Inpatient vs. Outpatient Status: How It Can Bankrupt You

This post is about hospital Inpatient versus Outpatient Status, the difference between the two, and how being categorized as one over the other can result in costly medical expenses. While this content pertains mostly to individuals on Medicare, I feel everyone should know this information in the event they or a loved one are hospitalized.

Inpatient vs. Outpatient Status: How it Can Bankrupt You

One of my least favorite parts of being a hospital social worker is being the bearer of bad news. On a typical day, I'll have numerous conversations with patients telling them that their equipment, transportation, and/or post-hospital care is not covered by their insurance. Telling patients that they're liable for up to thousands of dollars in medical expenses is not exactly what I had in mind when I became a social worker.

When it comes to talking to patients about what's not covered, the most infuriating and confusing expenses often stem from whether a patient was admitted to the hospital under Inpatient or Outpatient Status.

Inpatient vs. Outpatient Status

Inpatient Status is when a patient is admitted to the hospital under a doctor's order. Typically, that order reads as follows: "Admit patient to inpatient". In addition to a doctor's order, a patient must meet insurance criteria for an inpatient admission. For Medicare patients, this boils down to the following:

• Two Midnight Rule: A physician expects a patient to stay in the hospital for more than two midnights based on medical condition.
• If staying less than two midnights, the patient requires tests and/or procedures than can only be done in an inpatient hospital setting.

Outpatient Status (also known as Observation Status) applies to those getting medical services (x-rays, emergency room care, outpatient surgeries, lab tests, etc.) but do not have a doctor's order admitting them under Inpatient Status. While emergency room patients might be moved to another part of the hospital to spend the night, they are still considered outpatient until a doctor writes an order to change them to Inpatient Status.

How Inpatient vs. Outpatient Affects Your Medical Expenses

Inpatient Status hospital stays are billed under Medicare Part A. Outpatient Status hospital stays are billed under Medicare Part B. While most Medicare patient have both Part A and B, those who have opted out of either will be responsible for uncovered expenses. 

Whether someone is Inpatient or Outpatient Status has the most profound impact on individuals needing to go to a Skilled Nursing Facility (abbreviated SNF and pronounced "sniff" by medical workers) for short-term rehabilitation. In order to be eligible for SNF, a patient must a qualifying hospital stay. A qualifying stay entails 3 Inpatient Status days in the past 30 days.

What Can Go Wrong

The difference between Inpatient and Outpatient Status can be confusing, even for physicians who deal with this sort of situation on a daily basis. Here are a few examples of what can go wrong:

• A patient is incorrectly admitted under Inpatient Status. This usually occurs with patients hospitalized for non-medical social reasons such as homelessness or lack of caregiver support at home.
• When a patient is changed from Inpatient Status to Outpatient Status, it is known as Condition Code 44. When this occurs, the entire hospital stay is billed to Medicare as Outpatient Status.
• A patient is told verbally by a physician that they are being admitted under Inpatient Status. However, the physician neglects to put an Inpatient Status order in writing, and the patient is actually just moved to another part of the hospital to be monitored under Outpatient/Observation Status.
• A patient is admitted under Inpatient Status, but is medically stable enough to transfer to SNF after only two days (therefore not meeting the 3 day qualifying hospital stay requirement).

As stated above, this has the most adverse affect on individuals needing to go to a SNF. It does not matter what a doctor, nurse, physical therapist, or occupational therapist says. Without a qualifying hospital stay of 3 Inpatient Status days, Medicare will not cover a stay at a skilled nursing facility.

When calling around to various SNFs in the Bay Area, I've gotten quotes ranging from $250-$400/night for a shared room. This is for room and board only. Depending on how long a patient needs care, a SNF stay can be quite costly.

What Else Can Go Wrong?

24 hours after Inpatient Status admission, hospitals are required to give patients an "Important Message from Medicare" Letter (often referred to as the "IM Letter" by hospital staff). This letter outlines your rights as a Medicare recipient. Most importantly, the IM Letter gives you instructions on how to appeal if you feel like you are discharged from the hospital too soon.

If the hospital changes you back to Observation Status via Condition Code 44, the IM Letter no longer applies to you. Hence, you must go through different means should you wish to appeal your discharge.

How Can You Protect Yourself?

