Study: Hospital Observation Doubled Between 2001 and 2009

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A near decade-long study on the frequency of hospital stays found the use of the "observation" status for Medicare beneficiaries doubled between 2001 and 2009, according to an AARP Public Policy Institute research brief.

The annual count of total Medicare beneficiaries, both inpatients and outpatients, with an observation stay increased to 2 million in 2009, up from 500,000 in 2001. The 2009 figure accounts for 3.5 percent of all Medicare beneficiaries.

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Costs associated with observation stays increased most for cases that did not lead to inpatient admission, according to the brief. Observation stay durations over 48 hours were the least common but experienced the greatest growth, 250 percent for outpatient cases, between 2001 and 2009.

According to the AARP, this growth originated in Medicare payment changes, increased public and private pressure for shortened inpatient stays, efficiency gains for hospitals, improved reporting practices and avoidance of inpatient admission through observation stays.

The findings follow a recent report on the prevalence of the "observation" designation and the insurance coverage problems it causes for patients who do not meet Medicare's three-day inpatient stay requirement before being released to a skilled nursing facility.

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