Health & Medicine - Posted by David Orenstein-Brown on Tuesday, June 5, 2012 11:14 - 10 Comments 
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(No Ratings Yet) Loading ...Outpatient status spikes seniors’ hospital costs
While most patients see no difference between being admitted (as an inpatient) to the hospital and being held for observation (outpatient), there are significant differences in hospital costs, Medicare rules, and out-of-pocket charges. (Credit: "elderly patient" via Shutterstock)
BROWN (US) — Instead of being admitted to the hospital, more elderly patients in the emergency room are being “held for observation,” resulting in reduced costs to Medicare, but increased out-of-pocket costs for patients.
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The text of this article by Futurity is licensed under a Creative Commons Attribution-No Derivatives License.
“The dual trends of increasing hospital observation services and declining inpatient admissions suggest that hospitals and physicians may be substituting observation services for inpatient admissions—perhaps to avoid unfavorable Medicare audits targeting hospital admissions,” a new study published in the June edition of the journal Health Affairs reports.
Although the rate of observation stays varies widely by state and even by hospital, the nationwide ratio of Medicare patients who are held for observation to those who are admitted for inpatient stays increased 34 percent between 2007 and 2009.
Monthly incidence of “observation stays” per 1,000 Medicare beneficiaries varies across states – lower in the West, higher in the South and Midwest. (Credit: Feng Lab/Brown University)
Being held for observation, especially for days, can appear to patients to be exactly the same experience as being admitted—until they get the bill. That’s because people held for observation are classified as outpatients.
Under Medicare rules, outpatients may face higher co-pays for their in-hospital services and won’t be covered for subsequent care in skilled nursing facilities.
Zhanlian Feng, assistant professor of health services, policy, and practice at Brown University and first author on the paper, first thought to conduct the study when he read media reports of patients who were surprised by their higher costs after spending nights in the hospital.
“They never thought they were being treated as outpatients,” he says.
More observation for longer
The practice has alarmed patient advocacy groups, one of which launched a class-action suit against the government last year. The groups had claimed the practice was increasing. Feng, a gerontology researcher in Brown’s Program in Public Health, figured he could contribute to the debate by determining whether that was true.
“I had not seen the numbers,” he says. “That really prompted me to do some real research.”
The results show that to a specific and significant degree, the increase is not just a perception. After reviewing Medicare records of 29 million fee-for-service Medicare beneficiaries 65 and older in 2007, 2008, and 2009, Feng and his two co-authors report several trends:
- Observation stays rose to 1,019,881 (involving 2.9 per 1,000 beneficiaries) in 2009 from 814,692 (2.3 per 1,000 beneficiaries) in 2007
- Inpatient admissions fell to 22.5 per 1,000 beneficiaries in 2009 from 23.9 per 1,000 in 2007
- Observation stays got an average of 7 percent longer over the study period
- In 2009, 44,843 patients were held for observation longer than 72 hours, compared to 23,841 in 2007
- By state, observation stay rates in 2009 varied from a low of 0.8 per 1,000 beneficiaries in New York to 5.9 per 1,000 in West Virginia
Federal pressure
In its efforts to contain Medicare costs by preventing unnecessary hospitalization, the government has pulled several new levers in the last decade, the study says. In 2006 officials signaled an increase in audits of inpatient admissions, and in 2004 they allowed hospitals to change a patient’s status retroactively from inpatient to outpatient with observation before discharge.
Most recently, the Affordable Care Act of 2010 includes a provision penalizing hospitals if they have high readmission rates. Classifying patients as outpatients, either on their first or second visit, helps hospitals steer clear of counting them as readmitted.
Feng says he hopes the research will help policymakers better understand the facts surrounding the controversial issue. One area for further investigation, he says, could be to determine the clinical circumstances that led tens of thousands of patients to be held for observation for longer than three days. Another could be to determine how many patients held for observation actually faced any financial consequences for holding the outpatient versus inpatient designation.
Funding came from the Retirement Research Foundation and the National Institute on Aging.
More news from Brown University: http://news.brown.edu
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10 Comments
JJC
Carol Eblen
It would be interesting to know whether or not this “observation gaming” is prmarily aimed at the very old who also are pressured and influenced not to have CPR (because, they are told that it is bad for them) in order that DNR Code Status can be placed in their hospital charts. It would be intersting to know if the “observation” patients routinely have DNRs in their hospital charts. Maybe this will come out in the lawsuit filed in the federal court.
