CMS Hears Provider Concerns Over 'Observation' Status

Cheryl Clark , September 1, 2010

Nevertheless, more and more patients are being placed on "observation status" which some hospital officials said has been known to last as long as 13 days, and even include surgery. That may be, many speakers said, because hospital officials are afraid that if they admit these patients, Medicare Recovery Audit Contractor (RAC) committees will audit and reject claims because the patients' symptoms and conditions didn't meet strict admission criteria.

"Observation is a time to make a decision on whether a patient needs to be admitted, but that's not really how it's used in practice," said Steven Meyerson, an internist at Baptist Hospital in Miami. "In reality these are sick patients who need to be admitted."

But according to "arbitrary definitions, which are very vague and difficult to understand and apply, we have to decide who's an inpatient and who's an outpatient when sometimes the distinction can be two or three points in their sodium level or the amount of IV fluids they're receiving."

Toby Edelman, an attorney for the non-profit Center for Medicare Advocacy told the CMS panel that the number of patients being rejected from coverage after an "outpatient" stay has dramatically increased in the last 11 months.

While technically, a patient who is in observation status is considered an "outpatient," that distinction is lost on the patient who has been in the hospital 13 days, she said. "They went through the emergency department, they have a wrist band, they got tests and medication and food, and they were seen by physicians and nurses.

"Then, the beneficiaries and their families end up paying tens of thousands for nursing home care that Medicare would be paying for otherwise, except for this outpatient (observation) status," she said.

"Some people can't afford to pay privately and are going to inappropriate places, or they go home where they get no care at all, or they're going to assisted living or nursing home briefly and have to leave because they can't afford it."

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