Chain email says Medicare won't pay for 'observational' stay in hospital due to Obamacare

A reader recently sent us a chain email we hadn’t seen before. The lengthy missive, purportedly written by a "senior gentleman in Mesa, Arizona," details a visit to a hospital made contentious by Medicare payment rules. The anonymous author claims to have experienced "a medical situation that made it very clear that the ‘Affordable Care Act’ is neither affordable, nor do they care."

The full email, which is lengthy, is accessible in its entirety here. But briefly, the author relates what happened after he sought treatment for a suspected urinary-tract infection. After collapsing in a local urgent-care clinic, he was taken to a hospital. There, the medical staff feared he could be experiencing sepsis, a potentially serious inflammation caused by an infection, so they ordered a battery of tests, including one that could take a day or two to complete. As a result, they told him that he would need to stay in the hospital "for observation" rather than going home.

Here’s what happened next:

"I said, ‘Doctor, correct me if I'm wrong, but if you admit me for observation, my Medicare will not pay anything. This is due to the Affordable Care Act.’ He said, ‘That's right, it won't.’ I then grabbed for my bag of clothing and said, ‘Then I'm going home.’ He said you're really too sick to be going home, but I understand your position. This health program is going to hit seniors especially hard."

Then another doctor came into the room. "I said, ‘Doc, you and I both know that under the Affordable Care Act anyone on Medicare who is admitted to a hospital for observation will be responsible for the bill. Medicare won't pay a cent.’ At which point he nodded in affirmation. I said, ‘You will either admit me for a specific treatment or you won't admit me.’ Realizing he wasn't going to win this one, he said he would prepare my release papers."

We zeroed in on the core claim of this story, that "under the Affordable Care Act, anyone on Medicare who is admitted to a hospital for observation will be responsible for the bill. Medicare won't pay a cent."

When we looked into it, we found that Medicare does indeed have different reimbursement policies for patients who had been admitted to hospitals for observation as opposed to being admitted to treat a specific diagnosis. However, the email’s author (and, if his recounting is accurate, each of the medical professionals he spoke to) were sorely misinformed about how Medicare rules operate.

The different reimbursement rates have to do with follow-up in-home care, not the original hospital stay. And crucially, the controversy over reimbursement for patients under "observation care" has nothing whatsoever to do with President Barack Obama’s health care law, the Affordable Care Act.

What is ‘observation care’?

According to Kaiser Health News, "hospitals provide observation care for patients who are not well enough to go home but not sick enough to be admitted. This care requires a doctor’s order and is considered an outpatient service, even though patients may stay as long as several days.

The hospitalization can include short-term treatment and tests to help doctors decide whether the patient should be admitted."

Because observation care is considered outpatient treatment, Medicare generally covers such visits, minus things like copayments and the cost of routine drugs. Where Medicare reimbursement significantly falls short is once an observation patient leaves the hospital.

"Observation patients cannot receive Medicare coverage for follow-up care in a nursing home, even though their doctors recommend it," according to Kaiser. "To be eligible for nursing home coverage, seniors must have first spent at least three consecutive days (or through three midnights) as an admitted patient, not counting the day of discharge."

In other words, assuming the email author’s story actually happened, he shouldn’t have had to worry about Medicare paying for his time in the hospital while under observation. Medicare would have paid, minus copayments and the like; there was no need for him to go home while in a fragile state just to avoid being responsible for the full cost of his care.

Is this related to the Affordable Care Act?

Tying this policy to Obama’s law is flat-out wrong.

"The Affordable Care Act has nothing to do with observation status," said Mary T. (Terry) Berthelot, a senior attorney with the Center for Medicare Advocacy. Several other health-policy experts confirmed that. The policy was established by the Center for Medicare and Medicaid Services, a division of the Department of Health and Human Services.

While we’re at it, we’ll take a moment to debunk an additional Affordable Care Act-related claim included in the email.

The author writes that during a visit to his family practitioner, "I told him that I had heard that the Affordable Care Act would no longer pay for cancer treatment for those 76 and older, is that true? His understanding is that it is true."

In reality, there are no such age limits. In October 2014, we rated Pants on Fire a chain email that claimed that under the Affordable Care Act, "at age 76 when you most need it most, you are not eligible for cancer treatment. …  Cancer hospital will ration care according to the patient's age."

Our ruling

The chain email said that "under the Affordable Care Act, anyone on Medicare who is admitted to a hospital for observation will be responsible for the bill. Medicare won't pay a cent."

That’s wrong. Medicare will cover the hospital stay, minus standard copayments and the like. Patients kept in the hospital under observation will not be able to receive Medicare reimbursements for follow-up care such as nursing-home stays, however.

Even more inaccurate is the charge that this policy stemmed from the Affordable Care Act. In reality, this stems from a separate policy decision and had nothing to do with Obama’s law. The claim is not only ridiculous but also dangerous, by urging ailing patients to leave the hospital for no good reason. This claim rates Pants on Fire.