A May 1 story in USA Today raises an interesting issue about the practice of holding patients in a hospital for observation, but never actually admitting them under Medicare rules. As may be expected, hospitals use this gap in logic to make a few extra dollars and Medicare uses it to save money and in the process to shift costs to patients.
The main cost shift occurs because drugs supplied to patients under these circumstances are not covered by Medicare. Hospitals, seeing an opportunity to add revenue charge patients an inflated price for a drug, often many times what the patient would pay at a pharmacy.
If you are held in a hospital and it is unclear of your status you or a relative should confirm whether or not you have been “admitted.” If you are told you are being held for observation, you need to confirm what charges you may incur that will not be covered by Medicare, including your Part D plan.