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After a car accident left him with a neck fracture, Angelo Verdini, a 90-year-old North Haven, Conn. resident, was shocked to receive a $7,700 bill for the weeks he spent in a rehabilitation center. Verdini was rushed to an emergency room after the accident, and then spent five days in the hospital where he believed he had been admitted as a patient. He later discovered that rather than being admitted, he was instead only placed under “outpatient observation status” and not admitted. “I couldn’t tell the difference,” Verdini said.

Being designated as an “outpatient” meant that Medicare would not pay Verdini’s full bill for his hospital stay. It also meant that the “outpatient” hospital days would not count toward qualifying for Medicare’s nursing home benefit – which requires a prior three-day inpatient hospital stay.


Mr. Verdini now fears that he will have to fight for the rest of his life to get his full bill reimbursed by Medicare.

Sadly, Verdini’s situation has become all too common. Hospitals increasingly classify patients as “outpatient” even if they are in the hospital for many days receiving medical tests and treatment just like patients who are classified as inpatient. This seemingly simple difference can end up costing families thousands of dollars out of pocket. Worse, it can force older and disabled patients to forego necessary post-hospital nursing home care since Medicare will be completely unavailable to help with these very high costs.

That is why we have been leading the effort to fight this inequity in both the court system and in Congress. Rep. Courtney has championed this issue by introducing legislation to fix the problem of observation status through statute, while the Center for Medicare Advocacy has been working to inform the public about inpatient and outpatient observation status. Over the past several years, we have helped organize a broad coalition of national organizations working to eliminate or reduce the harm caused by observation status. The Center is also in court, fighting to allow hospital patients to appeal an outpatient observation classification just as they can appeal all other denials of Medicare coverage.

Fortunately, today, the bipartisan Improving Access to Medicare Coverage Act will be reintroduced in Congress. If passed, the bill would end the harm for the most vulnerable patients – those who need post-hospital nursing home care. It would require that all the time a patient spends in the hospital count toward the three-day hospital requirement to qualify for Medicare. Passage of the bill would provide a safeguard against situations just like the one Angelo Verdini experienced. 

The introduction of the bill coincides with a new mandate from the federal Medicare agency requiring hospitals to notify Medicare patients within 36 hours of being placed in Outpatient Observation status for 24 hours or longer. Hospitals must use a specific written notice known as the Medicare Outpatient Observation Notice (MOON).

The Medicare agency, CMS, created this problem. CMS should fix it. The MOON notice is not a solution. It will not end the harmful Outpatient Observation classification and may cause more confusion and consternation. While patients will be informed of their status, they will not have the right to appeal. Absent that, we need legislation to give back Medicare’s post-hospital nursing home benefit to patients who are unfairly classified as outpatients. We need to protect families from the harm and confusion surrounding “Outpatient” hospital Observation Status.

Judith Stein is executive director of the Center for Medicare Advocacy. Rep. Courtney represents Connecticut's 2nd District.

The views expressed by this author are their own and are not the views of The Hill.