Hospitals Report Negative Financial Ramifications from Using Observation Status
As featured in the Daily Briefing, Medicare and private insurers are increasingly labeling patients as "observation cases," or outpatients, despite days-long hospital stays, a practice that is boosting costs for facilities and patients, the Pittsburgh Tribune-Review reports.
Although the observation label is not new--CMS applies the designation to patients admitted through the ED with symptoms that can be stabilized within 24 hours, such as asthma and chest pain--hospital leaders in Pennsylvania say the practice of classifying cases as outpatient despite longer hospital stays has grown and is burdening facilities with lower reimbursement. Federal law does not specify that a patient must be considered an inpatient admission after 24 hours in a hospital, according to a Medicare spokesperson. Payment for an observation case is 33% of payment for an inpatient admission, according to the CMO at Forbes Regional Hospital. The trend can also be particularly harmful to Medicare patients because it may lead to denied coverage for nursing home care, the Tribune-Review reports.
Hospitals Turning to Observation Care