AHA: CMS' Policy for Observation Status Policy is "Unsustainable"

The American Hospital Association filed a friend-of-the-court brief yesterday, arguing that CMS' stance on observation stays is "unsustainable" and puts hospitals in an "untenable position."

The AHA filed the brief in response to a case, brought by Medicare beneficiaries, challenging CMS' use of observation status.

The Medicare program considers "observation status" to be an outpatient service and billed under Medicare Part B. Inpatient hospitalization is covered and billed under Medicare Part A. The lawsuit claims patients on observation status generally receive the same treatment as those patients who have been formally admitted, but the use of "observation status" causes beneficiaries to absorb significantly more of the hospital costs that otherwise would have been paid for under Medicare Part A.

The AHA said it takes no position on the proper outcome of the case, but the court should be sensitive to the "difficult situation" hospitals find themselves in with respect to observation status.

"Inpatient hospital stays are reimbursed differently from 'observation' stays and have different post-hospital coverage consequences, yet the government has not specified when it considers each type of stay to be appropriate," the brief states. "That ambiguity has led to a tug-of-war between beneficiaries and the government."

"Hospitals are left in an untenable position. On the one hand, they risk loss of reimbursement, monetary damages and penalties from auditors and prosecutors when they admit patients for short, medically necessary, inpatient stays," the brief states. "On the other hand, they face criticism from patients and CMS over the perceived use of observation services as a substitute for inpatient admission. Hospitals cannot win no matter how they handle the situation."

More Articles on Hospitals and Observation Status:
'Observation Status' Patients Cost More Than Those Admitted, Study Finds
Medicare Beneficiaries Sue HHS Over Medicare's Observation Status
Hospital Observation Units: What's Undermining "One of the Best Ideas in Healthcare?"

 

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