Medicare Proposes Limiting Hospital Observation Care

If the clock strikes midnight twice during a Medicare patient’s stay in a hospital, they must be considered admitted and not present for “observation care,” according to proposed rules issued by the Centers for Medicare and Medicaid Services (CMS).

“Under the proposed changes, with some exceptions, if a physician expects a senior will stay in the hospital for less than two days (or through two midnights), the patient would be considered an outpatient receiving observation care,” according to a report on the proposed changes by Kaiser Health News and The Washington Post. “If the physician thinks the patient will stay longer, the patient would be admitted. Setting deadlines for observation stays would also limit the growing length of time of observation visits, another trend officials said was troubling.”

The time seniors spend in observation care does not count toward the three-day minimum hospital inpatient stay that Medicare requires before it will reimburse for subsequent admission into a nursing home. The proposed rule comes on the heels of a lawsuit filed by Medicare patient advocates on behalf of patients who were charged exorbitant out-of-pocket fees by nursing homes because they did not qualify for reimbursement despite spending three days in a hospital.

However the organization that filed the suit said CMS’s proposal is the wrong approach, and that instead the three-day hospital admission rule is what should be changed. Healthcare provider organizations such as the American Hospital Association agree, calling the three-day rule “somewhat arbitrary.”