Thursday, September 5, 2013

Another Update on Medicare Observation Status

We blogged previously about the developments concerning the Medicare Observation status and wanted to add to the resources for you. NPR did a very interesting story on this on September 4th.  The story features personal experiences and quotes from experts in the field. How often does the use of observation status happen?

According to the NPR story "in the past six years, the use of observation status has roughly doubled. And according to a government study, last year more than 600,000 Medicare patients were in the hospital for at least three days, but still couldn't qualify for coverage of nursing home care." The story quotes Joanna Hiatt Kim, vice president for payment policy for American Hospital Association (AHA) as explaining the Medicare Recovery Contractors go back through three years of hospital admissions and  when a "recovery auditor decides that an inpatient should have been an outpatient, the hospitals must return the funding that they had received years earlier, and they then often get little or no reimbursement, 'even though there's no dispute whatsoever that the care [the patient] received was reasonable and necessary.'"

According to the CMS page for the Recovery Audit program, the mission for this program  "is to identify and correct Medicare improper payments through the efficient detection and collection of overpayments made on claims of health care services provided to Medicare beneficiaries, and the
identification of underpayments to providers so that the CMS can implement actions that will prevent future improper payments in all 50 states."

The Center for Medicare Advocacy (previously mentioned in an earlier post) has filed suit as has AHA, according to the NPR story. Even though CMS has new rules taking effect October 1, the story goes on to report that there are those who think the new rules won't be a solution and Representative Joe Courtney has introduced legislation to resolve the issue of nursing home coverage if a patient is in the hospital for 3 days, regardless of whether admitted or under observation status.

Susan Jaffe at the Kaiser Health News released an FAQ: Hospital Observation Care Can Be Poorly Understood And Costly For Medicare Beneficiaries on September 4th, 2013. The seven FAQs run from an explanation of observation status, its impact on a beneficiary, why is its use increasing and what is being done to address the issue.  The FAQ notes that "[s]o far, Medicare has not made changes that would directly affect patients, for example, dropping the three inpatient day criteria for nursing home coverage, forcing hospitals to tell patients when they getting observation care or requiring hospitals to allow patients to bring drugs from home."

The Center For Medicare Advocacy's most recent alert of August 29, 2013 on the topic, Observation Status: New Final Rules from CMS Do Not Help Medicare Beneficiaries  offers some significant information with citations on the current status of this issue and notes that "CMS predicts that more patients will be inpatients under its revised regulations as a result of its new Part B inpatient billing policies."

Becky Morgan

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