Of course the denial of skilled nursing home care promised by Medicare was undercut many years ago when the Advantage companies lobbied to have a Medicare Rule that would deny coverage to Medicare patients who did not spend three overnights in the hospital and whose physicians did not indicate that these patients needed skilled nursing care under Medicare guidelines.
The very old who have no defenses do not realize that “war” has been declared against them and that they are being sent to eternity earlier rather than later to achieve “fiscal” goals.
The hospitals are using DNR status to keep elderly Medicare patients out of ICUs and CCUs because they are penalized when elderly Medicare patients die in their ICUs. .
Little did we realize when The Congress and Medicare passed The Patient Self Determination Act in 1991 that prohibited discrimination against those elderly who didn’t prepare advanced directives to shorten their lives that NOW 21 years later, their lives would be shortened without their consent by this shameful gaming of the system and the violatation of the PSDA of 1991 and other state and federal laws.
Carol Eblen
IIn retrospect, I believe that my Mother was in an observation status when she suffered a stroke at 104-1/2 and we sent her into Emergency. She had lived with me and my husband since she was 93 and played fairly good bridge until she was 101. Only in the last l2 to 15 months of her life did she START to lose more of her cognitive ability —She drove her automobile until she was 93. She survived breast cancer and two broken hips to great old age.—–she outlived her Father who died of pneumonia at home with her at 101. Good genes!
When we arrived at the Emergency Room, the ER physician told us she had a small stroke and then a physician from the Hospital came into the Emergency Room and asked me if my Mother would want a feeding tube, etc.. and did I have her Power of Attorney. I said that I did and that I’m sure my Mom would not want to live to be dependent on a feeding tube. She then summoned a couple of witnesses from the Emergency Room Staff in the Hospital and I signed the request for NO CPR and no Feeding Tube as required by State Law and only then did the physician indicate she would keep my Mom overnight —-warning me, of course, that she could die in the night —-because, of course, they wouldn’t do anything to prevent her from dying after we signed the No CPR thast resulted in the DNR in her chart.
They kept her overnight and did nothing for her and No Nursing Home in the Area would accept her for over three days because they knew (and told me) that she would have no Medicare Skilled Nursing Home Coverage under her insurance and they could not meet her needs in a Residential Nursing Home Unit, and, therefore, would not accept her if we paid them privately. Finally, one of the Nusing Home Administrators said that they would accept her if brought them a check for $4400.00 and that they would then try to work with Advantra people to get some reimbursement for the assessment of the damage done by the stroke, etc.. They couldn’t accommodate her in their usual rooms outside of their skilled Medicare unit and couldn’t put her into this unit — but did agree to give us a private room with an actual hospital bed (in bad repair) where we, her family, could stay with her 24 hours as day iif this was our desire, and have access to her 24 house a day. They said that their trained PTs and RNs would assess the damage, etc.. and do the best they could for her. Apparently the hospital had broken my Mom’s humerous and the Nursing Home reported this to the State after she complained of pain in her arm upon admission to the Nursing Home.
The Nursing Home Administrator did get the Insurance Company to pay some of the Bill for the assessment of the damage from the stroke and this was refunded to me after several weeks had passed. WE brought my Mom home on Hospice and she died in less than a month while in a deep sleep and out of pain. .
In the meantime I complained to the Advantra people about fraud in selling the policy to my Mom in our residence without pointing out clearly in the policy that that the 30 days of Skilled Nursing Care wouldn’t be available under certain conditions. I complained bitterly to the hospital and to my elected officials, I raised as much hell as possible. I decided to bring my Mom home on Hospice because while the staff was very good to her, they didn’t have the staff to t give her the care she needed on the unit she was in and it was difficult for us, as a family, to be covering her throughout the day and into the night to see that she was nourished and kept clean and out of pain.
