Medicare little help for outpatients’ routine medication costs

By Peggy O’Hare

July 11, 2014 | Updated: July 11, 2014 6:27pm

SAN ANTONIO — Jim Settle, 76, and his wife received an unhappy surprise weeks after he underwent minimally invasive back surgery last fall at Methodist Hospital in the South Texas Medical Center.

Bills that arrived in the San Antonio couple’s mailbox included charges totaling more than $850 for daily doses of routine prescription medications given to Settle during his hospital stay, which spanned little more than 24 hours.

Those fees included a $464 charge for a single insulin shot — a medication Settle normally takes every day at home for a fraction of that cost. Also listed were a $26.42 charge for two gabapentin capsules to treat diabetic neuropathy and a $20.63 fee for one pill to relieve gastric reflux symptoms.

The couple learned too late that Medicare would not cover the costs of these routine medications because Methodist had admitted him as an outpatient. And Settle would not have been allowed to bring his supply of prescribed medications from home had he tried, Methodist officials later informed them.

“It’s like you’re at their mercy,” said his wife, Eleanor Settle. “If the hospital doesn’t allow you to bring your own medication and you’re charged at these ridiculous rates … it’s like you don’t have a choice. And no one tells you about it going in — at least not that I know of.”

Methodist requires a physician’s order granting authorization for an outpatient to take medications from his or her own personal supply while hospitalized, officials with the hospital said Friday. All Texas hospitals have this requirement in place, they said.

Patients can protect themselves by knowing which drugs will be covered by Medicare prior to a hospitalization, Methodist officials said.

“Concerned Medicare patients being admitted to any hospital in the United States should speak with their physician and Medicare representatives in advance of hospitalization about expected status and complications that may result in observation services or an extended stay in the hospital,” Methodist officials said in a prepared statement.

“They should ask relevant questions to clarify how their benefits may differ between inpatient and outpatient status. They should also inquire about medication policies if they are concerned about the cost of medications in the hospital.”

Had Jim Settle been admitted to Methodist as an inpatient, all services he received there, including his routine medications, would have been covered by Medicare Part A, which pays for hospital care, said experts who work closely with the federal health plan for seniors and the disabled.

However, Jim Settle was only there for a quick procedure, so he was listed as an outpatient, which meant the hospital submitted the charges to Medicare Part B — a program that does not usually pay for so-called “self-administered” drugs, even those given in a hospital setting. Medicare Part B covers only a limited number of drugs, usually those that patients cannot take without a medical professional’s assistance, such as intravenous medications, according to the Centers for Medicare and Medicaid Services.

Methodist officials said Friday that proper procedures were followed in Settle’s case and that his admission as an outpatient was consistent with his doctor’s orders.

The surprising bill that the Settles received is a common problem that afflicts seniors nationwide, said those who fight for the rights of Medicare beneficiaries.

“I think most people are caught off-guard,” said Stacy Sanders, the federal policy director for the Medicare Rights Center, a nonprofit group that advocates for Medicare recipients and provides free guidance through a telephone hotline. “Most people expect when they go into the hospital that their drug costs will be very similar to what they are at their community pharmacy.”

Hospitals commonly require even the most routine patient medications to be obtained from their internal pharmacies as opposed to patients bringing their supplies from home or from a neighborhood pharmacy, Sanders said.

Such policies are intended to protect patients’ safety, said Elizabeth Sjoberg, the Texas Hospital Association’s associate general counsel and a registered nurse.

“Whenever someone talks about bringing in their medications from home, there’s going to be concern,” Sjoberg said. “Unfortunately, if we don’t address the patient safety issue, it could become a liability issue.”

Eleanor Settle said she and her husband are not covered by a Medicare Part D drug plan, which might have allowed them to pursue some reimbursement. But even if they were, their out-of-pocket costs would still be high because the hospital’s pharmacy is likely out of network, Sanders said.

The couple’s supplemental Medicare coverage through Humana also will not cover routine medications given in an outpatient setting, Eleanor Settle said.

There is no federal requirement for hospitals to alert people they are being admitted as outpatients, said Toby Edelman, senior policy attorney at the nonprofit Center for Medicare Advocacy Inc.

Only three states — Connecticut, New York and Massachusetts — have laws requiring hospitals to tell people if they’re considered outpatients, she said.

“People generally have no idea,” Edelman said. “And even if you find out you’re an outpatient, there is nothing you can do.”

Jim Settle was in Methodist Hospital for little more than 24 hours, but there have been hundreds of cases nationwide where patients were hospitalized for much longer periods of time as outpatients or under “observation,” Edelman said.

Such occurrences can be financially devastating for seniors requiring skilled-nursing facility care after getting out of the hospital because Medicare won’t pay for such services for someone whose hospitalization was classified as an outpatient stay.

Federal regulations stipulate Medicare will pay for care at a skilled-nursing facility after a hospital stay only if the beneficiary was admitted to the hospital as an inpatient for at least three consecutive days, not including the day of release, Edelman said.

She recalled the case of a Wisconsin woman whose care at a skilled-nursing facility was not paid for by Medicare since the woman had been previously spent 13 days in a hospital, all of that time as an outpatient.

“The Wisconsin woman had no way of knowing that she was an outpatient in observation status,” Edelman said during her testimony before a congressional subcommittee in May. “She was in a bed in the hospital, had diagnostic tests, received physician and nursing care, medications, treatment, food and a wristband.”

Medicare generally pays hospitals more for inpatient services than it does for outpatient services. Federal recovery auditors can force a hospital to refund all Medicare payments it received for a patient’s care if an audit concludes that person was improperly admitted as an inpatient — a factor that likely plays a role in hospitals’ admission decisions.

“Hospitals have every incentive in the world to call people outpatients,” Edelman said.

CMS established a new regulation last year referred to as the “two-midnight rule,” which requires physicians to admit someone as an inpatient if they anticipate that patient will be hospitalized for two or more nights. But a minimum hospital stay of three consecutive nights as an inpatient is still required for Medicare to cover someone’s expenses at a skilled-nursing facility later.

Tamara Apgar, a San Antonio medical claims negotiator who helps patients with high medical bills, said she has heard of other Medicare patients being surprised by unexpected fees, which she attributes to the program’s numerous regulations. She offered one suggestion for Medicare recipients worried about high prescription costs.

“If people are aware of this issue and they’re going into the hospital, I would go to the hospital administrator ahead of time, and I would say, ‘This is not OK with me — I’m not willing to assist you with your bottom line in this way. And I want to know if there’s another way this can be done,’” Apgar said.

“Can the medication be brought in a sealed container from my pharmacy? And can the nurse witness my spouse giving me this, my family member giving me this? What kind of a compromise can we reach? The more attention there is, of course, and the more pressure brought to bear, maybe there will be change,” she said.