Congressional advisors waver on eliminating observation stays

People increasingly are spending days in the hospital as observation patients.
People increasingly are spending days in the hospital as observation patients.

Getting rid of hospital observation stays might not be a good idea after all, according to Medicare Payment Advisory Commission members who previously pushed for the change.

Commissioner Craig Samitt, M.D., expressed enthusiasm for eliminating observation stays at a November MedPAC meeting. At a meeting last Friday, he said his position is “evolving,” according to Bloomberg BNA. He cited cost concerns. Cori Uccello of the American Academy of Actuaries is another MedPAC member who now appears to be wavering on the issue.

Eliminating observation status potentially would resolve a hugely concerning issue to long-term care providers and beneficiaries. Seniors currently must spend three days as a hospital inpatient to qualify for skilled nursing coverage, and observation stays — which have been dramatically increasing —  do not count toward this threshold.

Even if observation status is not scrapped as a category, there are other potential solutions on the table to make post-acute care more accessible. Public health consultant Kathy Buto supports counting days in observation care toward the three-day threshold, according to BNA. At least one of the days would have to be spent as an inpatient to trigger SNF benefits.

The observation stay problem largely stems from the fact that auditors have aggressively challenged hospitals when they admit people as inpatients only for a day or two. The threat from auditors has led hospitals to use observation status liberally. MedPAC commissioners will continue to debate Medicare's hospital short-stay policies, and they might vote on recommendations for reform by this spring, BNA reported.

Also at last week's meeting, MedPAC unanimously voted to recommend equalizing payments for skilled nursing facilities and inpatient rehab centers. Congress is not obligated to act on MedPAC recommendations.