Ordinarily, a senior who experiences an in-patient hospital stay of three days or more and is discharged to rehabilitation is entitled to limited Medicare coverage. Up to the first 20 days can be covered 100% (i.e., no cost). After that period is exhausted, the senior is obligated to a private pay daily rate of $170.50. This cost is often covered by a Medicare Supplement policy. Note: participants in Medicare Advantage Plans may experience different coverage rates and period.
Over the last few years, Medicare has increasingly pressured hospitals to limit the number of seniors who would be entitled to the post-hospitalization benefit. The way this is done is to keep the patient “under observation,” which means the patient is not admitted for care. This “under observation” time frame can be many days. The consequence of this is that when the senior is finally discharged out of the hospital for rehabilitation, they have zero Medicare coverage. This means that seniors discover that they need to pay up front for that care which can be $350 per day or higher. For the first 20 days, that could mean an unexpected cost of nearly $7,000!
Faced with this cost, seniors often decline necessary rehabilitation and return home. Now, Medicare is imposing a second “penalty” by reducing access to home health care for these seniors.
Recently, CMS (the federal Centers for Medicare and Medicaid Services) announced a new payment system for home health care payable under the Medicare program. Beginning January 2020, if a senior needs home health care, but they didn’t first come out of a hospital stay (a “community discharge”) the reimbursement rate to the Home Health Care provider will be as much as 25% less than if the senior is coming out of a hospital stay (an “institutional discharge”). This means that care for a senior who did not first have a hospitalization will be less than one who was first hospitalized, regardless of the extent of their health needs. Home health care agencies will likely be trying to cut down the portion of their cases that are at the lower reimbursement rate.
The problem here is that “observation stay” patients are grouped with “community patients,” even though they are coming out of a hospital. That means that they will have a more difficult time securing home health care.
To protect yourself as much as you can if hospitalized, be adamant and proactive about securing admission if post-hospital rehabilitation or home health care is anticipated.