According to the lawsuit, however, the practice has gotten out of hand. A Medicare Payment Advisory Commission report 14 months ago says that between 2006 and 2008, the number of observation status claims increased by 22.4% "and the claims for periods of 48 hours or longer increased by 70.3%, which accounted for 8% of all claims in 2006 and 12% of all claims in 2008," according to the lawsuit.
The lawsuit does not make any claims that the patients were harmed, but in an interview, Deford said that because this practice is now so commonplace, many patients who should be receiving skilled nursing facility care are not getting it. "And as a consequence, some of them will suffer health consequences."
The advocacy groups' petition to the court also notes that the practice of placing patients in observation often violates the Medicare statute because whether a patient's hospital admission is appropriate is frequently determined by "commercially available screening tools, such as those from the McKesson Corporation (Interqual) and Milliman," the lawsuit says.
"These are proprietary systems that are not publicly available," the lawsuit says. Additionally, Medicare allows its utilization review committees "to reverse the decision of a beneficiary's physician to formally admit the beneficiary as an inpatient, and to retroactively place that beneficiary on observation status," a practice the lawsuit claims interferes with the practice of medicine in violation of the Medicare statute.
Retired physician Richard Bagnall, 91, who had a history of myocardial infarction, congestive heart failure, tremors, atrial fibrillation, and chronic kidney disease, is one plaintiff named in the lawsuit. He was taken to the emergency room of John Dempsey University of Connecticut Health Center after an episode of lightheadedness.
"He received IV infusion, EKG and X-ray and was started on an atrial fibrillation monitor," and was treated for hypertension.