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CMS Hears Provider Concerns Over 'Observation' Status

Cheryl Clark, September 1, 2010

Hospital and nursing home providers are pleading with the Centers for Medicare & Medicaid Services to dump its 48-hour limit "observation" status—a Medicare billing category for patients not sick enough to qualify for acute admission but too sick to be sent home.

The problem is, after these beneficiaries are discharged, or if they are admitted to the hospital but for less than three consecutive days (the three-day rule), Medicare will not pay for subsequent care in a skilled nursing facility or for self-administered prescription drugs – some of which are extremely expensive.

That often surprises, frightens, and disappoints patients and their families, many of whom can't afford to pay for care they think should be covered. And the policy is creating intolerable problems for hospitals which see the policy as interfering with the trust patients place for their care.

That's what dozens of providers lined up to tell officials for the Centers for Medicare & Medicaid Services who held a special "listening session" on the controversy in Baltimore last week.

"Even though the patients have been educated that they are basically in on an outpatient basis, and they have outpatient liability with self-administered drugs, they don't think it's right," said one provider from Asante Health System in Medford, OR.

"They don't understand it, and they think the hospital is doing something wrong," she said. "It becomes a huge financial liability to the patient, and it also becomes a problem with the patient's relationship with the hospital."

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