New law targets Medicare loophole that spawns “surprise” medical bills

Imagine spending time in the hospital followed by two months in rehab only to learn that Medicare won’t cover your rehab because of a legal loophole.

That’s what happened to M.J. Bricout after she broke her leg three years ago.

“I was mugged,” Bricout told NBC News, explaining how she felt when she received a $28,000 bill. Her doctor had categorized her as “under observation” while in the hospital, so effectively an “outpatient.”

For years, seniors have received “surprise” bills for drugs, expensive nursing home care and other services not fully covered by Medicare in cases where they were hospitalized but classified as “under observation.”

A new law, drafted by Rep. Lloyd Doggett, D-Texas, in response to Bricout’s and others’ stories, requires hospitals to tell patients they are “under observation” and potentially liable for large bills.

More than 1 million patients each year will now get these MOONS (Medicare Outpatient Observation Notices), NBC reports. However the law does not eliminate the loophole altogether, which means patients and their families must remain vigilant.

Three cheers for M.J. Bricout. Voices for Affordable Health empowers consumers to stand up for high-quality, affordable care. Share your stories and tips.