Being informed and knowing the difference between Inpatient Status and Outpatient Status is the first step in protecting yourself from unexpected medical expenses. Here are a few more tips:

• Ask questions. In the hospital, ask your attending physician whether you are being admitted under Inpatient Status or Outpatient Status. If you don't trust your physician's response, ask to speak to a Nurse Case Manager (also known as Patient Care Coordinator) or member of the Utilization Review/Case Management/Discharge Planning Department. Other hospital employees are not as well-versed in insurance criteria and might give you the wrong information.
• Bring your medication from home. Medicare Part A covers home medication received in the hospital while Medicare Part B does not. Let's say you decide you leave your routine medication at home and receive the same medication from the hospital pharmacy. In the event you are changed from Inpatient Status to Observation Status via Condition Code 44, you become financially responsible for the home medication given to you during your entire hospital stay. If you take expensive, brand name medication, the costs can be astronomical. To be safe, bring your medication from home and have your medical team give that to you instead.
• Make sure you receive a MOON Letter or IM Letter. If not, ask for one from the Utilization Review/Case Management/Discharge Planning Department.
• Medicare Outpatient Observation Notice (MOON) Letter: The main purpose of the MOON Letter is to inform patients that they are hospitalized under Observation Status. This letter is required to be given to all Observation Status patients hospitalized for 24 hours or more. Furthermore, patients must receive a MOON letter within 36 hours after Observation Status services begin. 
• Important Message from Medicare (IM) Letter: The main purpose of the IM Letter is to inform patients of their Medicare rights and provide instructions on appealing a hospital discharge. This letter must be signed by the patient and a copy must be given to them within 48 hours of Inpatient Status admission. Additionally, another copy of the IM Letter must be provided within 48 hours of discharge.
• Know who to contact for help.
• Utilization Review Department: Also known as the Case Management, Care Coordination, or Discharge Planning, this department consists of Nurse Case Managers or Nurse Patient Care Coordinators responsible for justifying hospital stays to insurance companies. Additionally, they are in charge of discharge planning tasks such as ordering equipment and arranging SNF stays. These professionals are the first line of defense when it comes to all things insurance and discharge related.
• Hospital Ombudsman: A hospital ombudsman is a neutral party responsible for handling patient grievances. Most hospitals have an ombudsman on staff.
• Medicare: For insurance related concerns, Medicare patients can contact Medicare at 1-800-MEDICARE. For patients with Medicare Advantage plans, contact the customer service number on the the back of your insurance card. Please note that when contacting Medicare, you will likely experience long hold times.
• SHIP (State Health Insurance Program): SHIPs are state sponsored programs that give free health insurance counseling to Medicare patients. They can also assist with complaints and filing appears. To find your state's SHIP program, go here: SHIP
• Medicare Beneficiary Ombudsman (MBO): The MBO functions the same way as a hospital ombudsman but is specific to Medicare patients. If contacting 1-800-MEDICARE did not help, you can ask the representative to speak to a Medicare Beneficiary Ombudsman.
• Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO): BFCC-QIOs are responsible for ensuring quality of care for all Medicare patients. They assist with appeals, grievances, and medical necessity and quality of care reviews. You can find contact information for your state's BFCC-QIO here: Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO)
• The Joint Commission: Also known as JCHAO, The Joint Commission is a non-profit, independent organization responsible for accrediting roughly 21,000 health organizations in the United States. JCHAO certification is extremely important, and hospitals typically try to make the best impressions possible when they visit. JCHAO has a page on their website where you can report concerns about a healthcare organization or patient safety event: Report a Patient Safety Event
• Consider Switching to a Medicare Part C Plan (also known as Medicare Advantage): Some Medicare Advantage plans waive the three nights qualifying stay requirement. However, possible trade-offs include higher deductibles, copays, and other out of pocket costs.

Inpatient vs. Outpatient Status: Conclusion

Getting hospitalized is stressful enough without having to deal with financially devastating insurance issues. Hopefully, by knowing the difference between Inpatient Status and Outpatient Status, you can know what questions to ask and better prepare yourself to respond to any complications associated with discharge planning and skilled nursing placement. Unfortunately, unless Medicare changes their policies regarding qualifying stays - or gets rid of Observation Status altogether - there will continue to be patients impacted by this seemingly benign technicality.

Hospice: 10 Things Patients and Families Need to Know

Hospice is a care philosophy that focuses on maximizing the quality of life as opposed to the quantity of life. Hospice may include services such as medication/pain management, medical care, spiritual care, and social services. 

