The following story is co-published with Matt Bivens’ Substack newsletter, The 100 Days.

“No,” said the priest. “It is not necessary to accept everything as true. One must only accept it as necessary.”

“A melancholy conclusion,” said K. “It turns lying into a universal principle.”

― Franz Kafka, “The Trial”

You thought you were a patient in the hospital?

Wrong, says Medicare. You were never in the hospital.

“But I was!” says the patient. “I was on the fourth floor, I stayed overnight, I had a complete cardiac workup!”

Yes, Medicare agrees. But all of that occurred outside of the hospital, including the parts that took place inside the hospital. You may have spent a night in the hospital understood as a physical building , but you did so outside of the hospital as a metaphysical concept.

That’s why you have to pay the bill yourself.

Because your entire time inside the hospital happened outside of the hospital, so Medicare won’t fully cover it.

Also, Medicare adds quickly to forestall further interruption, this was at your doctor’s discretion ! If the doctor had actually ordered that promised admission, Medicare might have paid for it. But your doctor’s paperwork says you were only cared for outside of the hospital, including for the entire time you were inside the hospital.

What is going on here?

Medicare has spent years quietly changing the meanings of commonly understood words.

It’s quite simple: Medicare has spent years quietly changing the meanings of commonly understood words, precisely and solely so as not to pay what it owes.

Patients who have contributed 2.9% of their paycheck for decades, with the understanding that they were prepaying for care later in life, are instead met in their golden years with smirking disrespect, verbal sleight of hand and Jedi mind tricks.

And who gets dragged to the center stage of this farce? The treating physician.

“Sign here,” says Medicare to the nation’s hospital doctors. “We’d rather not move forward with our conspiracy to defraud the patient until you order it formally.”

And the doctor signs. Dutifully, sullenly, with multiple computer clicks a day.

How a raven is like a writing desk

The Oxford English Dictionary says the words “inpatient” and “outpatient” have both been in use since at least the early 1700s. These portmanteau terms were simply shorter versions of “in-the-hospital patient” and “out-of-the-hospital patient”.

Thus, for 300 years, the universal definition of an “inpatient” was someone who received care overnight in a hospital; an “outpatient” was someone who got care but went home that same day.

In some situations, a doctor might take a little time before deciding if a patient needed to stay in the hospital. It was called a period of observation. The doctor might say, “I’m just going to observe this patient for a bit. But if at the end of the day they can’t go home, then I will admit them.”

As to that word “admit,” it has been around in English for more than 600 years, and before that was borrowed from a 1,000-year-old Latin word, admittere . For far more than a millennium, it has meant simply “to let inside.”

A patient admitted was thus anyone let inside the hospital for the night .

This is how reason, immemorial custom and commonly understood words existed for lo these hundreds of years. An inpatient was let in. An outpatient stayed out. A period of observation might determine who needed to be admitted .

Easy, right?

Enter Medicare. It was founded in 1965 to cover the healthcare costs of all senior citizens, and it is funded by payroll taxes — the so-called FICA portion of your paycheck. You give 1.45% of your pay to Medicare and your employer contributes an additional 1.45%, for a total “Medicare tax” of 2.9%.

A Social Security Administration explanation of payroll taxes that help fund retirement and healthcare benefits.

Medicare was set up as a two-part program: Part A for inpatient care (i.e., hospitalizations) and Part B for outpatient care (i.e., everything else).

For decades, Medicare comported with centuries of common sense and medical practice, and recognized that an inpatient was someone admitted to the hospital. As long as the doctor decided this was indicated, Part A would pay. Private insurers, in this and all else, followed Medicare’s lead.

Then in the early 2000s, under Part B, Medicare expanded its coverage of the outpatient basics — from walking aids and wheelchairs to primary care visits — to include periods of observation.

Back then, this seemed generous but fair. After all, observing a patient’s response to treatment for some hours at a clinic or an emergency department (ED), while deciding whether to admit them or send them home, was work. It involved high-level decision-making. We doctors felt it was just and fair to recognize and compensate such work.

There was even a reasonable case to be made that it might save money, or at least be revenue neutral: Hospital admissions are expensive, and some of them might be avoided if the decision to admit was made less hastily, more judiciously. So, subsidizing the luxury of a bit more observation time might be offset by savings on avoidable hospitalizations.

And then it all got a little weird.

Medicare around 2006 started to ask for more documentation.

