Trend: More hospital patients classified as 'observation'

As Medicare and private health plans get even tougher on which patients can be admitted to hospitals, a growing number of them are being classified as "observation" patients. Typical patients for observational care include those with chest pain, asthma attacks, kidney stones, dehydration, dizziness and mild trauma.

These patients are a step up in case from emergency department diagnosis and treatment, but not classed as having been formally hospitalized. This type of care is typically provided to patients who don't seem well enough to discharge, but clearly aren't well enough to be admitted.

The phenomenon is particularly pronounced among Medicare patients, because hospitals are concerned that if they bill for an inpatient stay not meeting the program's standards, they could be charged with fraud. (Meanwhile, the Recovery Audit Program [1] should soon be barreling down hospitals to make sure cases don't slip by.) In Illinois last year, for example, 320,000 people received observational care, up from 32,000 in 1998.

The observation period is typically about 24 hours. However, if it goes longer, some Medicare patients face serious financial pain; Medicare may refuse to pay for treatments since they're not classified as inpatient care. Worse, hospitals aren't required to tell patients that they're in observational care, which means that they don't know that their medical bills are growing.

To learn more about this trend:
- read this Kaiser Daily Health Policy Report item [2]

Related Articles:
RAC program moves ahead after delay [1]
Lawmakers question California Medicare audits [3]
Study: 40 percent of hospitals expect to owe money to Medicare under RAC [4]