Study: Medicare rules make observation status costly

Hospitals are likely losing money and incurring ill will from patients when they assign them to observation status under Medicare rules, especially if the patient has a general medicine diagnosis, and is female, according to an 18-month study of the practice at a Wisconsin academic medical center. The research was published last week in JAMA Internal Medicine.

Observation status for hospitalized patients in an academic medical center differed markedly from the Centers for Medicare & Medicaid Services' definition, the study found. The hospital lost money, primarily because reimbursement for general medicine patients was inadequate to cover the costs. Fear of having hospital claims questioned by Medicare recovery audit contractors prompts some admitting physicians to place patients in observation status rather than admit them as inpatients. Between 2006 and 2008, use of observation increased 26% for Medicare beneficiaries, and has spiked even higher in recent years.

Read the entire story here.

Source: HealthLeaders, JAMA Internal Medicine