Poor Medicare Patients May Spend More on Hospital Stays

The study highlights differences in out-of-pocket costs for observation versus inpatient hospital stays that patients may not understand.

(Reuters) — Out-of-pocket spending for hospital care by people with Medicare may be higher for those with lower incomes, because they’re more likely than wealthier Medicare beneficiaries to be kept in the hospital without being officially admitted, a new study suggests.

Under Medicare, the government insurance program for the elderly and people with disabilities, people admitted to the hospital pay a fixed out-of-pocket fee that covers the majority of their care there, as well as follow-up acute nursing care and repeat hospitalizations within the first two months after they go home.

But people who aren’t sick enough for an inpatient admission may be kept in the hospital for observation, which not only carries a one-time out-of-pocket fee but also requires patients to pay 20 percent of the bills for hospital services and pick up the tab for certain drugs.

The poorest people on Medicare had more hospitalizations for observation, researchers found.

For the study, they examined Medicare claims data for 2013, including more than 67,000 patients who had a total of more than 132,000 hospital stays for observation.

Compared with the wealthiest 25 percent of patients, the people in the poorest quartile were 24 percent more likely to be hospitalized for at least three observation stays per year, the study found. The risk of high out-of-pocket costs was lowest for the wealthiest patients, and peaked for people who were poor, but not the very poorest.

“We know from prior work that multiple observation stays can lead to high out-of-pocket costs for Medicare beneficiaries,” said lead study author Dr. Jennifer Goldstein, a researcher with Christiana Care Hospitalist Partners and Sidney Kimmel Medical College in Philadelphia.

“To our knowledge, this is the first nationally representative study to find that beneficiaries who are least able to afford it may be at greatest risk for incurring these high costs,” Goldstein said by email.

Overall, people in the study had an estimated average household income of $51,872.

The study included 97 percent of counties nationwide. Researchers sorted Medicare members based on the proportion of people living in poverty in their county of residence. In the wealthiest counties, 12.2 percent of residents lived in poverty, whereas poverty rates were above 19.1 percent in the poorest counties.

One limitation of the study is that researchers couldn’t account for which patients might have qualified for additional medical coverage through Medicaid, the U.S. health program for the poor, or through so-called Medigap plans people can buy to cover expenses not paid by Medicare.

“While it makes sense that the higher use of observation stays for persons with lower socioeconomic status is associated with higher charges, it is likely that much of these higher costs would be covered by Medicaid,” said Dr. Kumar Dharmarajan, a researcher at Yale University School of Medicine, New Haven, Conn., who wasn’t involved in the study.

“After accounting for Medicaid contributions, it is actually conceivable that persons with low socioeconomic status actually have lower total out-of-pocket payments,” Dharmarajan said by email.

Still, the study highlights differences in out-of-pocket costs for observation versus inpatient hospital stays that patients may not understand, said Dr. Ann Sheehy, a researcher at the University of Wisconsin School of Medicine and Public Health in Madison who wasn’t involved in the study.

More research is needed to make it easier for patients to grasp, Sheehy said by email.

“No study to date has been able to compare cost of inpatient to [observation] stays for the exact same set of services and hospital length of stay, and none have been able to account for all costs a patient may incur,” Sheehy said. “As a physician, I cannot accurately tell the patient I am caring for what they will pay for an observation hospitalization compared to inpatient.”

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  • Yeah, paying more on medical care because they can’t afford to eat healthy to prevent sickness. My stance on this is simple, either we all receive government subsidized healthcare the same as military, members of Congress and the President or no one gets it since having food deserts is prevalent in this country due to powerful lobbyists paying off politicians on both sides of the aisle.

    Shouldn’t have huge populations in this country without healthcare and/or paying large amounts to be physically and psychologically better.

    The American population isn’t responsible for consuming large amounts of processed foods high in sugar and sodium, sodas, juices and so called healthy foods because our government gladly hands out tax credits to major companies producing them making these items cheaper. I will always refuse to adopt and believe in the idiot conservative and demonstrative Democratic Party approach to this issue.

    Anytime you can walk into a convenience store where soda, candy and chips are on average cheaper than a bottled water; you have serious health epidemic occurring right under our noses starring up at us in our faces.

    • You are so right!

      People under stress crave sugar, salt and fat. The fast food vultures feed people that garbage and we subsidize it by allowing them to pay a below sustinance minimum wage, so their workers qualify for EBT, section 8, EIC, etc.

      If, by paying their workers a livable minimum wage, a Big Mac costs $15, so be it. And EBT should not pay for soda or chips.

      Enough “free stuff” for McDonalds and Coca Cola.

      It’s disgusting that a single American doesn’t have access to good healthcare. Maybe we can’t afford a military larger than the next eight militaries added together. Maybe just three.

  • What stands out to me as a mental health professional:
    More visits to hospitals by those who aren’t sick enough for an inpatient stay and pay more for ER care…

    Are these patients with low economic status needing primary care doctors who can monitor health, instead of emergency rooms?

    Cost would be less for PCPs monitoring patients on an ongoing basis instead of ER visits.

    What’s the missing link? Patients who don’t want ongoing care with a PCP?

    This is the reason for many ER visits for mental health… is it the same for physical health?

    It has to be part of it. A deeper issue to consider as well- the psychological reasoning of people not seeking to care for themselves properly until they have no choice.

    Economics and the structure of healthcare systems is absolutely part of it, but what people spend their money on, and what they don’t is a clear indicator of a emotional wellbeing and mindet. Fear, depression, being overwhelmed… the system can make changes to address cost, but there’s still an emotional component here. Macro always includes micro…

    Tip of the iceberg… love thought provoking articles like this.

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