First, to keep the paperwork tidy, Medicare around 2006 started to ask for more documentation. If a patient was admitted, for example, there should be a written order from a physician — call it an admission order. Also, if a patient was going to be observed, then for Medicare to pay, there ought to be some time-stamped documentation of that, too.

How about this, Medicare continued, warming to the task: We’ll just have a physician’s admission order for every inpatient, and another physician’s admission order for every observation patient. Some patients will be “admitted to the hospital”; others will be “admitted to observation.”

Never mind that “admitted to observation” is an affront to logic.

How can someone be admitted to the status of not-yet-admitted?

“Admit this patient to obs” was as nonsensical as the Mad Hatter asking why a raven is like a writing desk. As smirking non sequitirs goes, it’s up there with Marie Antoinette suggesting cake when you can’t afford bread.

Confused physicians and hospital administrators asked: Wasn’t someone in observation still an outpatient? Were we now “admitting” a patient — “letting them in” — to the status of “not being let in”?

“Yes!” cried Medicare, in enthusiastic agreement. “Now you’re getting it!”

Can you see where this is going?

The observation sledgehammer

From Medicare’s point of view, a patient “admitted to observation” was and remains a patient denied admission to the hospital. It is an emphatically outpatient status.

Medicare insists upon this definition whether the patient is being “observed” by a primary care doctor in her office, by emergency physicians in an emergency department or even — and this is key — by doctors upstairs in a hospital. Yes. Over the years, Medicare has not only convinced EDs across the nation to “observe” many patients by keeping them downstairs in the ED; this massive federal bureaucracy has also bullied and bamboozled hospitals into declaring (on paper) that many patients upstairs, including those receiving titrated intravenous medications and extensive testing, as only being upstairs in the hospital for “observation.”

Medicare Part A thus won’t pay for it, and Medicare Part B only pays for some of it.

It’s more than just a word game. Every patient formally “admitted to observation” is declared to be receiving exclusively “outpatient” care. Medicare Part A thus won’t pay for it, and Medicare Part B only pays for some of it, after copays and such.

I was entering emergency medicine at this time, and the shiny new ED “observation unit” was everywhere seen as a potentially lucrative feature of the practice. We’d get paid by Medicare for the index visit, and also in some cases document a period of additional observation and get paid a second, smaller amount.

In a specialty where the doctor only earns about $160 per patient on average, every little bit might help. Only about 2.4% of patients seen in emergency departments ended up in “ED obs units,” though, and the extra layer of documentation and ongoing patient responsibility hardly seemed worth the crumbs of additional revenue.

What’s more, while many ED doctors seemed aware of the financial upside for themselves of parking an old person with a likely minor infection in ED obs, few seemed aware of the financial downsides for that patient. Medical debt contributes to two-thirds of personal bankruptcies; 59% of Americans can’t afford an emergency expense of more than $1,000; and a Nobel laureate not so long ago had to sell his medal to pay medical bills.

But there was never any education or messaging out there warning us doctors that putting an elderly patient in any flavor of obs status (ED or upstairs) could be a financial catastrophe for that patient — in dollar terms, comparable to going into the parking lot and wrecking their car with a sledgehammer.

The years went by, and then one day, Medicare had seamlessly taken over as the arbiter of who could be admitted for what. We doctors would continue to tell people they were being “admitted to the hospital.” The patients still went upstairs. They still got the same care.

But on the back end, a giant bureaucratic machine was starting to adjust the paperwork. When the bills came, Medicare would now tell patients that their doctor had put in orders clarifying that this had never been a real admission.

I would tell a patient, “I will admit you to the hospital.” Medicare would come along a few months later to say, “Your doctor misled you about that, and now you owe thousands of dollars.”

Midnight games

In 2013, Medicare offered up yet another arbitrary bureaucratic understanding: A doctor could only admit a patient to inpatient care if he or she reasonably expected the patient would stay in hospital across two midnights. Otherwise, the patient would automatically be “admitted to observation” — i.e., not admitted. This was a huge escalation in Medicare’s campaign to cheat seniors. (And not just seniors, because private insurers gleefully follow Medicare’s lead here).

An issue briefing from the American Medical Association in 2016 highlighted one small absurdity of this. It offered two hypothetical chest pain patients who got the same treatment but different bills: The first comes in at 11 p.m., stays for 29 hours (crossing two midnights), and has his care paid for as an inpatient stay. The second arrives two hours later (at 1 a.m., so after that first midnight), and even stays longer, for 45 hours, but because his visit only crosses one midnight, he is “admitted to observation” and gets hit with a monster copay.

