Long term care: pay and pay and pay again

Think you’ve been prudent and taken care of any long term care needs by buying long term care insurance? Okay, good, but now you can start worrying again. As usual, American capitalism has found new ways to extract more bucks out of us hapless suckers, oops I mean frugal, hard working citizens.

The Wall Street Journal last week had an article describing how Medicare tracks and audits hospitals for frequent re-admissions. The idea is supposed to be that if you give correct and adequate care followed up by adequate home care, you shouldn’t be readmitting people for the same thing. Ha-ha.  The reality is that home follow up is just about non-existent except for being handed an information sheet as they wheel you out (don’t want the discharged folks to trip on their way out). Hospitals will do everything they can to get you out in two days because after three days of warming a bed you might actually be eligible for some nursing home/rehab care. Their rate of referring to that is tracked, also—and penalized for MORE referrals, rather than being rewarded, as you might reasonably expect.

But now, some hospitals have found a way to obliterate records of readmits by classifying these stays as “observation” stays, which are technically outpatient visits. Which means  some patients will foot a far higher percentage of the bill, depending on insurance. And Medicare won’t count it as a readmission, even if you are “observed” for three days, so you won’t be eligible for any nursing home care provided by Medicare. Getting Medicare to pay for nursing home care was tough already, but this makes it impossible.

You could theoretically have several “outpatient observations”, then be referred to nursing care, and end up paying over and over again for multiple short stays, and your LTCI wouldn’t cover any of it, since the deductible period is usually either three months or six months. Many people select this because theoretically Medicare can cover up to 100 days, although getting that full term is harder than juggling watermelons.

This hasn’t become prevalent enough to raise a hew and cry yet, but if you or a loved one are being admitted to a hospital, be sure you know under what label the stay is being characterized for your insurance or Medicare coverage. And hope you find a pile of cash under that mattress.

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