AARP has released a report titled “Rapid Growth in Medicare Hospital Observation Services: What's Going On?” The report finds dramatic increase in the use of Medicare observation status for Medicare beneficiaries between 2001 and 2009. The findings raise concerns about the clinical benefit of long-term observation and the high out-of-pocket costs to patients. AARP endorses the legislation, Improving Access to Medicare Coverage Act of 2013 (H.R. 1179/S. 569), introduced in the House and the Senate by Reps. Joe Courtney (D-CT) and Tom Latham (R-IA), and Sens. Sherrod Brown (D-OH) and Susan Collins (R-ME), that would count the time spent in observation…
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Former Medicare chief Dr. Donald Berwick said Obama administration officials should abandon a rule that is leaving many older Americans without coverage for expensive rehabilitation care after they leave the hospital. The Medicare rule requires recipients to be admitted as a hospital inpatient for at least three days before the federal health insurance program for seniors and the disabled will pay for follow-up nursing home care. The problem is that an increasing number of patients are spending days in the hospital under “observation’’ status, often without realizing they were never officially admitted. “The patient ends up holding the bag and…
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Many Medicare patients who require skilled nursing care after a hospital stay are often surprised when they receive a very expensive bill for the skilled nursing care. Medicare beneficiaries can be held as “observation” rather than as an admitted patient even though it may appear to the patient to be a regular stay in the hospital. Medicare will not pay for the subsequent skilled nursing care if the patient’s hospital stay is classified as observation. Learn more. A new investigation shows that whether a Medicare patient is admitted to the hospital or kept for observation depends on what hospital they…
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As part of the annual update to inpatient hospital reimbursement under the Medicare program, CMS is again considering observation status. This time, CMS is proposing "a time-based presumption of medical necessity for hospital inpatient services based on the beneficiary's length of stay" (78 Fed. Reg. 27486, 47644 (May 10, 2013)). Under the proposed rules, Medicare would presume that an individual is an inpatient if the physician documents that the patient requires more than two midnights in the hospital following an inpatient admission. The "starting point for this time-based instruction would be when the beneficiary is moved from any outpatient area…
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NAELA and seven other national organizations wrote this fact sheet on the harms of observation status. There has been a 34 percent increase in the ratio of observation stays to inpatient admission between 2007 and 2009. There has also been an 88 percent increase in observation stays exceeding 72 hours.
Frederick, MD 
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