You're in the hospital, but are you really? Find out about the latest way hospitals and the government are sticking you with thousands in extra health costs.
News 8 Investigates
Ninety-five-year-old Bea Tanner was rushed to a North Texas hospital after she passed out while suffering from a heart condition.
Her doctor ordered a battery of tests, including CAT scans, MRIs, and EKGs. She was treated at the hospital three days.
Then, as a Medicare patient, she was taken to a nearby skilled nursing facility for rehabilitation.
But within a week, the facility contacted Bea’s son, Randy Tanner, telling him that Medicare would not cover his mother because she was not an admitted hospital patient, and she already owed the rehab facility $3,000.
“Somebody called me and said she (Bea) didn't stay in the hospital,” Tanner said. “…I said, ‘I'm certain she was there Wednesday, Thursday and Friday night.’”
Tanner thought his mother was an “inpatient” who had been admitted to the hospital. Instead, he learned she was listed as an “outpatient” on “observation status.”
The observation status label allows doctors to monitor an individual to determine if they are sufficiently sick to admit as an inpatient.
But for observation patients like Bea Tanner, the label means higher out-of-pocket costs due to co-pays and pharmacy charges. They also do not qualify for skilled nursing facility care at discharge, even if they stay in the hospital for three days.
Bea Tanner is not unique. In fiscal 2014, more than 633,000 Medicare beneficiaries were given observation status for at least one or more of their three-day hospital stays, according to an analysis by the Office of Inspector General (OIG) at the U.S. Dept. of Health and Human Services.
Such a designation may cost patients – many on fixed incomes – tens of thousands of dollars in extra costs, investigators said.
What are the most common reasons for observation stays? We've compiled them here.
While at the hospitals, Randy Tanner said no one told them that his mother was listed as an outpatient. And Texas and federal law currently doesn’t require such notification.
Records show the number of observation stays continues to rise.
A Department of Health and Human Services OIG analysis found in fiscal 2006, that 932,000 Medicare patients received observation care.
In fiscal 2014, the use of observation care more than doubled – totaling more than 1.9 million patients.
During that same period, Medicare enrollment only increased 5 percent.
Several authorities said hospitals continue to put more patients on observation status, in part, because they’re under increased scrutiny by federal inspectors.
It comes after federal inspectors noticed hospitals admitting Medicare patients unnecessarily - and for short periods - possibly as a way to make more money. Medicare pays more for inpatient stays than outpatient stays.
Texas Hospital Association CEO Ted Shaw acknowledged that doctors have to determine if a patient truly needs to be admitted – a difficult process that can take time, with many variables.
And hospitals face stepped up enforcement, with more audits of their hospital records.
W. Stephen Love, president of the DFW Hospital Council, called such audits well intended, but a form of “Monday morning quarterbacking.”
“We understand we receive federal funds - we should be audited,” Love said. “But they look at the documentation and as a Monday morning quarterback go: ‘Well, based on this and how the patient improved, they shouldn't have ever been admitted.’ Then they deny that stay. Hospitals have to deal with denials of payment constantly.”
It may be one reason that hospitals are pulling back on admitting patients and – at least initially – on observation status even though they’re spending the night.
Rachel Bryan, who evaluates Medicare programs with the Office of Inspector at DHHS, says they have seen the number of longer, multi-day observation stays continue to grow.
“It's really not fair for Medicare patients,” Bryan said.
Beginning in March, she said, patients will begin receiving written notification if they are placed on observation status.
Bryan also said her office is recommending that patients like Bea Tanner become eligible for skilled nursing care despite being placed for one or more days on observation status.
“One of those recommendations is to count any nights spent in the hospital toward Medicare's requirement to pay for rehab services.” Bryan said.
However, any such change in Medicare policy would require congressional action.
• For more information about Medicare and observation status designations, visit the Center for Medicare Advocacy's observation care website:
• Or go here: