SHM Public Policy Committee member Ann Sheehy, MD, MS, FHM, (left) met with (left) spoke personally with Rep. McDermott (D-WA), the ranking member of the House Ways and Means Subcommittee on Health. Dr. Sheehy, who is a hospitalist at the University of Wisconsin School of Medicine and Public Health in Madison, testified about issues related to Medicare’s two-midnight rule, observation status, and the RAC program.
Twice in the past four months, Society of Hospital Medicine (SHM) member Ann Sheehy, MD, MS, FHM, found herself on Capitol Hill, testifying before Congressional committees focused on the U.S. healthcare system.
A physician at the University of Wisconsin (UW) School of Medicine and Public Health and a member of SHM’s Public Policy Committee, Dr. Sheehy was invited to speak about issues related to Medicare’s two-midnight rule, patient observation status, and the Recovery Audit Contractor (RAC) program.
These issues are “so important, and I am passionate about it,” Dr. Sheehy says. “I saw what was happening to patients and it just did not make any sense at all.”
Medicare’s two-midnight rule classifies most patients who stay in the hospital fewer than two midnights as outpatient or under observation. Observation status leaves patients on the hook for the costs of any chronic condition medications they receive in the hospital; additionally, patients under observation or considered outpatient are not eligible for skilled nursing facility (SNF) coverage.
SHM actively supports the Improving Access to Medicare Coverage Act, a bipartisan bill sponsored by Rep. Joe Courtney (D-CT) aimed at ensuring Medicare beneficiaries classified as under observation are considered inpatient for the purposes of accessing SNF care, even if their stay spanned fewer than two midnights.
At the Congressional hearings (watch video of the testimony at www.c-span.org/video/?319488-1/medicare-hospital-coverage committee and http://www.aging.senate.gov/hearings/admitted-or-not-the-impact-of-medicare-observation-status-on-seniors), Dr. Sheehy used her experience at UW Hospital and findings she and colleagues published in JAMA Internal Medicine to build a backstory around the issues. Based on the transcript of the testimony, Dr. Sheehy told the House Ways and Means Subcommittee on Health: “Because of our clinical work and extensive experience in the hospital setting, hospitalists have a firsthand view of what observation care looks like to patients, physicians, and hospitals.”
“Medicare policy, should be aligned with clinical realities and should also be rooted in allowing physicians to provide the care patients need.
—Ann Sheehy, MD, MS, FHM
She argues in her testimony that observation status harms the patient-physician relationship and does not make clinical sense.
For instance, the time of day a patient gets sick can impact their designation under the two-midnight rule. In one 2013 JAMA Internal Medicine publication [http://archinte.jamanetwork.com/article.aspx?articleid=1731964], Dr. Sheehy and colleagues found nearly half of UW Hospital patients would have been assigned observation status rather than inpatient under the two-midnight rule by virtue of the time they arrived at the hospital.
Additionally, Dr. Sheehy addressed the issue of the private contractors, or RACs, which were established under the Tax Relief and Health Care Act of 2006 to audit patient records for appropriate hospital status. Dr. Sheehy, in her testimony, said the RACs are aggressive and nontransparent in their audits. Additionally, the RACs are paid a percentage of the money they recover on Medicare’s behalf but are not held financially accountable for decisions that are subsequently appealed and overturned.
Nationally, roughly 40% of RAC audits are appealed, and 70% of these are overturned. Dr. Sheehy told the Congressional committee that at UW Hospital from Oct. 1, 2012 through Sept. 30, 2013, RAC audits determined that 21% of 299 patient charts had received improper payments. The hospital appealed 58 of the 63 audit decisions and had won each of them as of mid-May 2014.