Ob­ser­va­tion care stirs ire

JAMA study says CMS pol­icy hurts hos­pi­tals’ bot­tom lines

Modern Healthcare - - THE WEEK IN HEALTHCARE - Joe Carl­son

Send­ing se­ri­ously ill emer­gency room pa­tients to out­pa­tient ob­ser­va­tion— al­ready un­der fire for the fi­nan­cial pain it in­flicts on Medi­care pa­tients—ob­vi­ously hurts hos­pi­tals’ bot­tom lines, since they don’t col­lect the higher in­pa­tient fees.

A new study from the Univer­sity of Wis­con­sin and pub­lished last week in the Jour­nal of the Amer­i­can Med­i­cal As­so­ci­a­tion doc­u­ments many of the pa­tients un­der ob­ser­va­tion should have been ad­mit­ted to the hos­pi­tal be­cause their stays ex­ceeded the CMS cri­te­ria for short­stay ob­ser­va­tion. “Lengths of stay were typ­i­cally more than 24 hours and of­ten more than 48 hours,” the study au­thors found. “The hos­pi­tal lost money, pri­mar­ily be­cause re­im­burse­ment for gen­eral medicine pa­tients was in­ad­e­quate to cover the costs.”

Ob­ser­va­tion is a mid­dle ground for hos­pi­tal pa­tients who are too sick to send home, but not sick enough to ad­mit as full-fledged in­pa­tients. The CMS orig­i­nally in­tended the use of out­pa­tient ob­ser­va­tion care to be rel­a­tively rare and short, but in re­cent years its use has ac­cel­er­ated—so much that some hos­pi­tals are es­tab­lish­ing ded­i­cated ob­ser­va­tion units for those pa­tients.

On aver­age, the UW Hos­pi­tal and Clin­ics posted a net fi­nan­cial loss of $331 for each ob­ser­va­tion pa­tient, be­cause their care is paid through Medi­care’s physi­cian ben­e­fit, known as Part B, ac­cord­ing to the study. In con­trast, pa­tients who were ad­mit­ted and re­im­bursed through the Part A hos­pi­tal­iza­tion pro­gram re­sulted in a net

profit of $2,163.

The in­creas­ing use of ob­ser­va­tion stays for Medi­care pa­tients has come un­der fire from pa­tient ad­vo­cacy groups be­cause Part B does not cover ex­pen­sive re­ha­bil­i­ta­tion that typ­i­cally fol­lows a hos­pi­tal visit, while Part A does. That dif­fer­ence leaves pa­tients re­spon­si­ble for thou­sands of dollars of re­hab care out of pocket, plus pre­scrip­tion costs and Part B’s 20% co­pay­ment.

And since ob­ser­va­tion care is of­ten de­liv­ered in a nor­mal hos­pi­tal bed, many pa­tients are not even aware of their sta­tus un­til well into their hos­pi­tal stay. Some pa­tients learn of it at dis­charge.

A group of Medi­care pa­tients is su­ing the CMS in U.S. Dis­trict Court in Con­necti­cut to over­turn Medi­care’s ob­ser­va­tion pol­icy and com­pen­sate ben­e­fi­cia­ries who have paid costs to which lawyers say they shouldn’t have been sub­jected. The judge has not yet ruled on the CMS’ mo­tion to dis­miss the case and plain­tiffs’ re­quest to cer­tify it as a clas­s­ac­tion law­suit.

“No one is ar­gu­ing that th­ese pa­tients don’t be­long in the hos­pi­tal. They are too sick to go home. But la­bel­ing them as out­pa­tients is com­pletely ar­bi­trary and is con­trary to the Medi­care law that Congress set up,” said Ali Bers, one of the at­tor­neys for the plain­tiffs at the Cen­ter for Medi­care Ad­vo­cacy.

Bers said the JAMA study sup­ports the main con­tentions of the law­suit, par­tic­u­larly the find­ing that the CMS’ own poli­cies on who should be seen in ob­ser­va­tion is con­tra­dicted by the elec­tronic tool that the CMS au­di­tors use to ex­am­ine that same ques­tion—a pro­gram called the In­terQual cri­te­ria.

For ex­am­ple, the CMS pol­icy on ob­ser­va­tion care says it should typ­i­cally last no more than 24 hours, and only rarely should it ex­tend be­yond 48. Yet the UW study found that less than half — 44% — of the “obs” pa­tients left in less than a day, while 17% stayed more than two days. All of the UW pa­tients were clas­si­fied us­ing In­terQual, said Dr. Ann Sheehy, lead author of the study.

“We found that to be very ironic,” said Sheehy, a hos­pi­tal­ist with Univer­sity of Wis­con­sin Hos­pi­tal and Clin­ics, whose pa­tient pop­u­la­tion in 2010 and 2011 pro­vided the pop­u­la­tion for the anal­y­sis. “Th­ese two poli­cies just com­pletely con­tra­dict each other.”

CMS of­fi­cials de­clined to comment on the study.

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