in that discussion make sure that your doctor is aware that there may be a potential issue with hospital observation and Medicare.

Need help looking at your options? Give Karen or Matt a call at 865-203-2040 or email us at contact@seniorinsurancespecialty.com!

*We do not offer every plan available in your area. Currently, we represent 11 organizations which offer 126 products in your area. You can contact Medicare.gov or 1-800-MEDICARE, or your local State Health Insurance Program for help with plan choices.


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