"Observation Status" for Hospitalized Patients: Implications of a Proposed Medicare Rules Change

Division of Hospital Medicine, Department of Medicine, University of Wisconsin School of Medicine and Public Health, Madison.
JAMA Internal Medicine (Impact Factor: 13.12). 08/2013; 173(21). DOI: 10.1001/jamainternmed.2013.9382
Source: PubMed
11 Reads
  • [Show abstract] [Hide abstract]
    ABSTRACT: In response to growing concern over frequency and duration of observation encounters, the Centers for Medicare and Medicaid Services enacted a rules change on October 1, 2013, classifying most hospital encounters of <2 midnights as observation, and those ≥2 midnights as inpatient. However, limited data exist to predict the impact of the new rule. To answer the following: (1) Will the rule reduce observation encounter frequency? (2) Are short-stay (<2 midnights) inpatient encounters often misclassified observation encounters? (3) Do 2 midnights separate distinct clinical populations, making this rule logical? (4) Do nonclinical factors such as time of day of admission impact classification under the rule? Retrospective descriptive study of all observation and inpatient encounters initiated between January 1, 2012 and February 28, 2013 at a Midwestern academic medical center. Demographics, insurance type, and characteristics of hospitalization were abstracted for each encounter. Of 36,193 encounters, 4,769 (13.2%) were observation. Applying the new rules predicted a net loss of 14.9% inpatient stays; for Medicare only, a loss of 7.4%. Less than 2-midnight inpatient and observation stays were different, sharing only 1 of 5 top International Classification of Diseases, 9th Revision (ICD-9) codes, but for encounters classified as observation, 4 of 5 top ICD-9 codes were the same across the length of stay. Observation encounters starting before 8:00 am less commonly spanned 2 midnights (13.6%) than later encounters (31.2%). The 2-midnight rule adds new challenges to observation and inpatient policy. These findings suggest a need for rules modification. Journal of Hospital Medicine 2014;. © 2014 Society of Hospital Medicine.
    Journal of Hospital Medicine 04/2014; 9(4). DOI:10.1002/jhm.2163 · 2.30 Impact Factor
  • [Show abstract] [Hide abstract]
    ABSTRACT: Purpose: Recent policy changes in the USA have led to an increasing number of patients being placed into observation units rather than admitted directly to the hospital. Studies of administrative data that use inpatient diagnosis codes to identify cohorts, outcomes, or covariates may be affected by this change in practice. To understand the potential impact of observation stays on research using administrative healthcare data, we examine the trends of observation stays, short (≤2 days) inpatient admissions, and all inpatient admissions. Methods: We examined a large administrative claims database of commercially insured individuals in the USA between 2002 and 2011. Observation stays were defined on the basis of the procedure codes reimbursable by Medicare or commercial insurers. We report monthly rates of observation stays and short inpatient admissions overall and by patient demographics. Results: We identified 5 355 752 observation stays from 2002 to 2011. Over the course of study, the rate of observation stays increased, whereas the rate of short inpatient stays declined. The most common reason for observation stays was nonspecific chest pain, also the third most common reason for short inpatient stays. The increasing trend of observation stays related to circulatory diseases mirrors the decreasing trend of short inpatient stays. Conclusions: The use of observation stays has increased in patients with commercial insurance. Failure to account for observation stays may lead to an under-ascertainment of hospitalizations in contemporary administrative healthcare data from the USA.
    Pharmacoepidemiology and Drug Safety 09/2014; 23(9). DOI:10.1002/pds.3647 · 2.94 Impact Factor
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Background and objective: Treating envenomation with antivenom is costly. Many patients being treated with antivenom are in observation status, a billing designation for patients considered to need care that is less resource-intensive, and less expensive, than inpatient care. Observation status is also associated with lower hospital reimbursements and higher patient cost-sharing. The goal of this study was to examine resource utilization for treatment of envenomation under observation and inpatient status, and to compare patients in observation status receiving antivenom with all other patients in observation status. Methods: This was a retrospective study of patients with a primary diagnosis of toxic effect of venom seen during 2009 at 33 freestanding children's hospitals in the Pediatric Health Information System. Data on age, length of stay, adjusted costs (ratio cost to charges), ICU flags, and antivenom utilization were collected. Comparisons were conducted according to admission status (emergency department only, observation status, and inpatient status), and between patients in observation status receiving antivenom and patients in observation status with other diagnoses. Results: A total of 2755 patients had a primary diagnosis of toxic effect of venom. Of the 335 hospitalized, either under observation (n = 124) or inpatient (n = 211) status, 107 (31.9%) received antivenom. Of those hospitalized patients receiving antivenom, 24 (22.4%) were designated as observation status. Costs were substantially higher for patients who received antivenom and were driven by pharmacy costs (mean cost: $17 665 for observation status, $20 503 for inpatient status). Mean costs for the 47 162 patients in observation status with other diagnoses were $3001 compared with $17 665 for observation-status patients who received antivenom. Conclusions: Treatment of envenomation with antivenom represents a high-cost outlier within observation-status hospitalizations. Observation status can have financial consequences for hospitals and patients.
    Hospital Pediatrics 09/2014; 4(5):276-282. DOI:10.1542/hpeds.2014-0010
Show more