There are tens of thousands of policies in Medicare’s policy manual, which makes for stiff competition for the “Most Maddening” award. But my vote goes to the policy around “observation status,” which is crazy-making for patients, administrators, and physicians.
“Obs status” began life as Medicare’s way of characterizing those patients who needed a little more time after their ED stay to sort out whether they truly needed admission. In many hospitals, “obs units” sprung up to care for such patients – a few beds in a room adjacent to the ED where the patients could get another nebulizer treatment or bag of saline to see if they might be able to go home. Giving the hospital a full DRG payment for an inpatient admission seemed wrong, and yet these patients really weren’t outpatients either. The Center for Medicare & Medicaid Services’ (CMS’s) original definition of obs status spoke to the specific needs of these just-a-few-more-hours patients: a “well-defined set of specific, clinically appropriate services,” usually lasting less than 24 hours. Only in “rare and exceptional cases,” they continued, should it last more than 48 hours.
A recent article in JAMA Internal Medicine, written by a team from the University of Wisconsin, vividly illustrates how far the policy has veered from its sensible origins. Chronicling all admissions over an 18-month period, Ann Sheehy and colleagues found that observation status was anything but rare, well defined, or brief. Fully one in ten hospital stays were characterized as observation. The mean length of these stays was 33 hours; 17 percent of them were for more than 48 hours. And “well defined?” Not with 1,141 distinct observation codes.
To underscore just how arbitrary the rules regarding observation are, an investigation by the Inspector General of the U.S. Department of Health and Human Services released today found that “obs patients” and “inpatients” were clinically indistinguishable. Their major difference: which hospital they happened to be admitted to.
