The Matthews Family: The $4,500 Pill: How a Hospital Visit Became a Financial Nightmare

Jim and Teresa Matthews never imagined that a hospital visit could unravel into a financial bureaucratic nightmare. From Indian Land, South Carolina, the Matthews run a medical practice just across the state line in Indian Trail, North Carolina, where Jim is an optometrist and Teresa serves as office manager. Being health care professionals, the couple thought they understood the Medicare system. But when Teresa was hospitalized after a sudden episode of transient global amnesia—a rare, temporary loss of memory—they discovered a hidden flaw that left them with a $4,500 bill for a single day’s worth of medication and no clear path to challenge it.

When Teresa began exhibiting symptoms, Jim rushed her to the emergency room. Doctors admitted her for observation and ran tests, including an MRI and EEG. Teresa remained in the hospital for two nights. During her stay, she required nursing assistance to get out of bed, received meals and medication, what felt to the Matthews like a standard inpatient experience. At the same time, Teresa was recovering from COVID-19 and had one final dose of Paxlovid with her.

Although she brought her own medication, Teresa accepted the Paxlovid provided by the hospital staff.  Jim added that according to hospital policy, patients are not permitted to self-administer medications. What neither of them knew at the time was that Teresa had been—or would be—classified as an outpatient, a distinction that would have a devastating financial consequence.

Under her policy for Medicare Part D, Teresa’s prescription for Paxlovid was fully covered before her hospitalization. However, because the hospital dispensed the final day of her five-day Paxlovid regimen and classified her as an outpatient, the cost was shifted to Medicare Part B. Unfortunately, Part B does not cover self-administered medications during outpatient observation stays. At discharge, a utilization nurse handed Jim a clipboard with a form and asked him to sign. It was the first they heard of the classification.

“She’s literally shoving it in my face to sign,” Jim recalled. That form was a MOON—Medicare Outpatient Observation Notice. “That form basically says, ‘Hey, guess what? You’re only partially insured.’” They were stunned. Teresa had spent two nights in a hospital bed, receiving care, unable to walk unassisted. But Medicare Part A, which covers inpatient stays, including medications taken during that stay, wouldn’t apply. Instead, under Part B, they were now responsible for the cost of the Paxlovid—$4,500 for one day’s worth.

“I had already taken four days at home,” Teresa said. “I just needed the last days’ worth. But the hospital scanned the entire 10-dose blister pack twice and billed us for the whole thing. Twice.”

“Had we said nothing, it would have been $9,000 for one day’s worth,” Jim added.

They did everything they could think of to dispute the charges. Jim drove an hour to Atrium Health’s billing department in Charlotte and spoke to a representative in person, who admitted the charges were valid according to the system—even if they made no logical sense. The follow-up communication didn’t provide much clarity. “The billing agent gave me a consumer email address to follow up,” Jim said. “I sent multiple emails. I got replies, but each one was from someone different, identified only by a first name and initial. There was no continuity. Every time felt like starting over.”

They were told they could attempt to bill their Medicare Part D plan directly. When they called, the plan representative laughed. The most Teresa might be reimbursed—if she paid the bill first—was around $500.

“To this day, the bill is in limbo,” Jim said. “They haven’t sent it to collections yet, but we live in fear that it will happen any day. And there’s no one to talk to who can fix it.”

Even as health care providers, the Matthews had never heard of hospitals retroactively changing patient status from inpatient to outpatient, let alone what that change could mean for Medicare coverage. “We assumed she was inpatient,” Jim said. “She was there for two nights, needed nursing care, received medication, meals, everything we associate with inpatient care. But the hospital’s utilization committee made that decision behind closed doors and didn’t tell us until the moment she was being discharged. Whether she was initially admitted as an inpatient and later reclassified, we’ll likely never know. That’s the most insidious part. These decisions can be made or changed quietly, even after the patient has gone home. It’s a fluid and opaque process that leaves patients at a serious disadvantage.”

Since the incident, they’ve warned friends and family, including Jim’s sister in New Jersey, who was able to avoid a similar trap by refusing to sign a MOON form during a recent hospital visit. “We’re doing everything we can to spread the word,” Jim said.

The Matthews also worry about the broader implications. They suspect hospitals may have financial incentives to classify patients as outpatients. “If you’re labeled as an outpatient, you don’t qualify for nursing home care or rehab through Medicare,” Jim said. “It’s all about shifting costs off Medicare and onto the patient.”

As both providers and patients, they fear that proposed cuts to Medicare and Medicaid will only make things worse. “We see people every day who can’t afford their medications or who are going blind from untreated diabetes,” Jim said. “And as patients, we’ve seen how hard it is to get the care you’re supposed to be guaranteed.”

For Teresa, the financial bill is secondary to the emotional toll. “It’s the stress,” she said. “It’s the fear that we could be sent to collections. That we could be penalized for following hospital instructions and taking the medication I was prescribed. That there’s no one to call who can help.”

“You shouldn’t need to know billing codes to get health care,” she said. “You shouldn’t have to be your own advocate just to avoid a $4,500 charge for pills you already had.”

“And the hospital,” Jim added, “is supposed to be a place where you go to get better. Not a place you go into debt.”