WW: Why is the number of patients on observation status growing?
BF: Hospitals have significantly increased both the number of their observation stays, as well as their hourly lengths (>48 hours). Because the definition of “observation status” is vague, and even the one- to two-day window is inflating, hospitals and hospitalists often are navigating without a compass. Again, fear of fraud and penalty places hospitals and, indirectly, hospitalists—who often make judgments on admission grade—in a precarious position.
The responsibility of hospitals to notify beneficiaries of their status hinges on this murky determination milieu, which may change in real time during the stay, and makes for an unsatisfactory standard. Understandably, CMS is attempting to rectify this quandary, taking into account a hospital’s need to clarify its billing and designation practices, as well as the beneficiaries’ desire to obtain clear guidance on their responsibilities both during and after the stay. Hospitalists, of course, want direction on coding, along with an understanding of the impact their decisions will have on patients and subspecialty colleagues.
Let’s now bring in Dr. Conway, a pediatric hospitalist. I thank Dr. Flansbaum, who formulated the following questions.
BF/WW: Is it tenable to keep the current system in place? Would it help to require payors and providers to inform beneficiaries of inpatient versus observation status at time zero in a more rigorous, yet to-be-determined manner?
Dr. Conway: Current regulations only require CMS to inform beneficiaries when they are admitted as an inpatient and not when they are an outpatient receiving observation services. There are important implications for beneficiary coverage post-hospital stay, coverage of self-administered drugs, and beneficiary coinsurance from this distinction. As a hospitalist, I think it is best to inform the patient of their status, especially if it has the potential to impact beneficiary liability, including coverage of post-acute care. CMS prepared a pamphlet in 2009, “Are You a Hospital Inpatient or Outpatient? If You Have Medicare, Ask,” to educate beneficiaries on this issue. (Download a PDF of the pamphlet at www.medicare.gov/Publications/Pubs/pdf/11435.pdf.)
BF/WW: Due to the nature of how hospital care is changing, are admission decisions potentially becoming too conflicted an endeavor for inpatient caregivers?
PC: We want admission decisions to be based on clinical considerations. The decision to admit a patient should be based on the clinical judgment of the primary-care, emergency medicine, and/or HM clinician.
BF/WW: Before the U.S. healthcare system matures to a more full-out, integrated model with internalized risk, can you envision any near-term code changes that might simplify the difficulties all parties are facing, in a budget-neutral fashion?
PC: CMS is currently investigating options to clarify when it is appropriate to admit the patient as an inpatient versus keeping the patient as an outpatient receiving observation services. We understand that this issue is of concern to hospitals, hospitalists, and patients, and we are considering carefully how to simplify the rules in a way that best meets the needs of patients and providers without increasing costs to the system.
With growing attention to observation status coming from patients and provider groups (the AMA is requesting that CMS revise its coverage rules), we will no doubt be hearing more about this going forward.
Dr. Whitcomb is medical director of healthcare quality at Baystate Medical Center in Springfield, Mass. He is a co-founder and past president of SHM. Email him at [email protected].