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November 14, 2011

Hospitals play unfair games with Medicare observation status

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Most hospital visitors don’t care a whole lot whether they’re classed as inpatients or outpatients  — unless it affects the size of their bill. But lately, many patients are getting hit with unexpected fees after spending days in a hospital, thanks to tricks hospitals are playing in an effort to lower their readmission rate numbers, a newly-filed lawsuit contends.

These days, hospitals are under intense pressure to lower readmission rates, as such rates figure into their ratings on various types of quality scales.  In some cases, of course, they have no direct control of this number, as readmissions often have far more to do with the care they receive from community physicians and their willingness to comply with discharge instructions.

But ever-resourceful administrators have found a loophole that allows them to rejigger the admissions numbers. Under Medicare rules, they’re allowed to keep patients on “observation status,” deliver care and let patients go without ever classing them as inpatients. All of which might be well and good, except that if patients are in a hospital for days, they rack up a big bill — one they’re expected to pay far more of if the visit is billed as outpatient care under Medicare Part B.

Even more delightful for these patients, the fact that they haven’t logged three or more “real” inpatient days means that Medicare won’t pay for follow-up in a skilled nursing facility after discharge. So seniors either do without, or end up having the state pay through Medicaid.

Nice way to look out for patients, guys. Being old and sick and scared isn’t bad enough; now seniors have to wonder if their hospital costs are paid for even with Medicare coverage in place.

With this kind of mumblety-peg becoming fairly common, a consumer group called Center for Medicare Advocacy has filed a lawsuit to call a halt to the fun. The group is asking CMS to simply end observation status as a billable category.

While I sympathize with hospitals to some degree, who are also hoping to dodge scrutiny from the RECs by avoiding inpatient claim reviews, setting up seniors for high costs by playing unfair games is bad for you, the industry and the patient. Cut it out.

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