Be wary of “observation loopholes” currently trending in hospitals.  It can cost you big bucks.

By Mike Brooks of The Care Assistance Center

There are common misconceptions when it comes to Medicare and Long Term Care.  Medicare is specifically for acute care and what is medically necessary rehabilitation care for an individual.  Long Term Care is mostly custodial care, specifically for helping with activities of daily living, such as eating, bathing, dressing, toileting, transferring, and continence.

Medicare Part A (hospital insurance) will pay for skilled nursing care in a skilled nursing facility for a limited time under certain circumstances. Coverage with Medicare includes, but is not limited to: a semi-private room (room shared with another individual), meals, skilled nursing care (i.e. bandage changes), physical therapy, social services, medicines, medical supplies, transportation to other facilities, and dietary counseling.  Cost sharing with Medicare is always a factor and it’s important to consider supplementing with additional insurance to cover those expenses.

Medicare will pay for these services long as they are needed to meet your goal of obtaining better health.  When a doctor deems your treatment no longer effective it can trigger a change from rehabilitative to custodial care.  Once care is custodial, Medicare will no longer pay.  Let’s look at two scenarios and how Medicare covers both.

Scenario #1: You enter the Emergency Room (ER) and are formally admitted into the hospital by a doctor’s orders as an inpatient for three days and discharged on the fourth day.*  You meet the three-day requirement by Medicare to pay for skilled nursing care as described above.

Scenario #2 You enter the Emergency Room (ER) and are kept under observation for one day followed by an inpatient stay for two days, then discharged.*  Medicare will NOT cover the cost for any skilled care, although you were in the hospital for three days.

This leads us to a new misconception that has presented itself within the last year:  the observation loop hole.  Increasingly more hospitals are now entering patients into observation in fear of being penalized by Medicare for inappropriate admissions.  This can lead to sticker shock and unexpected, high out-of-pocket costs for seniors who leave observation and enter nursing care.

The Care Assistance Center LLC is available to consult with our clients and their family to ensure they are aware of these gaps in protection.  We understand the concepts of Medicare and Long Term Care and can help you build a plan that provides you with peace of mind and protection against the looming “sticker shock” for Long Term Care.

Please contact The Care Assistance Center for more information. We have kind and helpful staff here to help: (919) 518-8237.


*Note: The doctor that prescribes a month of rehabilitative care in a nursing facility.