Majority Press

Maine Nurse Testifies Before Aging Committee About Hospital ‘Observation Status’ Crisis

Committee examines how hospital use of observation status affects patients and taxpayers


WASHINGTON – The Senate Special Committee on Aging, led by Chairman Susan Collins, today held a hearing to examine the dramatic growth in the use of “observation status” by hospitals and the effects it has on patients and the health care industry.   Tori Gaetani of Beacon Health, which is affiliated with Eastern Maine Healthcare Systems, was among today’s witnesses.   

In recent years, hospitals have increasingly placed Medicare patients “under observation” as opposed to admitting them—which has, in some cases, negatively affected patients.  At issue is the fact that, if a senior spends time in the hospital under observation status, Medicare will not pay for skilled nursing care that a senior may need after leaving the hospital. 

Senator Collins said, “The financial consequences of these stays can be severe for seniors.  They are held responsible for outpatient copayments and prescription drug costs they would not have had as an inpatient. There also is no out-of-pocket cap on these costs.  More important, if a Medicare patient is not formally admitted as an inpatient. Medicare will not pay for subsequent skilled nursing facility or rehabilitation care.”    The Senator further explained that many patients do not even realize they have never been admitted to a hospital as an inpatient.

Witnesses at the hearing, which was titled, “Challenging the Status Quo: Solutions to the Hospital Observation Stay Crisis,” included Tori Gaetani.  Beacon Health is participating of a pilot program for the Centers for Medicare and Medicaid Services (CMS), that exempts participating organizations from the three-day inpatient hospital stay requirement for beneficiaries to qualify for the Medicare skilled nursing benefit. Under the pilot, Beacon Health patients have been admitted from hospital emergency departments, hospital observation units, and from their physicians’ offices.  While not subject to the three-day prior stay requirement, these patients must still meet existing clinical criteria for skilled coverage. Ms. Gaetani explained that not only does the program save the Medicare program money, it has helped improve quality of care and has enabled more seniors to be able to return back to their homes and live independently.

Senator Collins is a cosponsor of legislation that would deem time spent in observation status as impatient care for purposes of the three-day hospital stay requirement for a Medicare patient to qualify for skilled nursing facility care. In addition, Senator Collins has called on CMS to require hospitals to notify patients about their hospital status and what the financial implications could be.

Also testifying at today’s hearing was Sean Cavanaugh, from the Centers for Medicare and Medicaid Services; Mark Miller, Executive Director of the Medicare Payment Advisory Commission; Dr. Jyortirmaya Nanda, of the SSM Health; and Spencer Young of Health Data Insights.

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