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Schumer's New Plan Would Allow Time Spent Under "Observation Status" To Count Toward Medicare-Covered Services After Hospital Stays -- Like Rehabilitation & Medication

Press Release

Location: Washington, DC

Today, at Samaritan Hospital in Watertown, U.S. Senator Charles E. Schumer joined Watertown senior citizens and hospital executives to push his plan to change the Medicare law, so that elderly patients are not charged unfairly for receiving needed nursing home care after being hospitalized or for prescription drugs. Schumer noted that "observation stays" cases in hospitals, when the elderly individual is not technically an inpatient, have been on the rise in recent years, costing America's seniors thousands of dollars in medical bills. Currently, Medicare will only cover post-acute care in a skilled nursing home facility if a beneficiary has three consecutive days of hospitalization as an inpatient. Medicare also requires co-insurance on prescription drugs if a beneficiary falls into that category. Under Schumer's plan, the Improving Access to Medicare Coverage Act, "observation stays" will be counted toward the 3-day mandatory inpatient stay for Medicare to cover prescription drug costs.

For example, Mrs. Audrey Garrett, of Adams, was admitted last year to Samaritan Hospital under "observation status," which was in accordance with current Medicare law. The consequence is that Medicare will not pay for her necessary prescription drugs during her stay. Schumer emphasized it is the flawed Medicare law which is costing Upstate New York seniors thousands of dollars in skilled nursing home care or prescription drug costs.

"In recent years, there's been a huge uptick in elderly patients under "observation" status in Watertown hospitals, but also all across New York-- and it's leaving seniors high and dry and hospitals no better off. A flawed Medicare law is to blame, and I have a plan to change that, so hundreds of thousands of seniors, like Mrs. Garrett, are not hit with huge prescription drug bills or expensive rehabilitation costs after a lengthy hospital visit," said Schumer. "This new Improving Access to Medicare Coverage Act would allow senior citizens to avoid being charged for prescription drugs out-of-pocket. 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 in Jefferson County thousands."

Schumer was joined by Samaritan Hospital CEO, Tom Carman, and other hospital staff, 76 year-old Audrey Garrett from Adams, Jefferson County Office for the Aging Director, Peter Fazio, and other senior citizens.

The number of observation cases has been on the rise in recent years, a consequence of policies meant to reduce Medicare expenditures. In the North Country, there are 103,479 Medicare beneficiaries who could be on the hook for an average of $356 per day in nursing care, plus cost of rehabilitation, therapy and prescription drug costs.Nursing home stays in New York cost an average of $356 per day, and a high of $528 for semi-private rooms, according to the 2012 MetLife Market Survey of Nursing Homes. This is the daily baseline cost, plus the cost of rehab, therapy services and prescription drugs that seniors could be forced to pay. Schumer highlighted that without this change in Medicare law, an unexpected trip to the hospital could cost Upstate New York seniors thousands of dollars.

Schumer highlighted the spike in observation status admissions in the past few years, in New York and across the country. The number of observation cases has been on the rise in recent years, a consequence of policies meant to reduce Medicare expenditures. According to most recent data from the American Health Care Association, New York average for observation stays was 29 per 1000 Medicare admissions in 2009, up 32% since 2007. This number has likely risen dramatically since. This can lead to massive bills -- in the tens of thousands of dollars -- that senior citizens must unexpectedly pay for rehabilitation and nursing home care post-hospital visit.

Schumer launched his fight for the bipartisan Improving Access to Medicare Coverage Act to address the flawed Medicare law, sponsored by Senator Sherrod Brown (D-OH). Currently, Medicare will only cover post-acute care in a skilled nursing facility if a patient has three consecutive days of hospitalization as an inpatient, not counting the day of discharge. In addition, Medicare will only cover the cost of prescription drugs related to a hospitalization if a patient has stayed for three consecutive days as an inpatient. In the case of Ms. Garrett, she was under "observation status" and therefore is required to pay co-insurance on her prescription drugs. Unfortunately, patients are being placed in "observation status" while staying at the hospital and may unknowingly be treated under outpatient "observation status" for the entirety of their hospital visit. This then makes the patient ineligible, under Medicare law for Medicare-covered services such as stays in a nursing home or home care visits.

Under Schumer's legislation, "observation" stays will be counted toward the 3-day mandatory inpatient stay for Medicare to cover prescription drug costs and skilled nursing facility services after a hospital visit. The Improving Access to Medicare Coverage Act of 2013 would amend title XVIII of the Social Security Act. Without being involved in billing technicalities between the hospitals and Medicare, Schumer's plan would ensure that patients 65 and older are eligible for coverage for their rehabilitation services, as long as they are in the hospital for three days.

"Observation stays" are specific, clinically appropriate services that treat and assess a patient in a hospital while a decision is being made as to whether patients will require further treatment as hospital inpatients, or if they are able to be discharged from the hospital. Hospitals, like Samaritan, are forced to follow a flawed Medicare law in their treatment of many patients above 65 years old. In fact, Schumer noted, that hospitals are reimbursed less from Medicare for the treatment of patients under "observation" status than those that are inpatient. Hospitals also devote a significant amount of time and money to assuring that patients are properly classified as inpatients or outpatients.

Audrey Garrett's case is among the hundreds of thousands of elderly Americans who have been placed under "observation" status during a hospital stay, and who now face medical bills that Medicare refuses to cover for prescription drugs and other rehabilitation. Mrs. Garrett came to Samaritan Hospital with a case of knee-pain. She spent a few days in the hospital and soon learned she had torn most of the ligaments in her knee. She did not have surgery during her stay at Samaritan, but did take some prescription medication. Ms. Garrett was later surprised to find that she had incurred a bill for nearly $250, an expense Medicare was refusing to pay because she received the drugs while on "observation status". To make matters worse, most of this cost was incurred from drugs that Mrs. Garrett already takes at home and that Medicare would normally pay for. In another recent case, the hospital reported a male patient, who, because of the "observation status" issue incurred a bill for over $1,000. Schumer said cases like these showcase that the problem is both real and distracting for patients who should be focused on recovery, not a bill they never expected.

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