Medicare pilot attempts to correct Medicare 'loophole' policy in hospital observation stays

Share this article:
Hospitals slap the government with lawsuits over 'two-midnight' policy to reduce observation stays
Hospitals slap the government with lawsuits over 'two-midnight' policy to reduce observation stays

Faced with growing complaints about the “observation stay loophole,” the Centers for Medicare & Medicaid Services is launching a pilot program that could ultimately help beneficiaries afford nursing home care.

Long-term care groups have long complained that hospitals classify patients as being in under observation, rather than as an inpatient. There's an incentive for hospitals to classify a patient as receiving observation services: if Medicare decides the hospital has billed it for the inpatient treatment of someone who should have gotten observation services, the agency can deny the entire payment. However, Medicare beneficiaries must stay three days in the hospital as an inpatient in order to qualify for nursing home coverage.

The three-year pilot program allows 380 participating hospitals the ability to rebill for observation services if claims for inpatient care are rejected. The hope is this will reduce the rates of seniors being classified as being in for observation. 

Share this article:

More in News

Long-term care continues to lead in deal volume and value: PwC report

Long-term care continues to lead in deal volume ...

Long-term care bucked healthcare industry trends with strong merger and acquisition activity in the second quarter of 2014, according to newly released data from professional services firm PricewaterhouseCoopers.

Empowering nurse practitioners could reduce hospitalizations from SNFs, study finds

Granting more authority to nurse practitioners is associated with reduced hospitalization of skilled nursing facility residents, according to recently published findings.

Pioneer ACO drops out of program, despite reductions in skilled nursing utilization

A California healthcare system has become the latest dropout from the Pioneer Accountable Care Organization program, despite reducing skilled nursing facility utilization and improving its readmission rates. Sharp HealthCare announced its decision in a quarterly financial statement released Tuesday.