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Hospital stays in the USA are incredibly expensive. And a simple paperwork mistake can leave Medicare recipients stuck with the bill for vastly more than they expect.

One of the puzzling realities of the American healthcare system is that it is possible to be in the hospital without being a patient. It's even possible to be admitted to the hospital and to find out that the record of admission has been erased, weeks or months later. 

Even worse, changes in admission status can leave seniors on Medicare stuck with a huge bill.

That is exactly what happened to 79-year-old Howard (his name changed for this article). Active and independent, Howard had a mild stroke, fell, and broke the wrist of his right hand. His son took him to the ER, and the attending physician admitted him to the hospital "just for observation." 

After the doctors confirmed that Howard's injuries were limited, they recommended that he spend a few weeks in a nursing home where he could get attention for his daily needs and "occupational therapy" to help deal with not being able to use his right hand, since he was right-handed. Howard progressed well for about a week, but developed a urinary tract infection. Just to make sure the infection was limited, the doctor put him in the hospital one more time. Antibiotics worked, and Howard was ready to go home at the end of his 20-day stay.

Then three months later Howard got a bill for $37,000 for 20 days of care from the nursing home.

Medicare Coverage for Hospitalization and Skilled Nursing Care

Everyone who has signed up for Medicare gets coverage under "Part A." Medicare Part A pays for up to 60 days of hospital care per year with just an $1184 deductible ($1216 beginnning in 2014), and smaller amounts after that. While most people on Medicare would have some difficulty paying an additional $1184, and it takes just an hour or less to run up this kind of charge, at least their bill will be limited if they don't stay in the hospital for 60 days or more.

Then Medicare also pays for 20 days' stay in a skilled nursing facility, if necessary, although it won't pay for a private room, TV, or other amenities. 

However, Medicare only pays for nursing care when there has been an admission for a qualifying hospital stay.

Read More: What Every American Has To Know About Signing Up For Medicare

Getting Stuck with the Bill for Follow-Up Care

The problem for many people who depend on Medicare is that just because they have been taken from the emergency room to a hospital room, seen the doctor in the hospital, received medications in the hospital, and been attended by nurses in the hospital doesn't mean they have been "admitted" to the hospital. In fact, even if they are admitted to the hospital, the hospital can change its mind later.

Why would a hospital change its mind about whether a patient has been "admitted?" It turns out that hospitals are compensated not just for the service they provide, but also for whether they have to readmit patients in the 30 days after their hospital stay. Because the hospital would have been penalized if it had reported that it admitted Howard twice in 30 days, even for legitimate reasons, it changed his first admission to "observation" in a hospital room, and disqualified Howard from Medicare coverage of his nursing home stay.

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