As a medical social worker, my job is to handle all aspects of hospice discharge planning. This includes connecting patients to a hospice agency, ordering equipment, providing resources on care facilities (i.e. board and cares, assisted livings, non-medical custodial nursing homes), and arranging transportation for hospital discharge. Additionally, I provide support to patients and family members during an stressful and emotionally draining process.

What's not publicly discussed about the hospice process is the immense pressure put on hospital employees to discharge patients quickly and efficiently. Insurance companies only pay if hospitals can medically justify a patient's stay. Once a patient goes on hospice, there is no reason for that person to be in the hospital and therefore must leave as soon as possible or the insurance company stops paying. This is often a challenge, especially when trying to provide compassionate care to patients and their families.

The purpose of this blog post is to give an honest and blunt take of hospice, what it entails, what's covered, and what happens when one elects hospice care. This information may come off as insensitive, mostly because I am feeling burned out and angry that this is how our medical system treats the dying. In addition, as the messenger who has blindsided countless patients and families with bad news, I strongly feel that it's better to know now than when it's too late.

Hospice: 10 Things Patients and Families Need to Know

#1 Hospice is NOT a place, but a care philosophy.

A common misconception is that hospice is a facility where one goes to pass away. Unfortunately, standing hospice facilities are exceeding rare, with hospice care typical administered in the home, assisted living/board and care, or custodial nursing facility. As mentioned above, hospice is not a location but a care philosophy that focuses on maximizing and individual's quality of life.

#2 Medicare pays for hospice, but does NOT cover room and board at a care facility.

In order to meet Medicare criteria for hospice, an individual must have a medical diagnosis with a prognosis of 6 months or less. Yes, Medicare covers hospice care, which includes visiting medical professionals (i.e. nurses, social workers, chaplains, caregivers), certain durable medical equipment (i.e. hospital bed, oxygen), and medication. However, Medicare does not cover room and board costs at a non-medical custodial nursing home, board and care, or assisted living. The only exceptions are if you are enrolled in your state's Medicaid program or have long-term care insurance.

#3 Hospice does NOT cover a 24 hour caregiver.

Depending on the hospice agency, you might be able to get a caregiver to come out twice a week for an hour each visit. Even individuals enrolled in a state's Medicaid program will not get 24 hours of care. The only possibilities are via family support, long-term care insurance, or private pay through a caregiver agency.

I've lost track of the number of times I've had to tell patients that they have to deplete their live savings to pay for a care facility or caregiver. The other option is to stay in the hospital and go into medical bankruptcy when insurance stops paying for their stay. And I thought I went into this field to help people.

#4 Hospice patients CANNOT stay in the hospital until they pass away.

Once the hospice decision is made, every effort is made to discharge the patient from the hospital as quickly as possible. The only exception is if a patient is actively dying with a life expectancy of 1-2 days. If a patient is expected to "linger" for 1-2 weeks, they are then transferred to a medical skilled nursing home under "comfort care". Otherwise, they are discharged to home, assisted living, board and care, or a non-medical custodial nursing home under hospice care.

#5 Patients and family members have LIMITED time to make home or care facility hospice arrangements.

I typically tell my patients and family members that once the decision to go on hospice is made, they must be discharged home or to a facility in less than 24 hours. While not every social worker does this, I feel that families and patients need to have an idea of how quickly things happen. In some cases - depending on the hospital and aggressiveness of the nurse case managers/management - I'm ordered to discharge patients the same day they enter hospice care.

The logic is as follows: Hospitals are places for individuals wanting aggressive treatment for their medical conditions. By opting for hospice, a patient is deciding to forego curative treatments in place of comfort-focused treatments. Hence, there is no medical reason for a patient to remain in the hospital. If a hospital cannot justify a medical reason for a patient to remain in the hospital, Medicare and other insurance companies do not pay.

As a medical social worker, hospice patients are my top priority due to the urgent need to get them discharged. The moment I get hospice orders, I immediately reach out to family members to confirm their wishes and determine equipment needs. Depending on the hospital's expectations and hospice agency's availability, I can get equipment delivered and a patient discharged home via ambulance by the end of my work shift. The hospice agencies I work with typically see a patient the day after discharge unless there is an urgent medical need that requires a "same day open".

If a family needs to find an assisted living facility or board and care, that may buy them an extra night or two in the hospital. Any longer and case management gets sent in to inform them that unless they leave, they will be liable for all hospital charges going forward.

#6 Most doctors know very little about the hospice discharge process.

Doctors are the experts when it comes to all things medical related. It's why they go to school for so many years and get paid more than us social workers, nurses, and other allied staff.

