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Saturday, January 14, 2012

Hospitals, Doctors and Patients in the Labyrinth of Healthcare Finance: The Case of the Patient Who Was Neither Admitted Nor Discharged

Your husband awakens with chest pain and you head to the local Emergency Department.  The team there performs an immediate EKG and obtains some blood for testing.  So far, there’s no clear evidence for a heart attack, so an immediate angioplasty is not in the cards.  You’re both relieved. 

A little while later, a young physician in a starched, ankle-length white coat comes to meet you, and introduces himself as the on-call cardiologist.  We’ll call him Dr. Harvey.  He tells you that so far things look pretty good, but some additional tests would be prudent.  His advice is that you not go home.  “So you’re admitting my husband to the hospital?” you ask.  “Not exactly.”

Under federal rules that are being enforced with increasing vigor, hospitals and their staff physicians must consider not two, but three pathways for patients who arrive with problems like chest pain, loss of consciousness and others:  discharge from the ED, in-patient admission, or “Observation Status.”

According to guidelines issued by the Center for Medicare and Medicaid Services (CMS), Observation Status is appropriate for patients who do not meet certain defined criteria that are required for the more familiar disposition of admission to an in-patient service.   Such patients are generally expected to have lengths of stay less than one day, and to require less complex services.   Failure to exercise this option where appropriate now subjects hospitals to fines and penalties that can be substantial.

Although the guidelines describing “Observation Status” have existed for some time, candidly, hospitals and doctors have not until recently focused on identifying patients that should fit in this category.  The reasons?  First, hospitals receive lower reimbursements for Observation, even though the short-term resource investment is high (hourly reassessment and documentation by the nurse, and at least six physician visits in 24 hours.)  Second, Medicare patients are typically better off with an in-patient stay, because larger co-payments apply for “Observation” patients under Medicare rules that hospitals do not control.  So the hospital loses (which, for our nation’s many healthcare non-profits is a significant issue) and so do patients. 

As a hospital executive, I worry that not a single episode of “ER” or “Chicago Hope” ever touched on this matter, so our patients are likely to be in the dark until our Finance representatives try to explain the bill.  Of course, as citizens we all realize (or ought to) that healthcare “spend” in this country is way out of control and that efforts to reduce it it are a must.  With or without President Obama’s Affordable Care Act this is a national problem of unprecedented scale. More on this another time!

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