Senate committee hears stories on observation status, two-midnight rule

The Senate Special Committee on Aging Wednesday heard testimony from healthcare leaders on the effects of Medicare observation status on seniors.

"The real problem comes when a senior citizen learns that they are the one that, after their observation status in the hospital, they need nursing home coverage, and despite staying in the hospital for the required three days or more, Medicare won't cover that nursing home stay because the patient was never admitted during that time, but was under observation," said committee chairman Sen. Bill Nelson (D-Fla.).

The government must focus on "making sure that seniors get the care they need and can afford that care," said Sen. Elizabeth Warren (D-Mass.) (pictured). "If we're letting some of our seniors down, then we need to fix it."

Ranking member Sen. Susan Collins (R-Maine) noted the increasing use and duration of observation status in hospitals, citing the 69 percent increase in seniors entering hospitals for observation over the last five years, as well as the increase in Medicare patients with observation stays lasting longer than 48 hours, which climbed from 3 percent in 2006 to 8 percent in 2011.

Medicare beneficiary Sylvia C. Engler of Framingham, Massachusetts, testified that after her husband Harold contracted a viral infection during a 10-day hospital stay and required rehab services, they learned he was under observation status, and as such they were charged nearly $8,000.

Marna Borgstrom, president and CEO of Yale-New Haven Health System in Connecticut, testified on the effect of the Center for Medicare & Medicaid Services' controversial two-midnight rule, which is already complicating emergency room doctors' jobs. The rule "disregards physicians' clinical judgment and exacerbates the existing challenges that hospitals face when having to explain to beneficiaries a policy that causes beneficiary confusion." She cited the case of a 67-year-old man who displayed symptoms of acute coronary syndrome, but did not meet inpatient criteria and left the emergency department against physician recommendations due to financial concerns over the prospect of observation status.

Moreover, the policy disincentivizes efficient, effective care by imposing a "rigid and arbitrary time-based approach" on physicians, Borgstrom claimed. Additionally, the payment shifts to the outpatient settings disproportionately affect teaching and safety net hospitals, she said.

The nature of observation care has "shifted from CMS' original intent," testified Ann M. Sheehy, M.D., of the Public Policy Committee and the Society of Hospital Medicine as well as the division chief of hospital medicine at the University of Wisconsin School of Medicine and Public Health. She cited university data showing that most patients hospitalized under observation stayed longer than 24 hours, and one in six stayed longer than 48 hours.

Nelson also touted the Improving Access to Medicare Coverage Act of 2013, which would count every patient day spent in observation status toward Medicare's required inpatient stay. Yesterday, Reps. Lloyd Doggett (D-Texas) and Todd Young (R-Ind.) introduced similar legislation in the House that would requite hospitals to clearly notify patients who are under observations status longer than 24 hours.

To learn more:
- read or watch the Senate testimony
- here's the announcement of the House bill