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VIDEO TRANSCRIPT: Hospital Surprise: Medicare’s Observation Care

You’re in a hospital room: You’re sick. Nurses check on you regularly and give you medicine. Your doctor has ordered treatments. But you have Medicare, so you figure you won’t face a hefty bill.

Well, surprise! You learn you haven’t been admitted to the hospital. Instead, you are receiving observation care.

That means doctors have decided you won’t be staying more than two midnights. Your doctors and nurses are monitoring your condition and watching to see if you need to be admitted. But often patients can’t see any difference in care.

Medicare considers observation care an out-patient service — even if you stay overnight at the hospital.

So you will likely have more hospital costs than if you had been admitted. Costs like the coinsurance Medicare charges for outpatient care, usually 20 percent. And the bill for the drugs you may need for your chronic conditions. So here’s a comparison: That baby aspirin you take for your heart condition? It could cost $18 at the hospital, instead of the pennies you’re used to paying when you buy it at the big box store.

And because Medicare has no limit on out-of-pocket charges, it can all add up fast!

The price tag could be even higher if you go to a nursing home after leaving the hospital. Medicare will help pay for that expensive care only if you spent at least three consecutive days in the hospital as an admitted patient. Observation care doesn’t count on that clock.

Nearly 1.9 million Medicare patients received observation care in 2014.  That’s a spike of 103 percent since 2006 while Medicare enrollment rose only 5 percent during the same time.

Why? Because Medicare has been trying to make sure the federal government doesn’t overpay for care.

Complaints about observation care prompted Congress to pass the NOTICE Act.  It does not change your financial responsibilities. It requires that hospitals tell you that you are in observation care after 24 hours and what the costs might be.

For more information about Medicare and observation care, check out the government’s primer and Kaiser Health News’ FAQ.

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