They're in typical Omaha hospital rooms, a 66-year-old woman and a 71-year-old man draped in hospital gowns, eating hospital food, watching hospital TV, sleeping that fitful overnight hospital sleep.
Nancy Becker is an “inpatient” after having a seizure and other problems. Doug is there for “observation” after falling because of his faulty knees.
It's not just a paperwork difference. The distinction between being admitted to the hospital as an inpatient and staying for observation, an outpatient status, is a national issue that is attracting the attention of Congress, the courts and the medical industry. In some cases, it's costing Medicare recipients thousands more than they expected.
There's a multibillion-dollar federal expense at stake, not to mention the health of tens of thousands of Americans.
Both Nancy and Doug went from the hospital to the same Omaha skilled nursing facility, Ambassador Health System, where physical therapists were ready to help them regain enough function to go home.
Because Nancy spent at least three days as an inpatient, Medicare's Part A benefit will pay 100 percent for the first 20 days, followed by 80 percent of the next 80 days, if needed. Her supplemental insurance policy will pay the rest. She may be there a month but hopes to recover more quickly.
The complete coverage lets her focus on twice-a-day rehabilitation sessions to rebuild her strength, balance and stamina.
“Without it, that would be very hard,” she said. “I could have been dealt a lot worse.”
Doug was hospitalized last October after he fell and his wife, Barb, couldn't get him up. When he entered the hospital from the rescue squad, she said, “They put down 'observation.' ”
It was a new term to them, but the meaning soon became clear: Because he wasn't an inpatient for three days, Medicare wouldn't pay for skilled nursing care. They had to pay the cost themselves.
She asked that the couple's last name not be printed because she's embarrassed to be struggling financially with medical costs.
Ambassador's therapists recommended a 30-day stay, Barb said, but at $331 a day for the room plus other expenses — about $2,600 altogether — they could afford only five days.
“That's about all the money we had saved for emergencies,” she said. “It's been hard for both of us.”
Ambassador therapists showed Doug some exercises and prepared him to return home. Instead of the facility's twice-a-day sessions, another physical therapist came to their home twice a week for about a month, and an occupational therapist showed him how to get in and out of the shower safely, plus other tasks.
Doug has an appointment with an orthopedic surgeon to see what can be done with his knees. Barb said the longer, more intensive therapy would have helped him do better avoiding falls, navigating the stairs, getting in and out of the car.
“But finances dictate what you can do,” she said. “That's how it is. We don't spend a lot of money. We're very tight. But I wish I could have had a little more money saved. If something like that happens again, I'm not sure what you do — take out a loan, I guess.”
Doug's experience with the three-day rule is not uncommon. It's designed to control Medicare spending, by one calculation reducing the federal program's annual costs by $6 billion. It's also intended to prevent fraudulent shuffling of patients to game the Medicare system.
But that estimated savings, said Dr. William Shiffermiller, vice president of medical affairs for Methodist Health System in Omaha, ignores the cost of people missing vital post-hospital care.
“We're putting people at risk because they should be getting that care,” Shiffermiller said. “They can't afford it without help, because they don't qualify.
“They go home, fall and hit their head or break a hip and end up with a neuroskeletal procedure, and then spend not just a few days but a month in skilled nursing ... institutionalized. It might actually save us money to provide the care they need when they need it.”
Patients in one Medicare report paid an average of $2,735 for post-hospital nursing services if they qualified for Medicare benefits, $10,503 if they didn't. Others got no post-hospital care because they couldn't afford it or, like many elderly people, were reluctant to spend the money.
Disagreement with the three-night rule has spawned two federal lawsuits — one was dismissed and the other, rejected by a judge, is under appeal — and proposals in Congress to count observation stays toward the three-night requirement.
So far 162 members of Congress have signed as co-sponsors of the proposal. Rep. Tom Latham, R-Iowa, introduced the House version along with primary sponsor Rep. Joe Courtney, D-Conn. The 134 other House co-sponsors include 22 Republicans.
The Senate version, introduced by Sen. Sherrod Brown, D-Ohio, has 25 co-sponsors, all but three of them Democrats. Eliminating the three-night rule, as some suggest, also would require an act of Congress, and there's no such bill pending.
Staying overnight at a hospital for observation as an outpatient has been happening for decades, but several factors are making it more common these days.
In 2012, observation stays totaled 13,565 in Nebraska, 23,377 in Iowa and 1.8 million nationally, Medicare data show. That's up 24 percent in Nebraska, 30.5 percent in Iowa and 35 percent nationally from 2009.
One factor is the audits performed by independent contractors who check Medicare claims and root out overpayments, underpayments and fraud. Known as Recovery Audit Contractors, the companies can dispute Medicare payments, such as bills for admitting people as inpatients who, according to Medicare guidelines, should be on observation status.
Auditors can demand that a hospital return the money it was paid, months or even years ago.
There's an appeal process, but it's lengthy and expensive, so there's an incentive for hospitals to use observation to avoid losing money, to get some payment through Medicare's Part B benefits and to avoid a potential “fraud” label.
