Tonawanda News — Because a loophole in the Medicare program is costing senior citizens a lot of money, legislation to close it will be introduced in the U.S. Senate sometime in the next week, U.S. Sen. Charles Schumer said Wednesday.

The problem is Medicare’s “observation status.” Seniors who are in the hospital for four days or more have to foot the bill themselves, as observation is considered outpatient care, so Medicare won’t pay for it. That bill could include nursing home care, rehab or therapy services.

Medicare, the public health plan for people over 65, only pays for inpatient services, rehab or therapy when a patient has been hospitalized for three days. Patients in observation status are not admitted to the hospital.

This could affect the 3 million Medicare recipients of New York state.

, as well as the 270,180 recipients who live in Western New York and the 45,017 who live in Niagara County, Schumer said. Nursing home stays could cost an average of $350 to $528 a day.

”There’s been a huge uptick in elderly patients under observation status at upstate New York hospitals,” Schumer said in a conference call Wednesday. “And it’s leaving seniors with big medical bills.”

Schumer shared examples like Ike Cassuto from Albany, who recently broke his pelvis and spent four days at St. Peter’s Hospital. In accordance with current law, St. Peter’s listed him under “observation status” because no operation or procedure was performed.

That means Medicare will not pay for his three weeks in rehab following his hospital stay.

Schumer pushed his plan to change the Medicare law, known as the Improving Access to Medicare Coverage Act, which would allow “observation stays” to be counted toward the three-day mandatory inpatient stay for Medicare to cover rehabilitation post-hospital visit.

”If you are holed up in a hospital bed for days on end, it shouldn’t matter what your billing status is and this plan help will save upstate New York seniors thousands,” Schumer said.

The number of observation cases has been on the rise in recent years, a consequence of policies meant to reduce Medicare expenditures, the senator said. According to most recent data from the American Health Care Association, the New York average for observation stays was 29 per 1,000 Medicare admissions in 2009, up 32 percent since 2007.

This number has likely risen dramatically since, Schumer said. This can lead to massive bills – in the tens of thousands of dollars – that senior citizens must unexpectedly pay for rehab and nursing home care, after their hospital visit.

The legislation is sponsored by Sen. Sherrod Brown of Ohio. The Improving Access to Medicare Coverage Act of 2013 would amend Title XVIII of the Social Security Act and ensure that patients 65 and older are eligible for coverage for their rehabilitation services, as long as they are in the hospital for three days.

The loophole affects hospitals and health care providers as well. They are reimbursed less from Medicare for the treatment of patients under “observation status” than those that are inpatient. 

”All health care providers (we talked to) are for this,” Schumer said.