Low-income Medicare patients use more observation care, incur greater out-of-pocket costs

Low-income Medicare beneficiaries are more likely to rack up out-of-pocket costs than their wealthier counterparts due to greater use of observation care, according to a study published by The American Journal of Medicine.

Researchers conducted a retrospective analysis of Medicare Part B claims and U.S. Census Bureau data from 2013 and found the poor and poorest beneficiaries were much more likely to use observation care compared to the wealthiest 25 percent of beneficiaries. Observation care is often associated with high out-of-pocket expenses for Medicare patients. Because it is considered outpatient care, beneficiaries are required to pay a co-payment and 20 percent of the costs after their deductible, with no limit. They also often must foot the bill for drug costs.

Researchers determined beneficiaries in the third quartile — considered poor, but not the poorest — had the highest risk of high financial liability related to observation stays.

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