When Is a Hospital Stay Not a Hospital Stay? Bill Aims to Fix Costly Medicare Loophole

Sen. Charles E. Schumer (D-NY) is introducing a bill to change Medicare law so that elderly patients are not charged unfairly for receiving needed nursing home care after being hospitalized. 

In a press release, Sen. Schumer said the plight of Isadore “Ike” Cassuto, an 88-year-old retired tax attorney and former WWII pilot, is typical of the cases of thousands of elderly Americans who have been unreasonably denied Medicare coverage for required care.

After breaking his pelvis in November, Mr. Cassuto spent four days at an Albany, N.Y., hospital before being transferred to a nursing home for three weeks of rehabilitation.  Medicare covers such nursing home stays entirely for the first 20 days, but only if the patient was first admitted to a hospital as an inpatient for at least three days.  It turned out that, unbeknownst to him, Mr. Cassuto had spent his four days in the hospital merely under “observation” without actually being admitted.  This meant that he was entirely responsible for his subsequent $6,000 nursing home bill.

As ElderLawAnswers has reported, more and more Medicare recipients are getting hit with this sort of sticker shock.  In part due to pressure from Medicare to reduce costly inpatient stays, hospitals are increasingly not admitting patients but rather placing them on observation to determine whether they should be admitted – often for the duration of their hospital stay. The consequence is that if the patient moves to a nursing home after being "released," the patient must pick up the tab for the nursing home stay -- Medicare will pay none of it. The bills can run between $200 and $500 a day. 

Under Sen. Schumer’s Improving Access to Medicare Coverage Act, which is being co-sponsored by Sen. Sherrod Brown (D-Ohio), “observation” stays will be counted toward the three-day mandatory inpatient stay for Medicare to cover rehabilitation post-hospital visit.

“If you are holed up in a hospital bed for days on end, it shouldn’t matter what your billing status is, and this plan will save . . . seniors thousands,” Sen. Schumer said.

Similar bills were introduced in 2011 by then-Sen. John Kerry (D-MA) and Rep. Joe Courtney (D-CT), but the bills went nowhere.

The Cassutos' story appeared in the Albany Times Union in December, and Mr. Cassuto’s wife, Thalia, mailed the article to Sen. Schumer along with copies of the couple's Medicare appeal letters.  Mrs. Cassuto, 82 and a retired teacher, said the couple was stunned when hospital officials told them Medicare would not pay for rehab.

"What do you mean it can't be paid?" Mrs. Cassuto later reported her reaction to the Times Union. "He's 88 years old. He's flat on his back. He's been paying for Medicare since it was invented."

The Cassutos doubt they will be reimbursed the $6,000 spent on rehab. "We are battling this now because it is so unfair and so unreasonable," Mrs. Cassuto told the Times Union. "We are battling this for other people."