Why Isn’t Rehabilitation Stay Covered By My Insurance Company?

QUESTION: My mother was in the Emergency Room (ER) and they couldn’t find out exactly what was wrong. The doctor recommended her staying at the hospital for Observation. She has been there three days and now they are recommending her going to a rehab facility. We just found out that it won’t be covered by insurance. What is happening? Why isn’t that rehab stay covered by her insurance?

ANSWER: Remember that this is Part 2 of my answer to this question and the issue of Observation Stays.

I will begin by addressing the rehab facility part of your question.

If a hospital stay is covered by Medicare Part A and is at least three days; there is an additional benefit of rehabilitation stay for up to 100 days. Previous to this policy change by Medicare, most individuals who went to the hospital for at least three days could then be discharged to a Rehab Facility (like the Medical Rehab Unit or MRU and/or a Skilled Nursing Facility or SNF) and have Medicare Coverage for up to 100 days. Original Medicare Part A would cover 100 percent of the cost for the first 20 days and then the individual would have a co-pay of $167.50 per day for days 21 to 100 if original Medicare was still covering the stay at the SNF.

The rules for that rehab stay have not changed. The difference is that an Observation Stay is not covered by Medicare Part A and there is no inpatient rehab stay benefit under Medicare Part B. That means, when your observation stay is covered by Part B, you have no rehab stay benefit, so when you go to the SNF you are paying for that entire stay yourself. These facilities cost about $350 per day while there.

This is how most people find out about their observation status. Just like you, they learn and begin to understand the difference at the time of preparing for discharge. When individuals and families are told that they will not have the insurance coverage they anticipated for the rehab stay and instead are paying for it fully themselves, the difference between inpatient hospital stay and observation stay really hits home.

For those individuals with Medicare Advantage Plans they may find that this observation status does not change the Rehab Stay Benefit. Some plans have agreed to cover these rehab stays even though original Medicare does not. In these Medicare Advantage Plans, there is often a per day co-pay for each Rehab Day. So you don’t have to pay $350 per day, but you may pay part. Each Medicare Advantage plan makes an individual determination in covering this benefit according to the situation and the qualifying diagnosis.

Some Medicare Advantage Plans will cover a rehab stay in an SNF without any hospital stay, so you could go directly from a physician’s office or your own home and have the rehab stay covered by your Medicare Advantage Plan with that per day copay.

For those requiring help after this hospital stay (admission or observation) you also may have the option of home care. Instead of doing a rehab stay at a facility, you may return home with home care and physical, occupation or speech therapy in your own home.

This observation status or stay applies no matter where you are in the hospital. We have run into this issue for people who are in the ER for more than 24 hrs, but less than 72. I have talked with people who were in ICU for two days, but were considered observation status. Where you physically sleep in the hospital does not determine admission or observation. It is your medical condition, doctor’s orders and Medicare Admission Criteria.

So after reading these two articles you may have a better understanding of the Observation Status Rule. My concern is who benefits from this rules change? I do not see a lot of benefit for those with Medicare. Those individuals who are going to the hospital and paying more for the hospital stays and treatment received there are certainly not benefiting. They are also paying more for their medications during their stays and are having difficulties getting those medications covered.

The individuals working in a hospital, doctors, nurses, social workers, and billing personnel are not benefiting by this rule change. The hospitals are not benefiting from this rule change. The hospitals are getting paid less for providing the same care during these observation stays. The social workers are the ones who get to tell you your insurance isn’t covering your stay the same way, and your rehab stay will not be covered at all. The billing personnel who field your questions and try to explain the difference in coverage to you about why you are having to pay more for this stay than you thought you would are not benefiting by the change in rules.

The benefit appears to be a benefit to Medicare and the Federal Government and insurance companies that contract with Medicare. Instead of paying for these hospital stays under the column of Medicare Part A, it has been switched to the column of Medicare Part B. This is the savings for Medicare and CMS and insurance companies.

So when you are frustrated by this Observation Stay rule, please don’t just voice your concern to the social worker and the billing personnel, and maybe even your Insurance Company. Express your frustration to your Federal Representatives. Those members of Congress, and CMS who approved these rule changes and made the policy change need to hear your frustration. The Federal Representatives and CMS are the ones who can change this rule, and need to understand how this change impacts you and your family. Let them hear your frustration and your cost for care. Tell them what this change has cost you and your family.

The Social Worker who informed you of the coverage, the doctor who treated you and the hospital you stayed in cannot change the rules, cannot override the rule, and cannot change your insurance coverage.

The rule needs to change at CMS. The Observation Status Coverage change continues to be advocated for by a number of organizations. The Medicare Rights Center has more information available on this issue, at www.medicarerights.org. The Medicare website also has information on this issue, at www.medicare.gov. At the Medicare website there is a really helpful publications called “Are You a Hospital Inpatient or Outpatient?” This publication provided some of the information used in these articles. You can also call 1-800-medicare to request a copy of that publication. Another website is www.medicareadvocacy.org has a lot of information about this observation status issue.

Please don’t think that you are the only person going through this. You are not. We in Health Care are talking with people every day about this issue. We are frustrated and working toward changing this policy of coverage. Those individuals with Medicare need to also voice their concern and frustration.

To contact Janell Sluga, GCMC with questions or concerns, please call 716-720-9797 or e-mail her at janells@lutheran-jamestown.org.

COMMENTS