More hospitals place patients on observation

Efforts to tighten the criteria for hospital admissions or avoid costly readmissions may have an unintended consequence. As Medicare, Medicaid and private insurers closely scrutinize whether patients really need to be admitted to a hospital, more patients may find themselves in what critics call observation "limbo," the Columbus Dispatch reports.

That's because hospitals around the U.S. are keeping patients in observation based on insurers' recommendations. Patients in "observation" are stuck in holding patterns, because their doctors aren't sure whether to send them home or admit them. Under observation, a patient may stay in the ER on an inpatient floor or in a hospital unit for a few hours, or up to two days. They are not classified as "formally hospitalized," although the care they receive shouldn't vary much, hospital officials say.

Hospitals are keeping more patients on observation status as a defensive strategy. If an insurer says a patients shouldn't have been admitted, it might decide not to reimburse the hospital, which can have a ripple effect. Last year, insurers downcoded claims for short-stay inpatient hospital claims to outpatient observation care. The increase in insurer denials and loss in patient volume can lead to layoffs, as it did at Doylestown Hospital in Pennsylvania.

To learn more:
- read the Columbus Dispatch article