A chart from the American Medical Association in 2016 compared the financial consequences of Medicare’s “two-midnight” rule for two similar chest pain patients.

That example of the near-identical chest pain patients with wildly different bills was illustrative. But it only focused on the arbitrary nature of using midnight as a bureaucratic signpost.

The larger problem is Medicare’s entire practice of declaring that many admissions to the hospital aren’t actually admissions any more.

There’s no science.

No explanation.

No medical justification.

Just a sly bureaucratic bit of word-redefining so as not to pay one’s bills.

I wonder what my bank would say if I stopped paying my full mortgage, on grounds that I now had a new definition for the word “house.”

MOONing the patient

From the 1950s to the 1990s, insurers worked to discourage unnecessary hospitalizations, or to cut hospitalizations shorter. That has arguably been a helpful reform. It’s kept down costs for all of us, and freed up hospital beds for those who need them.

But the low-hanging fruit from that approach was picked clean long ago. These days, there is thus a slick new game: If Medicare can’t safely prevent hospitalizations, it will instead pretend they did not happen and refuse to pay for them.

Never mind that the patient was sick enough that the doctor felt he or she should be admitted to the hospital overnight, a situation that previously Medicare always paid for. Not anymore. Today, Medicare simply labels certain admissions as fake admissions (“observation stays”) and looks away.

Often, this harsh reality would only come up when the patient was back home and opened the hospital bill.

Other times it would arise when the upstairs doctors realized they could not discharge a hospital patient to a skilled nursing facility. A patient who, for example, just had a hip fracture or a gall bladder surgery is often not well enough to go straight home, but also not sick enough to justify tying up a needed hospital bed, so they go to a short-term “rehab” hospital. From its founding, Medicare had been reluctant to pay for these rehab stays, and had insisted it would only cover short-term rehabilitation for those who’d been inpatient in hospital across three midnights.

You were never there. On paper, anyway.

This “three midnights to qualify for rehab” was as arbitrary as the later “two midnights to qualify for inpatient” rule.

But now it became an even higher hurdle, because Medicare says that if you’re in “observation status” snoozing in an upstairs hospital bed at midnight, then you weren’t actually in the hospital at all. You were never there. On paper, anyway.

Even when a patient ends up staying in hospital for an entire week, if they were started off in observation and no one thought to flip them to inpatient status, they still don’t punch their ticket with three midnights, and are thus forced to pay for rehab out of pocket (or, often, simply not go to rehab, and get dumped back at home to struggle along as best they can).

The American people at the time complained loudly about all this to their members of Congress, who leapt into action.

The result was the NOTICE Act, signed into law by President Barack Obama in 2015.

Did this put an end to the dastardly practice of cheating our nation’s elders out of their prepaid healthcare?

No. It only required the hospitals to provide a MOON — a medicare outpatient observation notice — to anyone in observation status for more than 24 hours. The point was to make darn sure the patient understood he was going to have a large co-pay.

The NOTICE Act was the opposite of a solution: It was meant not to solve a problem, but to undercut attempts at complaining about it.

A patient would protest, “But the doctor told me I would be admitted!”

A case manager would then “MOON” the patient in reply.

“Oh, you don’t make inpatient,” the case manager would say, quite firmly. “You only qualify for observation.”

Never mind that these are completely arbitrary redefinitions of ancient words, being offered solely because Medicare wants to renege on its bills. Like the character of the priest in “The Trial,” case managers across the nation recognize the dishonesty while insisting on the necessity. Signatures are collected, lying and deceit are the universal principals, and later we all sit around and complain about why no one trusts their doctor anymore.

‘Condition Code 44’ and other medicabalisms

Some patients and their families have caught on to this Medicare swindle. They will ask me suspiciously, “Is this a full admission?” They know my answer can involve thousands of dollars of additional cost.

Medicare has scrambled the English language into such a meaningless scrapple that I once overheard a fellow physician reassure a family, who were demanding to know if their loved one’s stay would be a full admission.

“Yes,” the physician replied, in all sincerity. “This will be a full admission to the observation unit.”

The physician himself did not seem to understand any of this “obs/inpatient” talk — it’s incomprehensible insurance jargon to many of us — but he did want to provide comfort and reassurance, and he did know he’d place “an admission order,” so probably that was good enough? The family seemed grateful and satisfied. Later, of course, a Medicare bill would arrive. I sometimes wonder how much that family now hates doctors.

