Medicare Terms Still Make a Difference After 'Bagnall' Ruling

In her recent "Senior Moments" column, Knoxville lawyer Monica Franklin details the differences in the Medicare world between the terms "observation" and "admission." The use of one or other of the words can make a huge difference in whether your client will incur extra costs for the hospitalization and whether your client will receive the Medicare benefit to pay for skilled care in a rehabilitation facility. In the column, Franklin references Bagnall v. Sebelius, which at the Journal's press time was pending. Late last month, Judge Michael P. Shea ruled against the plaintiffs and granted the government's motion to dismiss the action.

The plaintiffs' main substantive claim was that observation status violates the Medicare statute because it deprives them of coverage they are entitled to by law. The judge dismissed this claim by relying on a federal appeals court case that held that it is permissible for Medicare to consider someone an inpatient only if she has been formally admitted by a hospital. Franklin notes that the Improving Access to Medicare Coverage Act of 2013 (H.R. 1179), currently in the Subcommittee on Health, provides that a three-day stay in the hospital, regardless of observation or admission status, would allow a Medicare beneficiary to receive benefits to pay for skilled care in a rehabilitation facility.