How to Avoid the Two Words That Cost Thousands in Medicare Bills: "Under Observation"

It’s not something they teach doctors in medical school. And it’s probably not something you’d know to look for if you were suddenly rushed to the hospital in an emergency. But when a doctor decides to write the words “under observation” on a Medicare patient’s chart, it can have lasting consequences.

Those two little words can be the difference between spending thousands of dollars out of your own pocket and having Medicare cover the entire bill.

Brenda Kelley-Nelum was driving her husband Al 'Doc' Nelum to an appointment when he started having symptoms of a stroke.   An ambulance took him to the nearest hospital with a stroke clinic. Hours later they were still there, waiting on test results, when someone mentioned her husband had been put on observation status.  As an advocate for seniors in Virginia, Kelley-Nelum had a vague recollection that she’d heard that term before. And it wasn't good. 

She was right to worry.

As it turned out, her husband would go on to a nursing facility for rehabilitation, at a cost of about $22,000. Medicare pays for rehab only for people admitted to a hospital for three or more days as “inpatients.” Medicare will not pay for rehab if they were classified as “observation status” when they received treatment at the hospital.

Kelley-Nelum did what advocates advise anyone on Medicare to do. She found out how her husband was classified and asked if he might need rehab later. Then she spoke up -- loudly. She asked so many questions, she said, the doctors grew tired and sent in someone from hospital administration. That person relented and changed Doc Nelum's status to “inpatient.” His entire $22,000 bill was ultimately covered by Medicare.

Kelley-Nelum says her husband was lucky she was there.

“If I had not been there my husband probably would have accepted the observation status ... on face value.”

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How to Avoid the Two Words That Cost Thousands in Medicare Bills