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The Medicare “Under Observation” Trap

Don’t get caught in the “Under Observation” trap!

I have received many calls and emails regarding the Under Observation designation that some folks have been getting caught in. Here is the video that has brought the subject to light:


Here is the LINK to the Medicare publication that defines what folks will have to pay under different circumstances. Page 3 outlines several different scenarios.

What is the problem?

There has been a push by Medicare over the last 8 years to stop physicians and hospitals from needlessly admitting and hospitalizing Medicare beneficiaries. That is a reasonable goal.

The problem is that they are coming back sometimes months or even years later and denying claims. This has facilities and doctors running scared and increasingly hesitant to admit someone that they might not get paid by Medicare for.

The 2nd issue is the situation that occurred in the video above. With Original Medicare you must be hospitalized for 3 nights before skilled nursing care in a facility will be covered. If one is “Under Observation” then they are never admitted and any subsequent care or stay at a skilled nursing facility will NOT BE covered.

With Medicare Advantage plans like HMO’s this is not the case as most plans do not require prior hospitalization to be eligible for skilled nursing facility benefits.

What to watch for

If you are ever in need of hospitalization for anything, ask and make sure you are a classified as “Inpatient” and NOT “Under Observation”. Those 2 little words can have a major impact on what you will have to pay out of pocket.



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