With each passing year, Medicare expands the list of diagnoses that “no longer make inpatient.” Acute pancreatitis? Admit to obs. Diabetic ketoacidosis? Obs. Lisinopril-induced angioedema of the tongue requiring ICU-level airway watch? Obs. Cellulitis requiring IV antibiotics? Obs. Non-operative pelvic fracture? Obs. Non-septic urinary tract infection in a 99-year-old? Obs.

With each passing year, Medicare expands the list of diagnoses that “no longer make inpatient.”

These are all examples I’ve seen or heard of from fellow physicians. Good luck formally confirming any of them. In its usual cryptic, arbitrary way, Medicare does not publish any list of such dictates. Instead, experts move in to provide professional interpretations and advice.

Hospital administration, guided by criteria from private companies like InterQual or MCG Health — something that we doctors are not given routine access to — tries to decide whether “a person with these ICD-11 coded diagnoses” would usually go home in 24 hours (making it an obs admission), or whether the diagnosis and the supporting ED and hospitalist charts can justify risking the wrath of Medicare with an inpatient admission.

In speaking with doctors (including old medical school friends) from around the country about this, I was surprised how quickly even the most polite among them descended into strings of profanity.

The anger about this among doctors is real. But it’s also muted. There’s no useful forum for sharing it.

Hospitals don’t love any of this either. They get paid less for observation stays. They also have to hire more case managers to MOON indignant obs patients, which has to be done in person — it’s a congressionally mandated someone-to-yell-at. (Thank you, Congress.)

Insult to injury, hospitals also have a harder time discharging obs patients, because many can’t afford to go to rehab (so an obs admission, paradoxically, can lead to a needlessly prolonged hospitalization).

Logically, you might ask why the hospital doesn’t default to make everyone “inpatient” and then only downgrade to obs if circumstances so dictate — for example, if the patient improves rapidly, or otherwise leaves within 24 hours.

Yet quite the opposite happens: Hospitals often default to obs, and only upgrade cautiously to inpatient.

Why such unprofitable timidity?

Because Medicare audits hospitals that (in Medicare’s view) seem too aggressive with billing inpatient cases. Medicare sends out RACs (Recovery Audit Contractors), MACs (Medicare Administrator Contractors) and UPICs (Unified Program Integrity Contractors), who demand documentation and explanation, tie up hospital administration staff, and — most critically — freeze all payments during reviews. Hospitals run on tight margins, and are terrified of the idea of having payments frozen while some saucy bureaucrats poke around for a few weeks.

Anecdotally, if the hospital admits everyone to obs, and then upgrades many to inpatient, the RACs, MACs, UPICs and other vultures look on without comment.

Hospitals often default to obs, and only upgrade cautiously to inpatient.

The Feds approve of everyone starting out in obs.

Why? Because Medicare finds that, when it comes to weaseling out of paying its bills, every little bit helps. In particular, getting even just the first day classified as obs can often kill off any hope of achieving a three-midnight minimum, the difference between whether Medicare or Grandma pays for rehab.

By contrast, if the hospital admits everyone to inpatient and then downgrades “too many” to obs, Medicare will suspect the hospital of overusing Condition Code 44. Then the vultures will swoop in and curtail the hospital’s access to that mystical bureaucratic maneuver.

“What is Condition Code 44?” you ask.

I might reply that K., the man accused of an unknown crime by an unknown government agency, also wondered about the meaning of arcane lapel badges worn by his unknown judges.

The main thing to know about Condition Code 44, or the three-midnight rule to qualify for rehab, or the two-midnight rule to qualify for inpatient, or the smug insistence that some very ill people a doctor keeps in hospital overnight for care were slyly kept out of the hospital on paper, is that it’s all an arbitrary abuse of power by a bureaucracy looking to not pay its bills.

That’s all.

For the record: I have never willingly chosen “observation” for a patient I admitted. With every coerced mouse click, I abet Medicare in swindling ordinary people out of their money. I eagerly await the inevitable class-action lawsuit against the federal government. Until then, I also often wonder: What would happen if we doctors en masse refused to sign off on the fraud, and just put in inpatient admission orders on everyone sick enough to need hospital care? What a radical thought: Doctors documenting physical reality! Doctors acknowledging that each and every patient they admit to the hospital is, yes, a patient they felt needed to be admitted to the hospital.

The post How Washington Forces Doctors to Defraud Seniors appeared first on Truthdig .