An 83-year-old woman presents to the emergency department after a syncopal episode. After a normal ED evaluation, emergency department clinicians consider her to be at intermediate risk given her age and comorbidities. She spends the night in an ED observation unit and is discharged the next day after an uneventful night of telemetry. Ten weeks later, she is surprised to see the hospital bill, which includes a $215 charge for her chronic, routine home medications. There is no insurance coverage for this expense.
Use of observation, both as a billing status and a model of care, has been increasing steadily in recent years.1,2 Currently, about 2.1 percent of all ED visits result in observation care.3 Most hospitals with more than 50,000 annual visits have a dedicated unit to manage these patients, with ED staff managing their care.4 Observation patients stay an average of 15.4 hours,5 and most are on long-term home medications (eg, nearly half of patients aged 65 or older take five or more prescription medications).6 As a result, it is common for observation patients to receive doses of their home medications while in observation status.
In recent years, national conversations about health care reform have drawn attention from the lay press and, in turn, from patients to trends of high and unanticipated out-of-pocket costs (eg, the $18 baby aspirin).7 Observation is considered outpatient care. Hence, an observation stay invokes an outpatient insurance benefit. Medications considered by payers to be “self-administered medications,” typically patients’ home medications, may not be covered depending on many factors, such as primary and secondary insurance coverage. The most financially vulnerable patients (ie, those without insurance or with traditional Medicare only) are also the most likely to be responsible for medications at the chargemaster (ie, highest) rate at hospitals without a specific policy to address this issue. In 2013, the expense to Medicare patients for medications given during an average observation visit was $127, about a quarter of the total patient expense.8