KHN: Advocates Head To Court To Overturn Medicare Rules For Observation Care

Photo: National Committee to Preserve Medicare and Social Security

By Susan Jaffe MAY 03, 2013 

This KHN story was produced in collaboration with 

After Lois Frarie, a 93-year-old retired teacher from Monterey, Calif., spent four days at a local hospital while being treated for a broken elbow and pelvis, she went to a nearby nursing home to build up her strength.

But her family was stunned to find out that they would have to pay thousands of dollars up front since two of the days she spent in the hospital were considered “observation care.” She wasn’t an admitted patient for at least three consecutive days and therefore she didn’t qualify under federal law for Medicare’s nursing home coverage.

Lois Frarie and her husband Wayne live in a Park Lane senior community home in Monterey, Calif (Photo by Jay Dunn/The Salinas Californian for USA Today).

“I assumed I was under the hospital’s care,” said Frarie.

Advocates for seniors say the distinction is not fair to patients. They are taking their argument to federal court in Hartford, Conn., Friday for the first hearing on a lawsuit seeking to have Medicare eliminate the observation label. Government lawyers argue in court filings that Medicare considers observation care an outpatient service and if elderly patients think they should have been admitted to the hospital, they should file an appeal.

Yet federal records and interviews with patients and advocates across the country show that many observation patients who call Medicare about the billing problem find out there is nothing that Medicare can do to help – as Frarie’s and other persistent families have learned first-hand.

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  • LAAAC is managed by St. Barnabas Senior Services; Funded, in part, by Archstone Foundation.
  • St. Barnabas Senior Services

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