Hospitals Caught Between a Rock and a Hard Place Over 'Observation'

On one side, administrators and physicians are required by Medicare's strict billing criteria to place certain patients in "observation" status rather than admit them as regular inpatients. On the other, admitting these borderline patients and billing Medicare accordingly, could trigger a recovery audit contractor investigation, headaches, and a huge loss of federal reimbursement dollars.

11 comments on "Hospitals Caught Between a Rock and a Hard Place Over 'Observation'"
Priscilla T. Bassett (2/8/2012 at 6:01 PM)

a fair presentation of the hospital side
Kay F. (9/21/2010 at 11:45 PM)

I know Medicare expects the beneficiary to ask a hospital whether they are inpatient or observation. Medicare even publishes a brochure explaining the difference. But also according to Medicare if she was admitted as Inpatient and then changed to observation then it was then this hospitals responsibility to notify her of the change. Did it really take 5 days for them to notify her? And why would a hospital keep a patient past 48 hours if they are not sick enough to be an "inpatient"? It seems like a real financial loss for the hosptial.
sobrien (9/21/2010 at 5:04 PM)

When a physician makes the decision to keep a patient in the hospital, one of the first decisions he/she must make (usually with the guidance of a Utilization Review Nurse) is whether the patient should be admitted as an 'Inpatient', or made 'Observation'. The criteria that is used to guide this decision is spelled out in the InterQual or Millimen criteria. With each years update in the criteria guidelines, Inpatient criteria has become increasingly harder to meet. The new criteria, which became active as of August 1st, makes it especially difficult to justify an 'Inpatient' admission. The patients aren't any less sick, but the criteria points us toward an 'Observation' stay. Though CMS guidelines recognize that the decision to admit a patient is a "complex medical decision", the hospital is at risk of being denied payment if the patient is admitted to 'Inpatient', yet does not clearly meet this criteria. The changes this year will likely show an even bigger jump in the use of 'Observation' stays, with the resulting burden begin placed on both the hospitals, as well as the patients and their families.
Frank (9/21/2010 at 2:10 PM)

I didn't see anything in the article suggesting that the family was trying to do anything fraudulent, that's quite an accusation. Nor do I see how you came to the conclusion that this person should have been in the nursing home years ago. At a minimum, it's clear that the stay was beyond CMS guidlines of 24-48 hours. And it sounds like the patient was admitted as an inpatient.
Barbara K. (9/20/2010 at 10:53 PM)

Medicare wasn't made to take care of our aging parents. What happen to taking accountability for the care of your elderly parents? Your asking me (the taxpayer) to support your elderly parents. Not because they need rehabilitation, but because they should of been placed in an nursing home years ago. I applaud this hospital for not breaking under family pressure. What they are asking this hosptial to do is commit Medicare Fraud!
Jackie Cicora (9/20/2010 at 4:28 PM)

It is especially difficult when the patient needs to go into a nursing home from observation status. With a broken leg my mother's assisted living could not care for her. She had to pay for assisted living and nursing home for over three months to keep her room reserved at assisted living. This can run through a senior's savings very rapidly.
sue (9/20/2010 at 2:04 PM)

The interesting thing is that there is no mention of "observation" stays in the Medicare law and no such thing existed for the first 25 years that Medicare existed. The docs are faced with either sending a patient home because he/she doesn't meet the criteria for inpatient or admit them as an observation patient so that they can receive continuous nursing care and treatment. But then the patient/family get angry. I wish that the politicians' parents may all find themselves in this corner. That may spur changes.
Georgeann Edford (9/16/2010 at 12:38 PM)

Of course the patient's and family believe they are an inpatient. Five days in observation?? The CMS guidenlines say the limit is 48 hours. Utilization nurses need to communicate better with the physicians outlining the requirements of inpatient stays and physicians should not be allowed to admit patients just to make get the patient into a nursing home.
janice (9/16/2010 at 12:27 PM)

Seems simple [INVALID] if you are admitted to a hospital, even so they can watch you for a period of time, then you are a patient 'in' the facility [INVALID] hence, 'inpatient'. (Is this really a hard problem to solve?) Just a game of double talk, it appears to me. This smoke and mirrors manner of conducting business is very disrespectful to all of their customers [INVALID] and it's a good way to lose credibility in the community.
karen l. (9/15/2010 at 2:37 PM)

Even when we do tell the patients and/or their family that they are not an inpatient, it doesn't seem to help. They still get angry when they get the bill. We have literature that we review with them that states specifically what they will be responsible for. They still blame it on the facility.
Dave Cluley (9/15/2010 at 12:01 PM)

It seems that better management of patient and family expectations is in order. Before one is put on observation status, it should be made clear that the stay may not be covered by Medicare and that the patient will be responsible for the bill. In addition, an estimate of the total cost for the observation stay, within 10% of actual, should be provided so the patient/family can make a fully informed decision about how to proceed.


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