Sarah Palin warned of government “death panels” on her Facebook page and was nationally ridiculed. Politifact.com awarded Palin with the “Lie of the Year” for that statement. President Obama called her out during a joint session of Congress saying the claim is “a lie, plain and simple.”

I thought of Sarah Palin when I heard the story of Helen Wagner. Helen is 91 years old and is the mother of my sister-in-law Peggy. Give Helen five minutes and she will list a dozen times she has held death at bay. But now she is up against a much greater force: Medicare.

Helen lives with Peggy and my brother Bob. In August, she fell and broke her arm. In the emergency room at Lansdale Hospital, a doctor examined her and determined that the fall was probably caused by a minor stroke, possibly two. He was also concerned about a spot he saw on her lung on an X-ray. The doctor ordered more tests and said Helen would be “admitted.”

Only she wasn’t. Instead she entered a Twilight Zone of new Medicare regulations. Two days later the hospital called and said Helen would have to be picked up. When my sister-in-law asked about the tests, she was told they had not been done. In fact, Helen was never admitted to the hospital. She was just being “held for observation.”

A flurry of dialogue among the hospital, my brother and sister-in-law and doctors lasted four days and ended with a threat that Helen would have to be picked up or she would be transported to a nursing home with an available bed and the family would be billed.

My sister-in-law rushed to the hospital where, she says, her mother was weak and barely conscious. Peggy navigated her Mom’s broken arm and bruised leg as she dressed her and wheeled her out of the hospital. There were no discharge papers. (Lansdale Hospital would not comment on this specific case because of privacy laws.)

Helen and her family are just one of the latest victims of new Medicare regulations, and an even more recent crackdown on those regulations that cause agita for hospitals and heartbreak for families who care for the elderly.

The cost-saving rule is just a few years old and requires hospitals to hold some patients “for observation” instead of admitting them. The difference in terminology means that the hospital is reimbursed far less money than they would have if the patient had been “admitted.” When I asked a spokesperson from the hospital to tell me the difference in care between admission and observation, I was told, “There is none. It is just billing.” And yet, one would have to believe, that hospitals are reluctant to conduct tests that will be under-compensated or not covered at all.

Observation can last up to five days, according to the new rules. That may explain the hurried need to get Helen out of the hospital on day four. If a hospital doesn’t adhere to the Medicare regulations, it will face an audit that could mean a huge loss of federal reimbursement dollars.

The burden on families is even greater. If a patient is not admitted, rehab at the nursing home is not covered by Medicare. Even if you have private insurance, many companies base their criteria on Medicare. If Medicare is not covering, the insurance company isn’t either.

My brother and sister-in-law recently had a meeting with administrators at Lansdale Hospital, including the COO, who called the new Medicare rules “the bane of our existence.” Thousands of families have complained since “observation” started over five years ago.

According to the Centers for Medicare and Medicaid Services, “observation” status claims climbed 26.7 percent from 2006 to 2009—from 828,353 to 1.131 million. The increase in claims for “observation” patients kept for more than 48 hours is startling. It tripled from 26,176 to 83,183.

Observations are supposed to be limited to 24 or 48 hours, with five days being the absolute maximum. CMS believes this shows hospitals believe many patients are too sick to go home and feel pressured into not admitting them under Medicare rules.

So what is the criteria for who gets to be admitted and who gets “observation”? Those who don’t get admitted don’t meet the “evidence-based criteria.” A minor stroke, for instance, can be seen as part of the normal aging process. Helen Wagner, like many people who make it to 91, has a pacemaker and can’t undergo an MRI, the test that would provide evidence of a stroke and its severity.

Helen is now at St. Mary’s nursing home. St. Mary’s is also feeling the Medicare pinch and support Bob and Peggy’s efforts to get the “observation” status changed to admission. The matter is going to an appellate board.

When I heard Helen’s story about a new crackdown on government rules that can impact a patient’s care because of their age. I couldn’t help but think that maybe Sarah Palin was right.

Larry Mendte writes for The Philly Post every Thursday. See his previous columns here. To watch his video commentaries, go to wpix.com. Follow him on Facebook and on Twitter @LarryMendte.