Judith Stein got a call from her mother recently, reporting that a friend was in the hospital. “Be sure she’s admitted,” Ms. Stein said.
As executive director of the Center for Medicare Advocacy , she has gotten all too savvy about this stuff.
“Of course she’s admitted,” her mother said. “Didn’t I just tell you she was in the hospital?”
But like a sharply growing number of Medicare beneficiaries, her mother’s friend would soon learn that she could spend a day or three in a hospital bed, could be monitored and treated by doctors and nurses — and never be formally admitted to the hospital. She was on observation status  and therefore an outpatient. As I wrote last year, the distinction can have serious consequences.
The federal Centers for Medicare and Medicaid Services tried to clarify this confusing situation in the spring with a policy popularly known as the “two-midnight rule.” When a physician expects a patient’s stay to include at least two midnights, that person is an inpatient whose care is covered under Medicare Part A, which pays for hospitals. If it doesn’t last two midnights, Medicare expects the person to be an outpatient, and Part B, which pays for doctors, takes over.
It’s rare to have hospital and nursing home administrators, physicians and patient advocates all agreeing about a Medicare policy, but in this case “there’s unanimity of dislike,” said Carol Levine , director of the Families and Health Care Project of the United Hospital Fund. Despite protests , the rule took effect on Oct. 1, but Medicare agreed to delay penalties for 90 days.
Meanwhile, administrators at the Johns Hopkins Hospital in Baltimore have taken to calling the policy the Cinderella Rule, said Amy Deutschendorf, senior director of clinical resource management: “If you cross two midnights, you’re an inpatient. If not, you’re a pumpkin.”
Being a pumpkin can cost patients a lot of money. Under Part B, they’re billed separately for every procedure and visit and drug, and the co-pays can mount until patients owe hundreds or thousands of dollars — which they may only discover upon receiving the bills. “People are shocked,” Ms. Levine said. “Nobody is required to tell them they’re outpatients.” (Except in New York State, where the governor just signed legislation requiring that Medicare beneficiaries be informed of their observation status and be able to appeal it.)
Legislation to allow any time spent in a hospital — as an inpatient or outpatient or both — to count toward the three-day requirement for skilled nursing coverage has gone nowhere in two Congresses, but it has acquired more than 100 House sponsors from both parties and more than 20 in the Senate. That may be the more likely situation, someday...