Joint Press

Senate Hearing to Examine Rise of Hospital Observation Stays

– The U.S. Senate Special Committee on Aging will hold a hearing on Wednesday to examine the rising use of hospital observation stays for Medicare patients.

The hearing comes amid growing criticism from some Medicare patients who say observation stays have cost them thousands of dollars more in out-of-pocket costs.

Specifically, when a Medicare beneficiary enters the hospital, a physician must decide whether to admit them as an inpatient, or under “observation status.”  Traditionally, hospitals provide observation care for patients who are not well enough to go home but not sick enough to be admitted.  The distinction between observation status and inpatient status often carries significant financial consequences for Medicare beneficiaries.  For example, Medicare will not cover the cost of a subsequent rehabilitation facility or nursing home stay for observation status patients, because the program requires beneficiaries to stay three full days in the hospital as an inpatient in order to receive such coverage.  Beneficiaries may also end up paying more in co-payments and drug costs in some cases. 

In recent years, the use of observation status has increased significantly as the Centers for Medicare and Medicaid Services (CMS) has raised concerns with hospitals about short inpatient stays, citing that many such stays were improper because the services should have been provided in the outpatient setting.  As hospitals seek to err on the safe side as a protection from auditing, beneficiaries can be caught in the middle.               

During the hearing, lawmakers will learn about the plight of a Medicare patient who was forced to pay $7,859 for the cost of rehabilitation care due to his hospital stay being classified as an observation stay.  Committee members will also examine solutions to fix the problem, including legislation which would count any time a beneficiary spends in the hospital towards the three-day requirement for nursing home coverage.   Additionally, the panel will take a closer look at the impact of the so-called “two-midnight rule” CMS proposed last year.  The rule, whose enforcement has been delayed until next year, would direct physicians to formally admit a Medicare patients if they believe that patient will remain hospitalized for two or more midnights.  The rule leaves untouched the three-day inpatient requirement for Medicare coverage of a nursing home stay.



HEARING: Admitted or Not? The Impact of Medicare Observation Status on Seniors

2:15 p.m. Wednesday, July 30, 2014

Russell Senate Office Building, Room 418



 Sylvia Engler, Medicare Beneficiary

Accompanied by: Toby Edelman, Senior Policy Attorney, Center for Medicare Advocacy 

Marna Parke Borgstrom, Chief Executive Officer, Yale-New Haven Hospital, and President and CEO, Yale New Haven Health System 

Bob Armstrong, Vice President, Elder Care Services, St. Mary’s Health System,

Lewiston, Maine 

Ann Sheehy, MD, Chief, Division of Hospital Medicine, University of Wisconsin School of Medicine and Public Health