Here are a couple of important updates about Medicare issues that lots of people have written me about.
Fly Me to the MOON
Observational stays are a particularly dark corner in the nooks and crannies of Medicare’s rules. If a Medicare enrollee is admitted to a hospital and later discharged into a skilled nursing home for related care, Medicare will cover the nursing home expenses. However, doctors and other certified caregivers at a hospital may decide the person should not be admitted to the hospital, but treated as an observational patient.
Even though such a person may receive nearly identical care to that provided to an admitted patient, Part B of Medicare would cover outpatient expenses as opposed to inpatient expenses, which are covered by Part A. Further, and here’s where insult can become injury, people treated on an observational basis will not be covered by Medicare should they require related nursing-home care.
For reasons that are disputed, the volume of observational stays has increased sharply in recent years. Some say it’s because Medicare has stepped up its scrutiny of hospital readmissions, levying financial penalties against hospitals with especially high readmission rates. Hospital critics say the hospitals are trying to avoid such penalties by not admitting some people in the first place, but treating them as observational patients. The hospitals disagree with this.
Whatever the reason, patients and their families often did not learn they were being treated on an observational basis until their bills arrived or, worse, until they found out they were not covered for nursing-home care. To address this, a law was passed requiring hospitals and other care facilities to tell patients on a timely basis when they were being defined as observational visitors and not being formally admitted. These rules recently took effect, and CMS has clarified the implementing regulations.
The agency’s penchant for bad acronyms has continued unabated with these rules. They are known as MOON, short for Medicare Outpatient Observation Notice. My equally sophomoric weakness for truly bad puns prompts me to suggest that reading these instructions may send you into orbit. But Medicare enrollees and the friends and family members who care for them should understand these rules and make sure hospitals follow them.
Medicare vs. Obamacare
People who get their coverage from a state insurance marketplace are understandably confused when they also become eligible for Medicare. People can become eligible because they turn 65, are 65 or older and retire from work, or they qualify for Medicare because they’ve become disabled. According to Timothy Jost, a health care expert who regularly contributes to the journal Health Affairs, CMS has just issued revised policies explaining how Medicare-eligible people with exchange health insurances should proceed. Unfortunately, he says, the agency didn’t do such a great job.
People who already have Medicare can’t be sold marketplace policies by insurance companies. But people who already have exchange policies and then become eligible for Medicare cannot be booted out of the exchange by their insurer and may be able to keep their policy. If they do keep it, however, they usually will not be eligible to continue receiving premium tax credits from their marketplace plans. The loss of this benefit may make marketplace coverage more costly than getting Medicare.
Last week, Medicare said it is sending out notices to households with someone who is enrolled in Medicare and the marketplace, telling them their insurers should not be enrolling them on the marketplace and that they should tell their marketplace insurers to end their coverage. People having only Part A of Medicare (which is required of anyone receiving Social Security benefits) are instructed to get Part B and end their marketplace plans.
These notices, Jost says, incorrectly leave the impression that the only correct course of action is for people to end their marketplace plans and get Medicare. However, he says, this is not what the policy really says. In fact, such people do not have to get Medicare, but can retain their marketplace plans, so long as they do not receive premium tax credits.
(Another little-known provision of the ACA rules that remains in effect says that a person who has not worked long enough to qualify for premium-free Part A of Medicare – usually fewer than 40 quarters of work — can stay on an exchange plan and also buy exchange policies when they become Medicare-eligible. The premiums for Part A can exceed $400 a month, making an exchange plan possibly cheaper than getting Medicare.)
In another shift, Jost wrote that CMS has created an “equitable relief” program and will waive late-enrollment penalties until Sept. 30 for people with marketplace plans who did not sign up for Part B when they became eligible for Medicare.
“Equitable relief will certainly be welcomed by individuals who have stuck with their marketplace coverage to avoid the Part B late-enrollment penalty,” Jost concluded. “And it offers significant relief to individuals who are already paying the penalty because they delayed enrollment without understanding the consequences. But the notice may well mislead individuals who are in fact better off in the marketplace than in Part B as to their options going forward.”