AHA does not take a formal position on the outcome of the case, but asks the court to keep in mind the difficult situation hospitals find themselves in. A group of Medicare beneficiaries sued HHS in November 2011 over CMS’ policy (pdf) on observation status, in part because the beneficiaries have to pay more out of pocket during observation stays, which could last for several weeks.
There has been an upsurge in the use of observation status in recent years as payors question whether patients really need to be admitted. Hospitals and physicians may err on the side of putting a Medicare patient in observation status instead of admitting him or her to inpatient care to avoid penalties for 30-day readmissions. Also, physicians may hesitate to admit a patient to avoid other federal penalties.
“Fear of audits and False Claims Act liability may be leading physicians to order observation stays instead of inpatient stays,” write the AHA in its letter to the court.
Because federal prosecutors and auditors second guess physician decisions on whether to admit Medicare beneficiaries, hospitals are in an “untenable position,” writes the AHA in its friend-of-the-court brief. “If they give appropriate deference to the treating physician’s admission decision, they risk incurring substantial costs and penalties.”
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