WE, as a close family, and our children and grandchildren helped to see my Mom to the grave but I pity the very old who have nobody to look out for them or fight the system for them. The very old are being written off by the system and the system, of course, often means that the elderly and very ill patient IS “better off dead” than suffering the inadequate care received in our understaffed for-profit Nursing Homes. Late at night when I was with my Mother, a new patient was brought in from the hospital —-the radio was turned up very high —–and I wondered why! The next day this patient was DEAD and the radio was silent. I was told by an RN that old patients are shipped out of the hospitals to die in the Nursing Homes because this is more cost effective—-which, of course, is true!.
The next year, an unauthorized DNR was placed in the hospital chart of my elderly but very competent husband —-apparently because the hospital and the physician knew that they wouldn’t be reimbursed by CMS for any ICU time in the event he chose to have a life-saving and life-extending procedure.
Something terribly wrong and HHS must know this but they have to be sued to take any action. Too bad! So sad! My Country “Tis of Thee, Sweet Land of Liberty, Of Thee I love.”
.
one of my relative had face this situation, when he was admitted in a hospital and when we asked the doctors about the treatment they answered that he is in observation, that hospital was very costly so after 1 month treatment it became unaffordable for us to give the hospital charges but we were waiting for the final treatment which was on hold, so obviously this is a big problem for the patients when the system forgets about his responsibilities and focus on only money…which is really ridiculous.
It is the problem that most of the patients are experiencing. Patients are being held for longer time than what is needed for the reason that if they stay more days, it will mean additional income for them. I remember a good doctor who has operated on my cousin as she gives birth to her 2nd baby, after staying 2 days in hospital, the doctor courteously has told her that if she wants to go home already then he is allowing her to do so, but if she still wishes to stay, then she can stay. My point is she is given an option.
Carol Eblen
Under Medicare and the Advantage Policies, the time in the hospital for procedures is governed by strict rules that are enforced by Quality Improvement Organizations. The physicians have no control over the length of stay, etc…of their patients. It is not an arbitrary process and I guess this is the fairest way to distribute medical care and conserve resources. We cannot use the hospitals as “nursing homes” or “hotels.”
In the old days, physicians could keep patients for extra days and didn’t have to justify their orders. If you want to spend extra time in the hospital these days, and it is not approved, you will pay for it.
Observation, which keeps patients out of expensive inpatient hospital care, appears to be aimed at the elderly —- and the elderly who have DNRs in their medical charts —-and is, therefore, discrimination!
Joe
It is a dishonest way for hospitals to make more money. The insurance companies will not care so there is no support for the patient in this dishonest practice.
Tanya
Hospitals make LESS money by having patients in Observation status. The RAC auditors that CMS utilzes to keep hospitals “on the up and up” have denied payment to hospitals for improperly admitting patients to the hospital when they could be just “observed” on an outpatient basis. (Don’t forget the RAC auditors earn 12% of every claim they deny, and no one is auditing the auditors.)
Patients get the same care in an Observation bed that they do in an inpatient bed, it’s just the reimbursement to the hospital is less. And yes, the elderly more often fall into this scenario because, well, they are the ones most often in a hospital bed.
We all want the very best health care, and we want someone else to pay for it. It’s so easy to blame the president, blame the “greedy” hospitals and doctors…what are YOUR ideas for improvement of our healthcare system?
Joe
If hospitals are making less money then everyone is getting screwed by this process except for the insurance companies. What good is insurance if after all of my insurance payments, I still can’t afford medical care? My opinion is still the same, it is a dishonest, corrupt practice by doctors and hospitals. Once our institutions and leading citizens have decided that dishonesty is the way to do business, how can we expect anything different from regular citizens?
JJC
Tanya, My ideas for improvement of the U.S. health care system? In a word, reimagine the meaning of health care delivery. Is it to make a profit and offer the least amount of services to achieve that? Or is it to provide humane care–at all staffing levels and health care delivery models. I know the inside story of health care delivery in this country. It’s not pretty. Too many patients languish for lack of proper care (with barely qualified aides doing yeoman’s work for a pittance), while doctors bill exorbitant fees for a one-second walk-in to a patient’s bed. My ideas? How about compassion first? It’s not an unprofitable concept. Only a dismissed one…
Gives new meaning to red and blue states. Shameful gaming of the system, and a frightening trend, since outpatient charges billed to the patient do not suffer the same length-of-stay reimbursement constraints that the government imposes. So, hospitals have figured out a new way to make more money.