Skewed data? Observation stays rise as readmissions drop

Are hospitals improving care—or overusing observation status?

Experts say that the 2012 drop in 30-day readmissions for Medicare patients may have more to do with an increase in observation stays than with care improvements, a theory that could undermine the use of readmissions metrics in quality programs.

In 2012, hospitals reported 70,000 fewer 30-day readmissions than expected. The Obama administration widely attributed the decrease to the impact of looming penalties for readmissions.

However, a patient on outpatient observation status is never admitted, which means any return visit to the hospital does not count as a readmission, according to Modern Healthcare. In 2011, CMS data show that Medicare outpatient observation cases rose by 230,000 claims.

"Fundamentally, the question to me is, have we really done a good job of preventing readmissions, or have we just reassigned people who would have been readmitted to a different status?" Harvard professor Ashish Jha told Modern Healthcare.

Experts worry that hospitals may keep patients in outpatient observation status if they are likely to be readmitted or have recently be admitted to avoid readmissions penalties, which CMS began imposing on hospitals last year.

However, Mark Williams—the chief of hospital medicine at Northwestern University Feinberg School of Medicine—says it is unlikely that the nationwide decrease in readmissions was caused by a deliberate effort to avoid readmissions through observation status. "I'm sure there is someone in the U.S. who is doing it, but I've not seen cases of people who are talking about it," Williams says.

Meanwhile, Nancy Foster—vice president for quality and patient safety for the American Hospital Association—says that the increase in observation stays does not negate the important strides that hospitals have made to re-engineer their care processes and avoid preventable readmissions.

"When we get down to the nitty-gritty of a particular set of measures being applied in a particular way, that's when you discover that no measure is perfect," Foster said, adding that "you may be invoking penalties and pressuring hospitals and clinicians to make changes that the science shows are not in the patients' best interest" (Carlson, Modern Healthcare, 6/10 [subscription required]).

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