Observation is meant for short-term treatments and tests to decide if they need to be admitted, but CMS said the number of Medicare patients under observation rose from 828,000 in 2006 to more than 1.1 million in 2009. Although Medicare sets down a maximum 48-hour stay as a guideline, the number of patients exceeding that limit tripled to 83,183 in 2006-2009.
While CMS expanded criteria for observation status in 2008, hospitals may also be trying to protect themselves from recovery audit contractors’ investigations of inappropriate admissions and from planned penalties for readmitting patients under the healthcare reform law. Patients under observation are not counted as an admission.
Medicare patients, however, have more financial obligations when in observation status. Because it is categorized as outpatient care, patients have to cover a larger share of drug costs and other expenses than if they were admitted, and Medicare will not cover follow-up nursing home expenses for these patients. This can come as a shock to patients because hospitals are not obligated to inform them they are under observation rather than being admitted.
CMS sent letters to hospital associations in July asking for suggestions on how to tighten the policy. A CMS official suggested changes such as required notification patients of their status as well as setting a strict time limit.
Read the Kaiser Health News report on observation status.
Read more coverage on observation status:
– 4 Ways Emergency Departments Will Change Over The Next Five Years
– Pennsylvania’s Mercy Health to Pay $7.9M for Overbilling Medicare
– Six Revenue Cycle Inefficiencies: Key Learnings From Abbeville Area Medical Center
