Bill Kahn: Hospital scams can cost you

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In the Medicare and insurance world a hospital bill is not really a hospital bill. Let me explain. Normally, the hospital presents you with a bill that is sent to Medicare. Medicare reviews the bill, disapproves of part of the bill, telling the hospital they agreed to accept a lower amount rather than the one submitted for this particular procedure, rehab or medicine. For example, the hospital sends you and Medicare a bill for $1,000. Medicare tells the hospital they have agreed to perform the function for $600. The hospital eats the $400 that Medicare didn’t cover. Medicare then pays 80 percent of that $600, which is $480. This leaves the patient owing the hospital $120 to either pay or use secondary insurance to cover the remainder.

But what happens if Medicare tells you the procedure, rehab or medicine is not covered by Medicare? Then you are left to pay the full $1,000 and the hospital doesn’t have to eat anything. This is where the scam comes in. It’s in the hospital’s best interest to try and set up a situation where Medicare will deny coverage and you must pay the full bill.

Let’s look at an example: You go into the emergency room of a hospital for chest pain. They want to check you out and so they admit you as “Observation Status” — not unusual for a quick check. They find you are okay or need some medication and you’re on your way that day or the next. No problem there.

But let’s carry that a little further, where they find you need surgery and rehab. The hospital might still keep you under “Observation Status,” performs the operation and starts you on a rehab program. The clever hospital knows Medicare rules state that Medicare doesn’t pay for rehab under “Observation Status,” So guess who gets the bill? You. Understand, the term “Observation Status,” is a financial decision and not a medical decision at this point. You are the one stuck with the bill. You can’t pay it? Not their problem!

What to do? Make sure that if there is going to be rehab or for that matter anything requiring a hospital stay, if you’re under “Observation Status,” make them change it, insist they change it to “In Patient” status where you really would be covered.