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Hospitalization restriction could cost seniors a bundle for SNF care

August 13, 2012
by pamela tabar
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Continuing confusion over hospital classifications can result in seniors being responsible for paying their entire stay at a skilled nursing facility, even if they are Medicare beneficiaries. In an attempt to fix the problem, the Centers for Medicare & Medicaid Services (CMS) is lauching a pilot program that will relax the rules on hospital rebilling.

Currently, Medicare will only cover skilled nursing costs if a person has been a hospital inpatient for at least three days. Medicare doesn’t cover SNF care if the hospital stay was fewer than three days, or if the patient was hospitalized “under observation” instead of as an inpatient. The problem is, patients can’t tell the difference, and they could get a hefty, unexpected bill for their SNF care because of it.

Hospitals have been hampered by the classifications, too. If a hospital bills for an inpatient stay when an observation stay was warranted, Medicare can choose to withhold all payment. Wishing to reduce denied reimbursements, hospitals may be overusing the observation care classification, CMS says in the pilot program rule.

Under the three-year pilot program, 380 hospitals will test a revised billing system where inpatient services whose reimbursement is denied can be rebilled as observation care.

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