When an elderly person has an extended stay in the hospital, they are almost always under the impression that Medicare will cover most of the costs. However, many stay in the hospital for weeks and only later discover that they are responsible for most of the costs of their stay.
This is because Medicare is very particular about when it will pay for hospital costs.
For Medicare to pick up the bill, the patient must be classified as an inpatient. This means that the patient has been formally admitted to the hospital.
If the patient is an outpatient, Medicare will not pay and those patients who are in the hospital "under observation" are still considered to be outpatients, no matter how long they are actually in the hospital.
The story is picked up by The New York Times in "Under 'Observation' Some Hospital Patients Face Big Bills."
Elder law advocates have long pointed out that the rule is absurd.
The patient does not always get to choose what the hospital writes down in the file. The patient also does not always know the importance of being formally admitted, instead of just being under observation.
There has never been a way for the patients to challenge their designations later, until now.
A judge in Connecticut has recently opened the door for legal challenges.
Reference: New York Times (Sep. 1, 2017) "Under 'Observation' Some Hospital Patients Face Big Bills."