Policy crossfire

A NPR reporter recounted her experience bringing her mother to an emergency room to treat the aftermath of a fall. Despite her familiarity with Medicare as a health policy reporter, the experience still presented new questions that she spent time unraveling for her audience. Generally, Medicare pays for rehabilitation care after someone is hospitalized, so why did it not cover the reporter's mother's rehabilitation care?

It turns out that Medicare only pays for rehabilitation care after what's known as an inpatient visit of at least three days, and while the reporter's mother was in the hospital for over three days, she was considered to be under observation for enough of the time that she did not qualify for rehabilitation care. The reporter's investigations uncovered that hospitals are given incentives by Medicare to classify visits as observational rather than inpatient (inpatient visits are more expensive to Medicare).

Each piece of Medicare regulation might have made sense in isolation: if someone is only being observed, then Medicare shouldn't pay the more expensive rate for the more intensive treatment. It's unclear to me why Medicare might require an inpatient visit of a certain length before agreeing to pay for rehabilitation care. Presumably, the intention was something along these lines: if the visit were too short, then the patient likely had developed medical conditions over a period of time, and the conditions were largely unrelated to whatever brought the patient to the hospital, and the patient should pay for the rehabilitation of the long-term care, and not Medicare. Putting these regulations together, however, leads to some unexpected outcomes that can be very costly to patients.