The Medicare reimbursement game is getting harder to play for hospitals and patients.

Smaller reimbursements and more stringent guidelines combine to have hospitals calling for mercy.

But sometimes, it is the patient who is stuck.

Medicare, the federal health insurance plan for seniors, each year approves hospital admission criteria, which tell hospitals when a patient can be admitted as inpatient status or as observation status. It is the observation status that leaves patients with a higher bill.

“A patient who is classified as observation, while they are in a room just like an inpatient and getting services just like an inpatient, will not be covered (by Medicare) like an inpatient,” said Kathy Harrison, director of case management at Shoals Hospital.

“It is difficult to explain that to someone who is in the hospital, but we walk them through it as much as possible.”

Observation patients have co-pays and a higher deductible. More patients are finding themselves classified as “observation” because of the stringent admission criteria approved by Medicare in 2012. That means diagnoses and symptoms that were classified as inpatient in 2011 might not be in 2012.

In fact, earlier in 2012, admission criteria were so restrictive and the Center for Medicare Services received so much backlash from providers, the admissions standards were relaxed, said Denise Retherford, case management director
at Helen Keller Hospital in Sheffield.

“This is the only time I’ve ever known them to relax the standards,” Retherford said. “It isn’t a local issue. This is something every hospital across the nation is dealing with.

“Where it affects the patient is what it is going to cost them out of pocket.”

It is up to hospitals to inform Medicare patients of their status as inpatient or observation, and to make sure patients know what each status means to them.

While more responsibility financially is being shifted to patients, the changes have also highlighted the need for all patients to be more in tune with their health, which could prevent some hospital visits, Harrison said.

“It is more important now that people keep their doctor’s appointments, know their disease processes, let someone know if they can’t afford their medication and be aware of thing they can do to make their health care better,” she said.

While patients are getting higher bills, hospitals are also reimbursed at a lower rate for services that are deemed observation. That fact is more critical as hospitals struggle with declining reimbursements from government-sponsored and private
insurers.

Doug Arnold, CEO of Helen Keller Hospital, estimated recently that some rural hospitals in Alabama could stand to lose nearly $500,000 a month in reduced reimbursements.

“Doctors used to be sovereign,” Arnold said. “They used to decide using the science and the art of medicine and knowing their patient — what warranted a hospital admission. A bureaucratic book is now calling the shots.”

Jennifer Edwards can be reached at 256-740-5754 or jennifer.edwards@TimesDaily.com.