Medicare Coverage Problems Arise with More Observation Stays

13 Jun


Hospitals all over the U.S. are labeling their patients as outpatients under observation. According to a new study, that is causing problems for people who are being covered by Medicare.
Over the last 10 years, the Center for Medicare & Medicaid Services (CMS) has put a greater emphasis on detecting Medicare fraud and curbing costs via hospital audits, which includes audits of short hospitalizations. 
According to research from a Brown University study (and maybe some good old fashioned common sense), this has lead to an increase in patient observation stays (different from a hospitalization), since hospitals can avoid an audit if they do so. The researchers found a 34 percent increase in the ratio of observation stays to inpatient hospitalizations among Medicare beneficiaries between 2007 and 2009. Also during that timespan, there was an 88 percent jump in Medicare patients held for observation stays for 72 hours or more.
Trying to reduce the number of inpatient hospitalizations may have the good intention of reducing fraudulent or medically unnecessary healthcare expenditures, patient advocates say this leaves Medicare recipients in the lurch with large and unexpected expenses.
Hospitals walk a difficult tightrope between criticism on the patient advocacy front when they appear to increase observation stays at the expense of patients and auditor with the CMS if they don’t.
The California Hospital Association states on their website that hospitals “face criticism from patients and CMS over the perceived use of observation status as a substitute for inpatient admissions, but risk penalties from CMS auditors and prosecutors when auditing admissions of short inpatient stays.”