California aims to eliminate surprise observation care bills

nurse with patient in a wheelchair

California is among the first states to take a definitive step toward warning patients about surprise nursing home bills.

California lawmakers have passed a bill that would require Medicare patients to be warned about their potential financial liability if they are transferred from hospital observation care to a skilled nursing facility, according to Kaiser Health News.

Under current Medicare rules, the program won't cover nursing home bills unless the patient is admitted to the hospital as an inpatient first. That has become a national issue as some patients and their families have been hit with unexpected bills well into the five figures. Hospitals sometimes use observation care status to evade billing audits and potential penalties.

Federal law has recently been changed to address the issue, but few states have taken any specific action.

The California Nurses Association labor union, a leading advocate for the bill, hopes the legislation will eliminate the confusion that occurs when patients are not actually admitted to the hospital, even if they are physically located in the facility.

Although the law is not completely specific about what patients may be told, it would give them the chance to ask their physicians to change their status to obtain Medicare coverage, appeal to Medicare to obtain coverage, or recover from home on their own, Kaiser Health News reported.

However, other patient advocates have suggested changing the Medicare payment rules might be the better way to proceed.

“It is a baby step that at least tells them there is a problem,” Bonnie Burns, a training and policy specialist at California Health Advocates, a Medicare advocacy group, told Kaiser Health News. “The issue for many beneficiaries is that the time spent in observation doesn’t let them access the Medicare nursing home benefit. The better fix would be to allow people to use their Medicare benefit if they have been under observation.”