If your aging loved one spends three days in the hospital and then transfers to a nursing facility for continued recuperation, you may be under the false impression that Medicare is going to cover it. It’s not necessarily so; and the devil is in the details.

Medicare beneficiaries must spend three consecutive midnights in the hospital (not including the day of discharge) as an admitted patient to qualify for Medicare coverage for a subsequent nursing facility stay.  Unfortunately, every year thousands of Medicare patients are denied coverage for the nursing facility because of the way their hospital stay was classified.

If any part of the patient’s stay in the hospital was classified as “observation,” he or she may not meet the three-midnight admitted patient requirement.  Not only that, patients under observation do not receive Medicare coverage for any medications the hospital provides for pre-existing conditions.  And, Medicare drug plans are not required to reimburse patients for these costs.

Classification of a hospital stay as “observation” vs. “admitted” is becoming increasingly common. In fact, in the six years between 2006 and 2012, the number of seniors entering the hospital for observation increased 88%.

In general, a patient is assigned inpatient, or admitted status when they have severe problems that require highly technical skilled care. They’re assigned observation status if they’re not sick enough to require inpatient admission or if the doctors aren’t sure yet how sick they are. Whether a patient is admitted or merely kept for observation varies depending on the hospital.

Some commercial insurance companies will only authorize observation for up to 23 hours. Medicare, however, has extended that, allowing up to 48 hours of observation.  Although Medicare recommends that a decision on whether to admit the patient be made within 24 to 48 hours, federal records show that observation visits exceeding 24 hours more than doubled between 2006 and 2012, including a five-fold increase in stays lasting more than 48 hours.

Further complicating the issue is that many of the symptoms that are top reasons for observation, for example, chest pain, digestive disorders, fainting, nutritional disorders, irregular heartbeat and circulatory problems, are also among the most frequent reasons for a short hospital admission.

If you are caring for an aging loved one who goes from the hospital to a nursing facility, find out before they transfer how their hospital stay was classified. If it turns out they weren’t actually admitted but were receiving care as if they were, you may be able to fight it. Seek the help of your loved one’s regular physician, a geriatric care manager  or even an elder-law attorney.

According to a 2012 survey by MetLife  the average cost of a private room in a nursing home is $248 daily, and a semi-private room is $222 daily. Avoid these out of pocket expenses for you or your loved one by ensuring that you ask questions and understand all the details early in the hospital stay.