As healthcare reform continues to move towards full implementation, each Medicare Dollar spent is being analyzed. Now a new trend is becoming more and more popular in today’s healthcare industry, and is actually leaving some clients responsible for thousands of dollars in out of pocket medical bills. In this article we’ll take a look at why it’s happening and how to help your clients better identify their potential exposure.
What is Up Coding?
When someone goes into the hospital there is a level of care that is required in order for them be treated. The level of care received corresponds with a code that is billed to Medicare. Medicare will then reimburse the hospital, but it doesn’t always go that smoothly. Let’s say someone is in the hospital and in order for them to recover they only need to be placed “under observation.” Instead the hospital admits them and when they submit the bill to Medicare it’s coded as an “inpatient.” Medicare will pay the hospital a higher reimbursement amount for an inpatient stay, but here’s where the up coding can take place and the issues begin. If up coding has occurred and the hospital has been paid for more care than was actually required Medicare can potentially take back the full reimbursement amount and leave the hospital with NOTHING! …Now when someone goes into the hospital and they NEED to receive the level of care provided to an inpatient to fully recover, hospitals might code the visit as “observation.” As a result the hospitals are receiving less money from Medicare than if it was coded as inpatient, but don’t have to worry about losing the payment at a later date. The hospitals now are erring on the conservative side and taking a loss on the amount of money they’re getting back, rather than running the risk of losing their total reimbursement. Recent studies show this trend has caused a 25% increase in “observation” stays.
How Does This Affect Your Clients?
Medicare Part A covers inpatient care in a skilled nursing facility IF it follows an inpatient hospital stay of at least 3 days. So if your client goes to the skilled nursing facility after an inpatient stay, their bill goes to Medicare Part A where it is paid. The claim is then passed along to their Medicare Supplement to pay its part of the difference. All of that works out the way everyone planned because it was after an “inpatient” hospital stay. What happens if the client gets their skilled nursing facility bill after being in the hospital coded as under “observation?” The bill is sent to Medicare Part A where the claim is denied! Since it was denied the client’s Medicare Supplement will not cover any costs either. For example, if your client enters a skilled nursing facility where the cost is $250 a day, the client will be responsible for $15,000 in out of pocket costs.
How You Can Help!
Help your client understand what’s going on, and why it’s happening. Be sure they know to ask the question that could save them thousands of dollars: Am I an “inpatient” or “under observation?” Be proactive and help them identify when their current (or new) coverage will and will not pay. Last but not least, offer them a plan that no matter what, will help protect them.