Call 4 Action case highlights importance of knowing your hospital status

Posted at 7:19 AM, Mar 03, 2020
and last updated 2020-03-03 23:37:08-05

MILWAUKEE — Michael Lopez, of Milwaukee, contacted Call 4 Action after he said his supplemental insurance was denied after his emergency room visit. His insurance company, Aetna, told him it was because his stay was billed as “observation status” and not “inpatient.”

The I-Team took on the case and learned observation status is a term consumers should learn. It’s what Medicare considers outpatient service and it can impact what you pay for your hospital visit.

Lopez found that out after an emergency room visit on Dec. 1.

“I had extreme back pain,” Lopez said. “It took my breath away."

“I was visited by a surgeon, and she’s like ‘Hey, you know, tests results came back, gallbladder has got to go,'” he said.

Doctors performed surgery to remove Lopez’s gallbladder. He showed the I-Team his bills. He stayed in the hospital for two and a half days. So, imagine his surprise when he saw the hospital billed it as “observation status.”

“Two overnights in the hospital. So, how does that not make me an outpatient? I’m a little confused by that,” Lopez said.

Call 4 Action case highlights importance of knowing your hospital status_SOT

Lopez owed about $4,500 for his hospital visit, which is his out-of-pocket maximum. Due to the “observation status” classification, he wasn’t able to receive $1,100 from his supplemental health insurance policy.

“I submitted my claim to them and it was denied,” Lopez said.

“Do you know why to this day why you were classified as observation status?” the I-Team asked Lopez.

“No. I don’t. Other than they state they follow Medicare guidelines,” he continued.

The I-Team saw on Medicare's website, it says the decision to classify a status as observation or inpatient is "based on your doctor's judgment."

“I would strongly advise other people to advocate for themselves as well especially Medicare beneficiaries,” Lopez said. “It's just a really unacceptable billing practice. Hospital administrators and insurance are preying on one of our most vulnerable members of society. People that are on a fixed income."

The I-Team learned the classification process of using observation status is on the rise. According to the Medicare Payment Advisory Commission, between 2012 to 2017, outpatient visits jumped 32%.

This hospital classification has become a contentious discussion in the healthcare world for years. It can especially impact Medicare beneficiaries and what they pay for post hospital care in a skilled nursing facility.

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There are more than a million Medicare enrollees in Wisconsin.

Currently, the Center for Medicare Advocacy is pursuing a nationwide class action lawsuit. The organization wants patients to be able to appeal the observation status.

Over the years, lawmakers have introduced multiple bills addressing this coverage concern.

After the I-Team took on Lopez's case, he will now be receiving the $1,100 he applied for through his supplemental insurance.

A spokesperson for his insurer, Aetna, provided the following statement:

Mr. Lopez’s recent claim for services at Aurora St Luke’s South were not billed as an inpatient stay, which Aetna has since been clarified with the facility. We contacted Mr. Lopez this week to let him know that his claim is being reprocessed and he will be receiving payment within a few days.

We also reached out to Aurora, Lopez's provider. A spokesperson provided the below statement:

We are committed to providing our patients with access to the safest and highest quality health care. Our physicians and care teams determine the appropriate level of care based on a patient’s medicalcondition and they discuss these plans with their patients.

We follow standard industry and regulatory requirements and patients’ benefit plan guidelines when determining admission status. Outpatients are regularly monitored to determine if they need to be transitioned to inpatient, but could be in observation or outpatient status for a two-day stay or longer based on their medical needs and condition. Physicians cannot change their patients’ status after discharge.

If you have a medical billing problem, you can contact our Call 4 Action office at 414-967-5495 or file a complaint online with the office.

You can also email Consumer Investigator Kristin Byrne at

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