By S.Z. Berg NEW YORK ( MainStreet)--An increasing number of hospitalized patients age 65 and over are being classified as outpatients under observation rather than as admitted. most recently through the Affordable Care Act, which includes a provision that penalizes hospitals for high readmission rates. Hospitals are able to avoid readmitting patients and dodge the associated penalty by classifying patients as outpatients, either on their initial or second visit.
In addition to shifting the burden of costs to Medicare patients, this practice has consequences for public health data. "When people are classified on
observation status, they are not considered hospital inpatients and, therefore, if they need to return to the hospital, those admissions are not considered readmissions," Stein says. "Thus we cannot accurately determine which hospitals tend to have a lot of admissions and readmissions." Last year, the Center for Medicare Advocacy filed a class action lawsuit against the federal government to get hospital labeling policy changed. The filing for the Bagnall suit notes that in some cases patients are admitted into the hospital and their status is later changed to observation, an outpatient status. It goes on to note that under the secretary's Medicare manual, observation status is generally supposed to last no more than 24 hours, but that " both the incidence of placing beneficiaries on observation status and the average time period in which beneficiaries are on observation status have been increasing dramatically in recent years." "The lawsuit also challenges the lack of notice and appeal rights for those on observation status," says elder law attorney Christopher J. Berry, adjunct professor at the Thomas M. Cooley Law School. "On the legislative front, Rep. Joe Courtney (D-Conn.) and Sen. John Kerry (D-Mass.) have introduced legislation that would require time spent on observation status to count toward the three-day stay requirement," Berry says. "The Center is also working with Congress, led by Joe Courtney of Connecticut, to count all time in the hospital towards the three-day hospital requirement for Medicare nursing home coverage," Stein says. "The bill is bi-partisan in the House and Senate."
--Written by S.Z. Berg, author of College on the Cheap