Medicare patients surprised to end up as self-pay

I haven’t written about Medicare beneficiaries as self-pay patients yet, although it’s certainly been on my list of topics to address. Most people don’t think of Medicare recipients as self-pay patients, assuming that the program covers all or at least most of the elderly’s medical expenses. But that’s not the case, and although it is different and more challenging in some ways for Medicare enrollees to participate in the self-pay market, it is an option.

But sometimes, it’s an option that is thrust upon the elderly, who unwittingly wind up with large medical bills that they’d assumed would be covered by Medicare. NPR (formerly National Public Radio, I guess the marketing mavens got to them) had an article last week about one practice by hospitals and Medicare that combine to leave many patients with huge medical bills.

For Hospital Patients, Observation Status Can Prove Costly

If you’re on Medicare and you’re in the hospital for a few days, you may think you’re an inpatient. The hospital may have other ideas. Increasingly, hospitals are placing older patients on “observation status.” They may be there for days, but technically they’re still outpatients. 

This is a big deal for someone on Medicare because follow-up treatment in a nursing home isn’t covered unless someone has been an inpatient for at least three days. That’s leaving some seniors on the hook for thousands of dollars in nursing home bills.

One of them is 74-year-old Rosalie Winkworth of Dunellen, N.J. She went to the hospital in February for the same reason that many older frail people do: She fell. But she already had a lot of physical impairments stemming from a stroke she suffered when she was just 21 years old…

After Winkworkth’s discharge, her doctors said she needed to go to a nursing home. But since the hospital considered her an observation patient, not an inpatient, the family had to pick up the bill.

The story goes on to explain that hospitals blame Medicare for creating these sorts of situations, claiming that the program’s policy of retroactively classifying patients as inpatient, outpatient, or observation status can leave them with large unpaid bills. And apparently it’s not a minor problem, according to a government report cited in the article this sort of thing happens to about 600,000 Medicare beneficiaries each year!

It’s a serious problem, and I’m not sure there are any easy options for retirees who find themselves in these sorts of situations. I do wonder whether many of the elderly who might otherwise find themselves needing nursing home care might benefit from something like the ‘Granny Pod’ offered by MedCottage.

According to the company’s web site, these are “…mobile, modular medical home designed to be temporarily placed on a caregiver’s property for rehabilitation and extended care. Simply stated, it’s a state-of-the-art hospital room with remote monitoring available…”

They are small enough to fit in most backyards (I’d imagine there may be some issues with city zoning officials in some areas), and allow the elderly needing nursing-home levels of care to stay with family.

They aren’t cheap – looking around online it appears that they can cost anywhere from $1,500 – $2,000 a month to lease or between $85,000 to $125,000 to purchase. But that’s considerably less than what some nursing homes can cost, especially over the lifetime of the patient. And when the unit is no longer needed, if it was bought then it’s an asset that can be sold, thus recouping much of the money spent – something that can’t be said for traditional nursing home care. The company also offers financing to help with the purchase of a MedCottage as well.

Each Medicare beneficiary’s health care needs are unique of course, and it’s easy to imagine a number of scenarios where a MedCottage wouldn’t be a viable option. But for seniors concerned about paying for nursing care, the ‘Granny Pod’ may just be a suitable option.

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5 Responses to Medicare patients surprised to end up as self-pay

  1. Alice C. Burkhart says:

    I am 73, female, on Medicare and Tricare. (My late husband retired from the Air Force and I have not remarried.)

    Will I be covered under the “new” Medicare/Tricare guidelines?

    Alice Burkhart

    • says:

      Hi Alice, I’m not sure how that will work out, I’d guess there’s some information available through the CMS office or web site?

  2. Gordon Wall says:

    Is it illegal to pay cash for medical services, e.g. an office call, if one has Medicare coverage? And so if it is, what is the citation in law that applies?

    • Sean Parnell says:

      Medicare is tough, in that if you try to pay cash for something that’s covered the doctor is in all kinds of trouble. But you can pay cash for services that aren’t covered.

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