Paying close attention to the fundamentals of admitting and the three-midnight rule has a direct impact on your patients’ health-care coverage and access to post-acute services, as well as on patient-satisfaction ratings for your facility.
A Center for Medicare Advocacy
class-action lawsuit against the U.S. Department of Health and Human Services (HHS) challenges the use of observation status and underscores the importance of making a timely, correct assessment of a patient’s status — observation or inpatient.
The CMA filed suit on behalf of seven patients from Connecticut, Massachusetts and Texas who were admitted to observation status, stayed in the hospital for three or more days and then went to skilled-nursing facilities without the three-midnight inpatient qualifying stay. The patients were therefore billed for services that would otherwise have been paid under the Medicare Part A.
Implications for Hospitals and Post-Acute Providers
Until or unless Medicare policy is changed in the courts or Congress, this case,
Bagnall v. Sebelius, is a stark reminder that timing is money. For patients and for providers. Patients hit with unexpected bills (that they might not be able to pay) will not score their experience of care well, opening the door for reimbursement penalties. So, it’s important that:
- Hospital staff, not consultants, assign status. Hospitals that outsource the review of patient data and the classification of inpatient or observation status should stop that practice. After-the-fact decisions by outsiders aren’t always correct. Hospital physicians, case managers and utilization-review nurses should be the ones making these admission decisions, because they are the ones assessing the patient’s needs.
- Case managers monitor observation statuses. Case managers, using the hospital's preferred criteria set, should assess patients admitted to observation status a minimum of every eight hours at the beginning and end of each shift. This should happen before 11 p.m. since the inpatient admission three-day clock starts at midnight.
- Post-acute providers get necessary information up front. When reviewing referrals, be sure to get the patient’s admission classification status and current length of stay. If the patient was classified under observation status and didn’t meet the three-midnight minimum, make sure the hospital has discussed the financial implications with the patient and family before accepting the placement.
CMA: It’s an Access-to-Coverage Issue
Characterizing observation status as “harmful,” the CMA lawsuit stems from patient complaints that entire hospital stays, some as long as 14 days, were classified by the hospital as observation. In some instances, the plaintiffs’ physicians ordered their admission, but the hospital retroactively reversed the decision. As a consequence, patients were charged for various acute-care services they received, including prescription medications. They were also charged for their entire subsequent SNF stay, having never satisfied the statutory three-day hospital stay requirement.
“It causes severe financial problems for beneficiaries and their families, and deprives them of nursing home coverage altogether," said Judith Stein, founder and executive director of the CMA, in a news release.
The CMA argues that observation days should count toward the three-day qualifier.
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