Martha Kern
Shay Jacobson, RN, MA, NMG

The Medicare 30-Day Readmission rules have already inspired two law suits, one action filed by a class of Medicare patients (Bagnall vs. Sebelius) and the other filed by the American Hospital Association for non-payment of claims.

They have put hospitals and doctors squarely in the middle of uncomfortable government mandates and the patients who ultimately pay the bills.

The rules have further caused considerable consternation on the part of Medicare recipients, who now find themselves having to repeatedly ask what their hospital status might be (Inpatient? Observation?) on a day-to-day basis.

Suffice to say, the Medicare 30-Day Readmission rules, and the Affordable Care Act that inspired them, have only just begun to change the health care landscape.

Farewell, Simplicity
Hospitalization used to be a fairly straightforward proposition.

Upon reporting to the emergency room, or having been sent to the hospital by a physician, a patient would be admitted to the hospital, a few days of testing and treatment would commence, and then a discharge would be planned and executed. Charges were forwarded along to Medicare and/or a private insurer for consideration and payment and, soon enough, the entire chapter concluded quietly with payment of a deductible, perhaps, and evidence that the hospital had been paid by insurance.

The days of simplicity are over, however, particularly for Medicare recipients. For them, a hospital stay may no longer be an actual inpatient experience, despite the fact that it looks, smells and behaves precisely like one. That stay just might be an “observation” period, in which case it will conclude somewhat less quietly with a sizeable bill for the patient. Or, it may start out as an inpatient admission and then, without fanfare or announcement, toggle over to “observation” status. This toggling might even happen after the fact, when the patient has gone home or to a skilled nursing facility for rehab services they might wrongly have assumed would be covered by Medicare.

Observations on Observation
Hospitals did not just decide one day to complicate their operations where Medicare patients are concerned. The trend toward observation stays is a direct result of the government’s new 30-Day Readmission Rules. These rules stem from the Affordable Care Act of 2010 and represent an effort to minimize fraudulent claims and unnecessary hospitalizations, and hold hospitals responsible for the quality and quantity of care they offer. Patients should not, in the government’s estimation, just boomerang back to the hospital after an inpatient stay, and neither should be they be re-admitted and worked up all over again, simply because Medicare will pay the bills and fatten the bottom line. The new rules operate on the premise that patients should be given appropriate and necessary care, discharge plans and home follow up that is thorough enough to enable them to stay out of the hospital for at least 30 days.

If the hospital fails in this regard and a patient returns in fewer than 30 days, Medicare will levy a penalty. This is true now for all Medicare patients with an admitting diagnosis of congestive heart failure, pneumonia or myocardial infarction (heart attack). Soon, it will also be true for those admitted with stroke and chronic obstructive pulmonary disease (COPD).

Hospitals quickly realized that re-admission could not technically occur if there was never an admission in the first place. And thus was born the observation trend, wherein a patient is held at the hospital for a short time but never actually admitted.

Medicare favors observation over inpatient status, as well. When a patient is classified as “observation”, their time in the hospital becomes a Medicare Part B stay. Medicare Part B is technically outpatient, and involves co-pays for the patient. Where a three-day inpatient hospitalization (Medicare Part A) renders a patient eligible for up to 100 days of sub-acute and/or rehabilitative services at a skilled nursing facility, an observation stay (Medicare Part B) does not render them eligible for these post-discharge services.

In short, observation status saves Medicare quite a bit of money.

Method in the Madness
Inspiring the concern about Medicare readmissions are the following startling facts:
Twenty percent of Medicare beneficiaries are readmitted to the hospital within 30 days of discharge.

  • Thirty-four percent are readmitted within 90 days.
  • Hospital readmissions cost the federal government $17 billion annually.
  • Medicare believes that $12 billion of this sum is preventable and entirely unnecessary.
  • Health care spending for people with five or more chronic conditions is 17 times higher than for those with no chronic conditions.
  • A high percentage of health care expenditures are made on behalf of a small sector of the population.
  • Thirty percent of discharged patients discharge with a medication discrepancy that has the potential to cause them harm.

With the enormous swell of Baby Boomers steadily marching toward their Medicare years, the federal government determined that steps had to be taken to circumvent a crushing financial burden.

The Doctor is In…..the Middle
Doctors may be feeling some pain. They used to determine whether or not a patient should be admitted to the hospital, based on their history with that patient and their medical assessment of the situation at hand.

