Observation status bill sails through Senate

The U.S. Senate this week unanimously approved a bill that would require hospitals across the country to tell Medicare patients when they receive observation care but aren't actually admitted to the facility--a difference that most patients miss until they receive their medical bills.

The Notice of Observation Treatment and Implication for Care Eligibility Act, or H.R. 876, requires hospitals to provide Medicare beneficiaries with written notification and a related verbal explanation at discharge or within 36 hours, whichever is sooner, if they receive more than 24 hours of outpatient observation services.

The legislation, approved by the House in March, still requires approval from President Barack Obama and would take effect one year after enactment.

The notification must explain in easy-to-understand language why the patient was admitted to observation and the potential financial implications. Seniors admitted for observation often must pick up the costs if they need additional care at a skilled nursing facility because Medicare will only cover those expenses if their inpatient stay lasts at least three consecutive days, and observation days don't count. The state of Virginia recently passed similar legislation to clarify the confusion often caused by observation rules. But Medicare has been reluctant to take similar steps, Kaiser Health News reported.

Although a Medicare official declined to comment on the legislation to KHN, he told the publication the agency does publish a brochure that describes observation care and advises patients to talk to their physician or healthcare staff if they have questions about their admission. The problem, however, is that patients often can't tell the difference.

Meanwhile, a KHN analysis of the most recent data from the Centers for Medicare & Medicaid Services reveals that hospital claims for observation care increased 91 percent since 2006. Long observation stays, which last 48 hours or more, rose 450 percent for the same period.

During a Senate hearing in July about the issue, an American Hospital Association representative blamed the uptick in observation status on a shift in practice patterns, changes to Medicare payment policies and the actions of recovery audit contractors, whom he said often second-guess and penalize physicians' decisions regarding inpatient stays months or even years after the fact.

To learn more:
- here's the bill
- read the KHN article

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