Home Letters Setting the record straight on observation care

Setting the record straight on observation care

October 2013

Published in the October 2013 issue of Today’s Hospitalist

Correction: An online-only portion of an article from the August 2013 issue of Today’s Hospitalist contained incorrect information. (The online-only section accompanied the story, “What?! This patient should be in observation!?“)

That misinformation appeared in comments reported from an administrator with the Centers for Medicare and Medicaid Services (CMS) at this year’s Society of Hospital Medicine meeting. Our story quoted the administrator discussing a proposed new rule on observation services, which he said would allow patients in observation status for more than two midnights to count all of that time toward the three days needed to qualify for paid placement in a skilled nursing facility.

A letter the CMS sent to Today’s Hospitalist said that information was incorrect. The letter reads in part:

“The final rule provides greater clarity regarding when inpatient hospital admissions are generally appropriate for Medicare Part A payment.

Under this final rule “in addition to services designated as inpatient-only “surgical procedures, diagnostic tests and other treatments are generally appropriate for inpatient hospital admission and payment under Medicare Part A when the physician (1) expects the beneficiary to require a stay that crosses at least 2 midnights and (2) admits the beneficiary to the hospital based upon that expectation. The final rule emphasizes the need for a formal order of inpatient admission to begin inpatient status, but permits the physician to consider all time a patient has already spent in the hospital as an outpatient receiving observation services or in the emergency department, operating room or other treatment area in guiding their two-midnight expectation.

While outpatient time may be accounted for in applying the two-midnight benchmark, it may not be retroactively included as inpatient care for skilled nursing care eligibility or other benefit purposes. Inpatient status begins with the admission based on a physician order.”