Medicare will cover a nursing home stay entirely for the first 20 days, as long as the patient was first admitted to a hospital as an inpatient for at least three days. But a growing number of seniors are finding that Medicare won’t pay for a nursing home stay because they weren’t actually “admitted” as an inpatient at the hospital – they were merely held under “observation.”

Frequently, these patients have no idea that they weren’t actually admitted. They were given a bed and a wristband, nurses and doctors came to see them, and they received treatment and tests just as if there had been a formal admission.

Increasingly, hospitals are classifying hospital stays as “observations” – sometimes retroactively – due to pressure from Medicare to reduce inpatient costs. Tens of thousands of people a year are now facing this problem, which can prevent them from receiving full reimbursement under Medicare Part A in addition to being denied coverage for a subsequent nursing home visit.

However, a class-action lawsuit has now been filed that might help elderly patients all over the country.

The suit was brought in a federal court in Connecticut by two elder advocacy groups, the Center for Medicare Advocacy and the National Senior Citizens Law Center.

These groups are asking the court to make it illegal for hospitals to accept Medicare patients “under observation” instead of simply admitting them. They claim that this practice violates the Medicare Act, and denies senior citizens their due process rights under the U.S. Constitution.

If the court won’t do away with “observation” status entirely, then the groups are asking that hospitals be required to notify patients right away if they haven’t been admitted, so that they can weigh their options.

Currently, Medicare doesn’t require that patients be notified as to whether and when they have officially been admitted. As a result, whenever you or a loved one has a hospital stay, it’s a very good idea to ask directly about your admission status. If you haven’t been formally admitted – particularly if a nursing home stay afterward is likely – you should discuss this with your doctor and see if anything can be done.