Was Your Patient Really Admitted or Just under Observation?

Observation status is a sticky issue for both physicians and their patients. You admit your patient to the hospital. Then days or even weeks later you find out that the hospital reclassified your patient to observation status.

Suddenly, your patient is calling you, furiously demanding to know why his hospital charges are so high for the care you recommended.

The Pennsylvania Medical Society (PAMED) has received many calls from physicians about this loophole in Medicare regulations that permits a hospital’s utilization review committee to change a patient’s status from inpatient to outpatient observation without the admitting physician’s knowledge or authority.

What is PAMED doing about the issue?
The issue of observation status was recently elevated to a top priority by PAMED and its physician leaders. PAMED is working with legislators, insurers, hospitals, and others to raise awareness of the urgent need to find solutions for Pennsylvania patients and physicians. 

To help address this issue, PAMED’s Board of Trustees recently approved several actions to:

  • Help increase patient awareness
  • Further educate physicians on admission screening guidelines and documentation requirements
  • Work on the issue with national organizations, such as the American Medical Association and the Centers for Medicare and Medicaid Services, including investigating creation of a specific place-of-service code for observation services.

How are physicians and patients impacted by observation status?
When their hospital stay is classified as outpatient observation, patients are charged for various services they received in the acute care hospital, including their prescription medications.

Another twist: They are also charged for their entire subsequent skilled nursing facility stay, having never satisfied the Medicare’s three-day hospital stay requirement.

Physicians in this situation are then faced with two thorny problems: 1) Extensive research and paperwork to track, document, and defend the status under which they believe their patient should have been classified and 2) Furious patients who may blame the physician for their higher than anticipated medical bills, which can have a negative effect on the physician-patient relationship.

We want to hear from you. Tell us if and how you or your patients have been impacted by this issue.

Last Updated: 2/14/2013

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