Another factor is that Medicare and insurance companies require many common surgical procedures and chest pain to be treated as “outpatient only,” so patients in those cases are almost automatically put on observation status.
The Affordable Care Act also provides an incentive toward observation.
The law, also known as Obamacare, financially penalizes hospitals for too-frequent readmissions. But if a person is in the hospital for observation, goes home and then comes back to the hospital, that doesn't count as a readmission.
Hospital officials may not purposely misclassify people on observation status for that reason, but a report last year by Medicare's parent, the U.S. Department of Health and Human Services, said that the audits contributed to the hospitals' shift to more observation stays.
Stuart Wright of the department's Inspector General's Office advised that Medicare consider how clients with similar post-hospital needs should have the same access to, and cost-sharing for, skilled nursing care.
In 2012, he wrote, Medicare beneficiaries had 4 million observation stays, “long outpatient” stays and “short inpatient” stays for medical reasons that often seemed to be the same.
The government incorrectly paid $255 million for skilled nursing care for people who didn't stay three nights as inpatients, Wright wrote, an amount the agency is now trying to recoup.
Observation stays were cheaper, the report said, with Medicare paying three times as much for short-inpatient stays and beneficiaries paying nearly twice as much. Inpatient stays generally involve sicker people and more intensive treatments.
Cases of Medicare beneficiaries failing to receive skilled nursing benefits because of observation stays are unusual but not rare.
“We get calls from people whose relatives are stuck in observation status” for as long as two weeks, said Toby Edelman, senior policy attorney for the Center for Medicare Advocacy Inc. in Washington, D.C. The group filed the federal lawsuit in Connecticut against Kathleen Sebelius, secretary of health and human services.
U.S. District Judge Michael P. Shea rejected the lawsuit's claims, saying Sebelius followed the law that properly sets Medicare standards for observation stays and nursing home benefits.
Advocates say that patients and families sometimes are surprised to learn of the three-night rule after the fact. Hospitals are getting better at giving advance notice, the advocates say, but that doesn't change the financial outcome.
“I've had some difficult conversations with well-intentioned physicians and worried families,” said Dr. Anton Piskac, vice president for performance improvement at Methodist. “They want people put in the hospital for observation to keep them safe, and it's a shock when they have to come up with the first month's payment for the nursing home,” an expense that easily tops $10,000 in Omaha.
A decade ago, he said, a doctor could admit an elderly, frail and forgetful person to the hospital for three days and then to a nursing home to care for chronic problems a hospital couldn't help.
Today, Medicare doesn't consider that an inpatient case, disallows nursing home benefits and might even allege fraud if the doctor and the hospital take those steps.
“The rules are really pretty complicated, and they change,” Piskac said. “It's worrisome for people who are trying to be honest and follow the rules.” For example, some Medicare Advantage plans don't require a three-day inpatient stay to get nursing home benefits.
The gray areas of diagnosis also create problems, Piskac said. Someone who comes in with belly pain could simply need a laxative, or the pain could signal the start of an abdominal catastrophe that would put the person in intensive care.
Sending patients home after one day's observation “sort of makes sense until you actually have patients in front of you who are actually suffering,” he said. “When all else fails, look at the patient.”
The unsettled nature of the issue has spawned a secondary industry to help hospitals and doctors sort out patient admissions. A company called Executive Health Resources of Philadelphia offers advice, for a fee, to make sure decisions comply with Medicare rules.
That can be unsettling for doctors who may be unsure of the rules themselves, Piskac said.
“A doctor is in the middle of a busy office and a guy calls from Philadelphia who is not caring for the patient and starts asking questions about the patient,” he said. “The doctors don't like it. They're not sure they should be sharing health information with some guy that's calling from Philadelphia.”
Edelman, from the Washington advocacy center, said that's not a good use of hospital money. “It doesn't change the medical care or the tests or the treatment. It's about what they're going to be billed. Hospitals are spending a lot of money trying to decide if people should be called inpatients or outpatients, and the medical care is the same.”
The federal Centers for Medicare & Medicaid, which administers the two programs, is aware of the controversy. Last week, it held an “open door” conference call forum for hospitals, doctors and others to discuss admission issues.
Last year, the agency revised some of its rules and placed a temporary moratorium on auditing some hospital admission decisions. The American Hospital Association said that change “only raises new questions and lacks clarity.”
A Nebraska affiliate, the 200-member Nebraska Nursing Facility Association, supports counting observation stays as well as eliminating the three-day requirement altogether.
Shiffermiller, from Methodist Health, said the underlying concept of observation stays is valid: To find out what's going on with a patient while giving less expensive care compared with patients who have acute conditions.
“It's the implementation that's difficult,” he said, because there are no medical reasons for financial benefits to depend on the number of inpatient days.
“Counting an observation day toward the three-day qualification would be a great first step,” he said. “A better solution, maybe we should eliminate that altogether and just have the doctor certify why you need to go to the skilled nursing facility.”
The current system, he said, is “an attempt by government to limit their costs. These are perverse rules in attempt to stay within their budget. It really has no reasonable status from the perspective of caring for people. It's purely an economic system.”