Now, however, their judgments are second-guessed and sometimes reversed.

The admission status of every Medicare recipient is closely scrutinized in real time by off-site auditors called Recovery Audit Contractors (RACs). All those decisions about inpatient versus observation status are reviewed and often overruled, sometimes in hindsight, by these government-employed nurses. They can and do change patients’ status from inpatient to observation, sometimes after the patients have discharged.

RACs receive a commission from the government based on the amount of money they save for Medicare. It might be safe to assume, then, that their overall orientation will be to deny claims and choose observation status over inpatient at every opportunity.

Doctors must be ever mindful of the auditing process – they can be prosecuted for fraud if found to be admitting patients to the hospital when the RAC feels the patients should be merely observed.

Because the standards for inpatient versus observation status are not clearly defined, doctors and hospitals sometimes struggle to make determinations that will coincide with the RACs’ decisions. Many hospitals, in fact, now employ full-time professionals who review Medicare charts in an attempt to re-classify admissions that the RACs may challenge.

Hospitals can file appeals when inpatient Medicare claims are denied, based on RAC proclamations that the stay should have been observation. Hospital attorneys tell us they document and “prove up” inpatient stays with medical evidence of a patient’s illness or instability, and they frequently prevail when they appeal Medicare’s decisions.

Testing the Patient’s Patience
Much has been made of the penalties paid by hospitals, but a less heralded fact is that patients are now being saddled with higher costs and very few file appeals when their hospital stays have been classified, perhaps wrongly, as “observation”.

If all or part of a Medicare recipient’s hospital stay is categorized as “observation”, they may well be denied access to coverage for much-needed rehabilitative treatment at a skilled nursing facility after discharge. Private payment of these costs can be staggering. It is in the patient’s best interest to understand what is happening and to take an active role in tracking the manner in which Medicare is classifying their stay.

Patients and their advocates should ask hospital personnel for an update on their admission status on each day of their hospital stay. If one’s status is “inpatient” for at least three consecutive days, post-discharge rehabilitative costs will likely be covered. If, however, any part of that stay is classified as “observation”, these post-discharge services may not be covered, resulting in significant outlays on the part of the patient.

Advocates should be prepared to offer up evidence, to the greatest degree possible, that their patient needs to be admitted versus observed. Documentation of recent instability, salient medical history, co-morbidities, medication issues and other potentially overlooked factors may give the doctor and hospital the evidence they need to re-classify a stay as “inpatient”.

Advocates should also be prepared to file an appeal with Medicare when a patient’s admission status has been deemed “observation”, particularly when complications are present to such a degree that the patient needs skilled rehabilitation services upon discharge.

The Professional Edge
Lifecare Management has long been regarded as an essential form of advocacy for Medicare recipients who have little or no access to family-based support. It is relatively rare that family members are in positions to travel and/or take leave from work to closely monitor the circumstances of hospital admissions and ensure that support services run smoothly thereafter. Never has this monitoring been more critically important.

Lifecare Managers can further ensure that post-discharge services contributing to safety, wellness and a low likelihood of hospital re-admission are also in place. Skilled, supervised, professional caregivers, home modifications, medical equipment and other needs can all be coordinated and managed by these savvy professionals.

Family members have historically shown themselves to be reluctant at times to engage professional services when their loved ones encounter serious health setbacks. Owing to a desire to conserve assets and to assuage their own guilt, they sometimes attempt to manage it all on their own. Increasingly, this approach will fall short as the health care environment grows more and more complex. Hospitals will likely find some recourse to protect themselves from Medicare penalties when families repeatedly refuse to hire in-home care for loved ones who then go back to the hospital over and over. Before long, patients and their families will also be held accountable for their efforts to stay healthy and out of the hospital.

Professional Lifecare Managers can consult with families over the course of a hospitalization to ensure that any documentation supporting an inpatient stay is properly presented and the patient is given the best odds of an inpatient classification. They can also take the lead in filing appeals for those whose stays have been tagged “observation”, often to the financial detriment of the patient.
Proactivity must replace passivity. Asking the right questions and cogently presenting the facts of a case can make all the difference in the way a hospitalization is handled and how much it ultimately costs the patient. Professional care at home can forestall potentially costly re-hospitalizations and the skilled rehabilitative stays that often follow.

The new system is all about staying out of the system. The rules of health care are changing, and so must our strategies for managing the health of our family members and clients.

©Lifecare Innovations, Inc.