Medicare on the Move

Thought you had Medicare rules figured out? I bet you did!! Well, just to keep you on your toes, they’ve changed one!!

This gets a bit technical, but it could be really important – so follow me here.

  • Your parent goes to the hospital. He/she gets admitted.
  • They stay for at least 3 consecutive nights as an inpatient.
  • Their doctor recommends skilled nursing rehabilitation (rehab) care as necessary after hospital discharge.

If they meet the above conditions, they typically qualify for a Medicare-paid stay of up to 20 days in a Medicare-approved rehab facility.

Now for the newest clarification:

  • If your parent spends any of their 3 nights under OBSERVATION, not as an inpatient, they will not qualify for Medicare payment of the rehab facility. This part is not new. What’s new is the notice required.
  • A new law that went into effect on August 6 of this year requires that hospitals notify their Medicare patients if they are being treated for more than 24 hours in the OBSERVATION category.
  • This new requirement for notification is a GOOD THING!

Important details not new – but relevant:

  • In Observation status, the patient can still be occupying a room, but Medicare considers it outpatient care.
  • From the Medicare website: “Observation services are hospital outpatient services you get while your doctor decides whether to admit you as an inpatient or discharge you. You can get observation services in the emergency department or another area of the hospital.”
  • Outpatient care falls under Medicare Part B (where you normally see things like doctor visits and outpatient procedures). Part B has an annual deductible of $166 in 2016 with 20% coinsurance of the Medicare-approved amount.
  • Inpatient care falls under Medicare Part A (hospitalization). Part A has an annual deductible of $1288 in 2016 but has no coinsurance for the first 60 days in the hospital.
  • The Part B coinsurance can become costly when the days and services start adding up.


  • The Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act states that hospitals must notify their patients who receive outpatient services for more than 24 hours.
  • They must do so in plain language.
  • There must be both an oral and a written notification, within 36 hours of having started to receive the observation services.
  • They must explain their classification as outpatient and what that means to the cost of the services and their eligibility for Medicare-paid rehab care.
  • The patient or a representative must sign the notice. If either of those refuses to sign, the hospital staff who presented it will sign.

OK, I know this is complicated. But, if your elder goes to the hospital, you need to be aware of this and you need to understand its implication for costs and care.

You can get more info on this at or at

Don’t you just love details???

Sources: Medicare.Gov, and Congressional Research Service

*A big thank you to Jack Lenenberg at for alerting me to this new tidbit via his quarterly newsletter.

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