Protecting California’s Seniors From Surprise Hospital & Nursing Home Bills

In recent years, many seniors in the United States have seen an increase in hospital and nursing home bills not covered by their insurance, primarily Medicare.  The lack of coverage stems from their classification as being under “observation care” while in a hospital.  Any patient that arrives at a hospital due to an unknown illness or injury is placed under observation care.  Medicare classifies observation care as an outpatient service, resulting in higher costs to the patient.  Both the Federal Government and State of California have brought forth initiatives to help bring awareness to patients regarding observation care and the financial repercussions.

In July 2015, Congress passed the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act), which required all hospitals to notify Medicare patients of their observation care status within 24 hours.  In addition to notification, the hospital is required to explain why the patient had not been admitted along with explaining the financial implications of their status.  First, Medicare views observation care as an outpatient service limiting the coverage of any and all services provided by the hospital.  Importantly, follow-up nursing care cannot be covered by Medicare unless a patient has spent three consecutive days in the hospital as an admitted patient.  Due to complaints raised by patients and their families regarding the above issues, the Centers for Medicare & Medicaid Services urged Congress to pass the legislation.

California recently introduced legislation that would take the Federal requirement one step further requiring hospitals to notify all patients, not just those who are Medicare eligible, of their status as soon as possible.  The State has undertaken the initiative in response to the growing number of reported observation care statuses in California hospitals.  Since 2005, California has seen a doubling in the number of patients in observation care, while the increase in admitted patients did not occur at the same rate.  In addition to notifying all patients that appear in observation care, the California legislation would create nurse-to-patient ratio requirements for all areas of hospitals including observation care.  California’s legislation would reinforce and broaden the Federal NOTICE Act, while also providing more attention to patients in observation care with the mandated ratios.  The legislation was passed with broad support from the California legislature, and it is expected to be signed by Governor Brown.

Both the Federal Government and the State of California recognized the growing financial problem of medical expenses, especially in cases of seniors with Medicare.  The NOTICE Act accomplishes the primary goal of alerting Medicare recipients of their status and potential financial consequences.  The California legislation takes the notification a step further by alerting all observation care patients, and mandates nurse-to-patient ratios.  These two factors in conjunction create a much more patient-centric approach to medicine.  While the state hospital association has not outwardly endorsed the legislation in California, some members have voiced their approval as a general step in the correct direction.

Alex Martell is a first year student at DePaul University College of Law. He received a B.A. from Tufts University, where he majored in political science. Alex has an interest in regulatory and policy issues and will complete his law degree and certificate in health law in 2019.