However, one of the most common questions I receive from doctors after they order hospice is "What do you need me to do now?" At that point, it's the social worker or nurse case manager that takes over, coordinating discharge with a hospice agency, telling doctors what equipment to order, providing support to family members, finding facilities for patients who cannot go home, and arranging ambulance transport. Doctors assist by signing off on orders, talking to patients/family as needed, completing necessary discharge paperwork, and prescribing medication (though there have been instances where I've been asked "What meds do I prescribe?", to which I respond "You're the physician").

While the physicians I've worked with are generally really helpful, there are instances where they complicate hospice discharges by telling patients and family incorrect information. This may include promising patients things not covered by insurance such as certain medical equipment or caregiving services. In worst case scenarios, I've had physicians tell family member that patients could stay in the hospital when they needed to be discharged that day. This had led to heated arguments when I or the case manager where ultimately sent in to say, "Sorry, but the doctor was wrong." In the end, when it comes to hospital discharge matters, the insurance companies call the shots.

#7 You can pick your hospice agency.

Hospitals and other care facilities might try to push for certain hospice agencies. However, Medicare mandates that patients be given a choice on the matter. While most have no preference, there are a few who've had family members on hospice in the past and want the same agency.

While social workers and other hospital staff are technically not allowed to promote one agency over another, we have an idea of which ones are the most timely and responsive, which is key during the time-sensitive discharge process. Don't be afraid to ask us! The worst that happens is we tell you the required, "We're not allowed to recommend one over another" and give you brochures of our favorites. 

#8 You need to get recertified as terminally ill to continue to receive hospice services.

A patient needs to be recertified as terminally ill by a physician in order to continue receiving hospice services. Recertifications can be completed up to 15 days prior to the start of a new benefit period, but no later than two days after the start of a new benefit period. A hospice benefit period consists of two 90-day periods and an unlimited number of 60-day periods.

Sometimes, individuals do so well that they are no considered terminal. We call this "graduating from hospice". Even though a patient "graduates" from hospice, they always have the option of reenrolling should their condition deteriorate in the future. 

#9 You can disenroll from hospice at any time.

Opting for hospice care is not a lifelong commitment. As stated above, some patients actually improve and "graduate" from hospice. 

On the flipside, some patients decide that want to try aggressive treatments again and disenroll from hospice as a result. There is always an option to enroll again at a later date. 

#10 You have the right to refuse hospice care.

Hospice is widely accepted in the medical community as the humane approach when aggressive medical treatments no longer work or are causing suffering. Many of our patients disagree with this philosophy due to religious, moral, or personal beliefs. As hospital employees, we are required to respect patient/family wishes, even though we may not agree with them.

However, this does not mean we will not try to convince you otherwise. In my short career, I've had elderly late stage cancer patients who've declined hospice and opted for all life saving treatment, including CPR. The doctors would then have lengthy conversations with patients and family about prognosis daily, to no avail. I would have numerous futile "quality of life" discussions with the family, only to get sent in for more by my superiors who were frustrated at my attempts to advocate for people who are in a "state of denial" and "torturing the patient". Ultimately, after many weeks to months, these individuals would pass away, usually while receiving chest compressions in an attempt to revive them.

If you are an elderly patient with a terminal illness who wants everything done, as I social worker I will respect that and fight for your wishes. However, prepare yourself for frequent discussions from medical staff who disagree with your decision.

Final Thoughts

As a medical social worker, my job is to advocate for and support patients and family members during this painful process. However, as a hospital employee, I'm required to follow the rules and regulations set forth by management and insurance companies in order to keep my job. This may include our aggressive approach in getting hospice patients discharged as quickly as possible. While I understand the logic of a hospital not being a holding facility for people who don't need it, the social worker in me can't help but advocate for patience and compassion for people already having to grapple with the dying process.

Hopefully this post gives better insight on hospice and the discharge process. While this information is blunt, I feel that it's better that patients and family members know now rather than be blindsided in the hospital. Lately, I've had an abnormally high number of hospice cases and what's increasingly apparent is how little patients and family members know about hospice care and what's covered. 

If you remember two things from this article, it's that 1) hospice does not cover a caregiver/room and board, and 2) once the decision is made to go on hospice, every effort will be made for hospital discharge to happen in 24 hours of less. And yes, many of us working behind the scenes will feel like terrible people for causing extra stress during an already devastating time. Ultimately, like it or not, we hospital workers can only do much as the insurance companies run the show.