HHS: Short Inpatient Stays More Costly Than Observation Stays in 2012

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Medicare paid three times as much on average for a short inpatient stay than it did for an observation stay in 2012, and beneficiaries paid almost twice as much, according to a report from the HHS Office of Inspector General.

Medicare paid an average of $5,142 per short inpatient stay, compared with $1,741 on average for an observation stay, according to the report. In 2012, Medicare beneficiaries had 1.5 million observation stays and 1.1 million short inpatient stays, which were often for the same reason as observation stays.

Beneficiaries paid an average of $725 per short inpatient stay, while an observation stay cost an average of $401. Short inpatient stays were typically more costly than observation stays when patients were being treated for the same reasons, according to the report.

HHS also found the use of short inpatient stays varied widely between hospitals. Some hospitals used short inpatient stays for more than 70 percent of their stays, while short inpatient stays accounted for less than 10 percent of all stays for other facilities.

Additionally, the report raises concerns about access to skilled nursing facility services post-hospitalization. HHS recommends CMS ensure that beneficiaries with similar care needs following long outpatient stays, short inpatient stays and observation stays have the same access to and cost-sharing for skilled nursing facility services.

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Readmissions Dilemma: Admit or Observe?

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