Are hospitals lowering readmissions or just putting more patients under observation?

Although hospital readmission rates have dropped across the country for certain conditions, an analysis of Medicare claims by The Wall Street Journal found patients reenter the hospital nearly as frequently, but under a different label: observation stays.

Readmission rates at acute care hospitals in the U.S. dropped by about 9 percent from 2010 to 2013, although WSJ's analysis found rates of observation stays during that time increased by about 48 percent. That means the rise in observation stays accounted for roughly 40 percent of the decline in readmissions.

When patients enter the hospital on an observation stay, the care they receive is often indistinguishable from inpatient stays. But under observation, patients are not counted toward readmission tallies — a move that can help hospitals avoid penalties under the Hospital Readmissions Reduction Program.

Due to the program, 2,592 hospitals currently face penalties due to high rates of 30-day readmissions. Those penalties are estimated to cost a combined $420 million.

There are also other reasons for the increase in observation stays, however. According to the Journal, "CMS in recent years has encouraged hospitals to label more stays as observation, in part through its contracts with review claims," as an effort to cut costs.

While the billing change may benefit hospitals and save Medicare money, the move may not be good for patients.

"Rebekah Gardner, an assistant professor at Brown University's medical school, said that if patients are returning to hospitals just as frequently, regardless of how their stays are labeled, it signals that patient care hasn't improved," according to the Journal.

Additionally, patients' pocketbooks are affected differently if they are billed for an observation stay as opposed to an actual inpatient admission. Medicare Part A pays for inpatient stays. If you are hospitalized on observation status, payment by Medicare is under Part B, which covers physician and outpatient services. Patients without Part B coverage are often left with the bill for observation status, even though there was not a perceptible difference in the type or level of care they received in the hospital.

Further, Medicare does not cover skilled nursing facility stays unless the patient was admitted as an inpatient for a minimum of three nights.

Find more information on the Journal's approach to its analysis here.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars